The best way to see Iceland is by car and so the next obvious part of your trip planning is going to be figuring out your rental car situation. While Iceland is part of Europe, you'll quickly realize that the landscape car rental companies is different from what you're used to.
In this guide, learn about where to rent a car in Iceland, tips on how to save money, must-know advice on driving on the island, and common mistakes.
Read more about Iceland
- What to wear in Iceland
- Reasons you need to go to Iceland now
- The stories behind the 8 day Iceland road trip
- 6 day Iceland itinerary
- Bubble hotel review
- How to shoot the Northern Lights in Iceland
Where to stay in Iceland?
- For any road trip, you'll be hopping from one accommodation to the next. Beyond my recommendations for top hotels in Reykjavik, make sure to use Booking because they have such good inventory of hotels and B&Bs in Iceland. On top, if you're at Genius, you could save another 15% on top.
Table of contents
- Where To Rent A Car In Iceland
- How To Save Money on Car Rentals in Iceland
- How Far In Advance to Rent A Car in Iceland?
- Practical Advice on Renting A Car in Iceland
- Car Insurance
- Do you need it?
- Common car insurance claims in Iceland
- Types of car insurance in Iceland
- Is car rental insurance worth it in Iceland?
- Can you buy a separate car rental insurance policy?
- Can you rely on your credit card's own rental car insurance?
- Does travel insurance cover car rental damage?
- What's not included with car insurance
- Conclusion about car insurance
- Do you need a 4×4?
- Tips on renting a car
- Car Insurance
- 9 Tips on Driving in Iceland
- 6 Common Mistakes Driving in Iceland
- 5 Apps You Need To Download For Iceland
- 5 Things You Need To Buy For Your Iceland Road Trip
- Frequently Asked Questions
Where To Rent A Car In Iceland
Renting a car in Iceland is an absolute must for doing something like our 8 day Iceland itinerary. There's so much incredible beauty around the island and you'll want to see every inch of it including these top 12 things to do in Iceland.
Luckily, the road infrastructure in Iceland is excellent whether you're staying on the main roads or going off road. With mountains, glaciers, waterfalls, and volcanoes along the way, your car will be crucial for your epic road trip.
What kind of car do you need?
It first makes sense to get one thing out of the way. Do you need a car or do you need a campervan? These are two very different 4-wheeled vehicle options for Iceland so figuring out which you need is important.
Why you want a car
From sedans, SUVs, vans, coupes, and everything in between, these are the standard cars you think about. They get you from A to B to C but they aren't designed for sleeping.
These aren't that complicated but you'll have to think about whether the transmission (manual or automatic) matters to you, the size of the vehicle, how many people it needs to accommodate, and off-roading capability.
Why you want a campervan
Made popular in New Zealand and now Iceland and many other parts of the world, these are vans retrofitted to have its own living quarters. Some are more spacious than others.
These are awesome because you won't be tied to specific accommodations since you're rolling with one. Iceland is perfect for the campervan because they have such amazing infrastructure for camping in general that you'll find tons of designated camp sites around the island.
While most people think of campervans are for those on a budget, it's really more of a style of travel that draws people in.
A heads up that as of 2015, Iceland passed a new law to regulate camping . Essentially, you can only park your campervan in established campsites or through a landowner's written permission. Off-limits locations for camping are also provided by the Environment Agency of Iceland.
For the purposes of this article, we're focusing on cars for rent in Iceland.
Why you don't need a car
In some circumstances, it won't make too much sense to rent car. This can include:
- You're in Iceland for a very short period of time and looking to focus on Reykjavik where everything is walkable.
- You're on a multi-day guided tour.
- You'll be staying in Reykjavik and booking guided tours daily.
What locations to rent a car in Iceland?
The best place to rent a car in Iceland will be from the point of arrival which will most likely be at Keflavik International Airport (KEF), the country's primary hub for flying.
