Supreme Court orders higher disability compensation

Iceland’s Supreme Court has ordered Vörður insurance company to calculate a woman’s permanent disability compensation using average earnings for dental technicians, rather than the minimum wage benchmark in the Compensation Act, mbl.is reports. The ruling overturns a Court of Appeal decision that had dismissed her claim.

Vörður must pay 6,749,726 Icelandic krónur, plus interest and default interest, less 3,215,496 krónur the company paid in June 2022. The amount is therefore not all additional compensation. The insurer must also pay a total of 3,450,000 krónur in legal costs across the three court levels, payable to the state treasury.

The Supreme Court issued its ruling on October 14. Three of the five judges supported the decision, while two would have upheld the Court of Appeal’s ruling in Vörður’s favour.

The woman was 26 when she was injured in a traffic accident in October 2019. A car struck another vehicle from behind, causing it to hit her car. She suffered neck, upper-back and left-shoulder strains. Her permanent impairment was assessed at six points and her permanent disability at six per cent.

Vörður accepted liability and paid compensation in 2022. The dispute was only over which annual earnings should be used to calculate her permanent disability compensation. She reserved her right to challenge that calculation when the claim was settled.

She was studying to become a dental technician and had no employment income in the preceding years. She argued that compensation should be based on average earnings for dental technicians because completing the course had been foreseeable. Vörður said she had not progressed far enough in her studies and calculated the payment using the statutory minimum wage benchmark.

A district court ruled in her favour on October 23, 2024, finding that her annual earnings should be assessed individually. The Court of Appeal reached the opposite conclusion on November 13, 2025, and dismissed her claim. Vörður had already paid compensation based on the statutory benchmark.

The Supreme Court majority noted that earlier rulings had generally required students to have completed two-thirds of their studies before compensation could be based on the earnings of their intended profession. But the statutory benchmark had increasingly diverged from actual wages, the majority said. For the woman, it was 3,422,500 krónur a year; if it had tracked general wage growth since 1999, it would have been 6,691,000 krónur. The legislature had not addressed that divergence.

In those circumstances, the majority said the woman should face a lower burden of proof when establishing her likely future earnings and whether completing her studies had been foreseeable. Records differed on how many course credits she had completed when the accident occurred. The judges also considered that she had already undertaken part of the practical coursework for the autumn term and concluded that she had completed more than half of her studies. Her progress had followed the course plan before and after the accident, and she completed the programme seven months after the crash.