The South Iceland lowland is an active seismic zone. In May 2008 a shallow Mw6.3 earthquake occurred in the Ölfus region in South Iceland. The epicentre was located in the middle of farmlands and also close to two small towns in the area. The recorded maximum PGA was 0.88g in the town Hveragerði, about 2–3 km from the main fault.

A great deal of damage occurred, but fortunately there was no loss of life. All buildings in Iceland are registered in a detailed official database. Insurance against natural disasters is obligatory. After the Ölfus earthquake, damage and repair cost for every affected building was estimated by trained estimators in order to cover the loss incurred for policy holders. The damage data for every property was split into number of subcategories.

Analysis of the data showed that damage of structural elements was only a fraction of the total damage, and most of the estimated repair cost was related to cosmetic non-structural surface damage that required replacement of flooring, tiles and paint work.