This is the go-to spot to rent you car because the airport is actually located 40 minutes from the capital of Reykjavik. Since you'll be driving around the island, there's almost no reason to rent anywhere else.
Once you land, you grab you rental car, and go. When it's time to leave Iceland, you simply drive back to the airport, drop off the car, and walk to the terminal.
Alternatively, you could rent a car in Reykjavik but this doesn't make as much sense since you'll have to pay for an airport transfer both ways.
Another important airport is the Akureyri Airport (AEY) in northern Iceland. There are also a number of regional airports in towns around the island.
Which car rental companies are in Iceland?
Here are a list of the companies that rent cars.
To help gauge their relative prices, I've added example daily rates for a weekly booking in October (low-season) between both types of transmissions. These prices are before taxes/fees. Prices are in USD.
Take these for a grain of salt as rates fluctuate year to year and between seasons.
International Car Rental Companies
Many of these car rental companies are covered in our car rental coupon code breakdown so make sure to read that next.
|Car Rental Company||Location||Ex. Economy MT||Ex. Economy AT||Note|
|ACE Rent A Car||KEF||$47.71||$43.60|
|Avis||KEF, AEY||$79.57||$108.14||No tax added|
|Budget||KEF, AEY||$67.71||$92||No tax added|
|Dollar||KEF, AEY, Reykjavik, Akureyri||$92.63||$97.48|
|Europcar||KEF, many airports and city locations||$55.88||$55.88|
|Hertz||KEF, many airports and city locations||$61.86||$61.38||AT is cheaper|
|Sixt||KEF, Reykjavik||$52.77||$63.15||Requires upgrading to unlimited mileage|
|Thrifty||KEF, AEY, RKV, Reykjavik, Akureyri||$67.63||$71.32|
Observations: ACE Rent A Car, Sixt and Europcar offers really good rates but make sure you upgrade to unlimited mileage. For ACE, the key is to use the code AC000083B to save 15% off pay-later rates.
Local Car Rental Companies
There are many companies that you'll exclusively find in Iceland or are more unknown car rental agencies.
Something I've noticed is that many of these don't have extra fees and taxes (VAT) on top so the price you see is what you pay.
You'll notice many of the links will direct you to Guide To Iceland. That's because they're one of my preferred vendors for anything you book. When checking car rental prices, you should use their search engine to see what's available. Their prices can be better than booking directly and they're a reputable Icelandic company.
|Car Rental Company||Location||Ex. Economy MT||Ex. Economy AT||Notes|
|AddCar||KEF||$66.59||$66.59||Only SUV classes|
|Átak Car Rental||KEF||$40.29||$41.97||Offers free hotel pick up from Reykjavik|
|Blue Car Rental||KEF, Reykjavik||$69.99||$70.94|
|Carwiz||KEF||$37.71||N/A||AT unavailable, unlimited mileage is an add-on|
|City Car Rental||KEF||$41.95||$52.77|
|FairCar||KEF, RKV, Reykjavik||$52.62||$64.97|
|Fara Car Rental||KEF||N/A||$63.81||SUVs and vans only|
|Firefly Car Rental||KEF, Reykjavik||$67.45||$66.62||AT is cheaper|
|Geysir||KEF, AEY, RKV||$57.09||$74.39|
|Global Rent A Car||KEF||$60.41||$61.08|
|Greenmotion||KEF, Reykjavik, Husavik||$69.13||$85.85|
|Go Car Rental||KEF||$38.66||$41.13|
|Icerental4x4||KEF, Reykjavik||$47.60||N/A||Mostly SUVs|
|ISAK 4×4 Rental||Reykjavik||$274.15||N/A||They only offer large 4x4s|
|Lava Car Rental||KEF, Reykjavik||$62.01||$53.92||AT cheaper than MT|
|Lotus Car Rental||KEF||$44.57||$48.29|
|Mex Rent A Car||KEF||N/A||$90||AT Economy only|
|MyCar||KEF, Reykjavik||N/A||$48.59||AT only|
|Northern Lights||KEF, Reykjavik||$58.82||N/A||MT only|
|Orange Car Rental||KEF||$58.74||N/A||MT only|
|Rás Car Rental||KEF, Reykjavik||$85.26||N/A|
|Sad Cars||KEF||$51.18||$63.74||They have bad reviews|
|Saga Car Rental||KEF, AEY, RKV||$81.01||$87.77||It looks like they are re-sellers of Dollar.|
|Star Car Rental||KEF, Reykjavik||$53.46||$97.45||MT only|
Observations: Yep, there are a lot of car rental companies in Iceland and without this list above, it's impossible to find all of them in one place so I hope this helps. It's clear that in general, the local car companies are cheaper than the international brands with the cheapest being Carwiz, City Car Rental, and Go Iceland.
