Okay, so I looked online on the flight center website, and their travel insurance is through Covermore, which is good.
Their deals seem definitely the cheapest I've come across so far. I did the online quote which came up to $839 for the dates 25th May - 15th Sept (114 days) which is pretty decent.
Here's a picture for your viewing pleasure, obviously I'd go "Plan TI" for the US. Also, is it worth chucking money on the "amendment or cancelation costs" ?
Sundaytripz - does that sound about right?
Casp - haha, interesting theory you have there, sure would hate to break a leg in that regard. How much did your insurance cost all up for Iceland?
PS - if anyone knows how hard it is to get that extended travel visa (leisure, not working) for the US, because it's not under 90 days, that would be sick.
Apparently I have to schedule a meeting with the US embassy in Melbourne, not sure if its worth the effort for the extra few weeks.