Additional notes: Something that came up on my trip are websites such as Cars Iceland. We used them on our trip to Iceland without knowing any better and while they were totally fine in terms of payment and pick up, we learned that they're just a third party broker. We actually picked up our car from Blue Car Rental.
Lesson: Any company that isn't listed above is likely just a local broker.
Best way to choose a car rental company
So what's the best approach to finding your car for rent in Iceland? Here's the tried-and-true strategy to make sure you see the full range of availability and prices.
- Search through multiple car rental search engines (RentalCars, DiscoverCars, and Guide To Iceland). Yes, check them all.
- Narrow things down to your top choices based on the type of car you want, transmission, and price.
- With your shortlist, go directly to the company's website through the links in the tables above.
- Compare the prices but also look at the add-ons and insurance options. Some might not be possible via the search engines.
- Pick the best one and book!
The time and effort put to find your rental car will be worth it.
How To Save Money on Car Rentals in Iceland
As you already know from the extensive details in the travel guide portion of the 8 day Iceland itinerary, this is not a cheap trip. Everything is expensive from hotels, excursions, food, and of course car rentals.
That's why researching the best price is key.
Steps to find cheap rental cars in Iceland
There are two approaches you can take:
- Use the steps described in the above section where you compare all search engines (RentalCars, DiscoverCars, and Guide To Iceland) in addition to checking the car rental companies directly to see who has the best deal. Note that the smaller local companies will often have the better price.
- Car rental coupon codes work in Iceland and if you find the right one, you could get an insanely good deal. There's a lot to go through but start with the ones you have a personal affinity to such as Hertz, National, Dollar, Enterprise, and Avis and look for their promo codes.
Iceland car rental coupon codes
Iceland's car rental companies have their own promo codes as well. We've scoured online for the active ones and organized it in the table below. You're welcome :)
|ACE Rent A Car||AC000083B if paying later or AC000083P if pre-paying||15% off|
|Blue Car Rental||AWESOMEICELAND||They've recently removed coupon codes entirely from the system so the custom code won't work anymore.|
|Lotus Car Rental||absoluticeland||5% off|
|ISAK 4×4 Rental||epiciceland||10% off|
|Go Car Rental||epiciceland||5% off|
|Hertz Iceland||WEB10||10% off when booking from Hertz's localized site.|
|Geysir||GEYCS+CUPN18||You have to email them at [email protected] with this code to receive the 45 EUR discount.|
|Firefly Car Rental||WEB10||10% off, additional driver, free GPS. Limited units per day.|
|Saga Car Rental||APRIL35||No price discount but adds PAI and third party liability for free|
|Dollar||2020||No price discount but adds PAI and third party liability for free|
Most Popular Car Rental Company in Iceland
While they've recently gotten rid of their coupon codes, they're probably still the most reputable brand in Iceland and I would definitely rent from them again.
How Far In Advance to Rent A Car in Iceland?
You really don't want to mess around with car rentals and similar to my advice for car rentals in Santorini, you really need to do it as soon as possible.
Once you have your flights booked, the next thing should be the car. Since you'll need the car the entirety of your trip, there really isn't much guesswork on the days you need it for and time of pick up and drop off.
Timing is even more critical especially if you need automatic transmission. There is a more limited supply of these and so these will always be the first to be sold out or the ones to have their prices jacked up.
Overall, there just aren't that many cars for rent in Iceland. Make sure to head to RentalCars, DiscoverCars, and Guide To Iceland right away!
Recommendation: Book as early as possible.
Practical Advice on Renting A Car in Iceland
There's a laundry list of things you really need to know before you rent a car in Iceland.
Warning: This is confusing and quite extensive so make sure you have a drink in hand.
Do you need it?
Let's just get right to the chase. Do you need car insurance in Iceland?
The answer: A big fat YES
But which?: Keep reading!
Why?: The natural geology and weather of Iceland means that there's a higher chance of incidents happening. Car rental companies in Iceland are also insanely strict about checking every corner of the car when you return it and if they discover the smallest ding, you'll hear about it.
Also, it's important to note that Third Party Liability Insurance is a legal requirement in Iceland. You'll learn further below that at a miniumum, a collision damage waiver is included in the rate which sounds great but it's a bit more complicated.
Common car insurance claims in Iceland
More than any other country in the world, we learned from research and reading other people's horror stories that you need to have insurance. The reason is not because driving in Iceland is dangerous or difficult in any way but it's because of the likelihood of your car being damaged due to nature.
- Cracked windshield – This is when small rocks fly up at your car and manage to hit the glass windshield to cause a crack. The car will still be fine to drive but can spider quickly and is hard to miss by the car rental agency.
- Dings on the body of the car – Similar to the windshield, rock and gravel from the main ring road or off-road can get lifted from the car ahead of you or from your own car to cause dings, dents, and scratches on your car. Ash and ice can also cause the same damage when mixed with high winds.
- Damage to underside of the car – If you look closely, standard collision damage waivers don't cover the underside of the car. This can happen from those same rock, ash, and ice in the above.
- Collisions – The weather in Iceland is unpredictable and when you're hit with extreme conditions of snow, rain, icy, and/or wind, this is when accidents happen on the road.
- Theft – Even less common of an occurrence as Iceland is incredibly safe but you never know.
Of course, car rental companies will gently apply the scare tactic that these happen all the time. The reality is that it's somewhere in the middle.
On our trip to Iceland, nothing happened but many people have had issues. I'd say these are claims that occur more frequently than in other places of the world.
Types of car insurance in Iceland
These are the primary types of car rental insurance packages that are offered in Iceland. The list isn't exhaustive as some companies have their own bundles.
Collision Damage Waiver (CDW)
Sometimes they also call this Super Collision Damage Waiver (SCDW) and other times SCDW is an upgrade from CDW which reduces the liability further.
In Iceland, CDW is included but there are limitations to what this covers.
- Covers the body of the car (but not tires, headlights, underside, wind blowing against the car, or damage from sand and ash) – Yeah, that's a lot of exclusions!
- The liability (the maximum amount you have to pay if you get into an accident) can be something like $700 USD for 2WD vehicles and $950 USD for 4WD vehicles and vans. This is sometimes also called a “self-risk” and the concept is similar to a deductible. Be careful as some companies have this raised up to $3,000 USD.
Typical cost: Free (SCDW as an upgrade for reduced liability)
While this is included, I think this is really just a way for car rental companies to ding you HARD if they see any damage because a deductible of $700 is still A LOT.
Gravel Protection (GP)
This is essentially gravel insurance and covers part of the exclusions that you see with the CDW/SCDW.
Gravel is all around the island and is the most common source of damage for a car. This protection extends from the body of the car to the windshield, headlights, and side mirrors.
The liability is typically $150 USD so even if there is an accident, you'd have to pay upwards of $150.
Typical cost: Free or $10 USD/day
Theft Protection (TP)
This is insurance against your rental car being stolen and comes with no liability (you don't pay anything if the car is stolen).
This does not cover the contents inside the car.
Typical cost: Free or $8 USD/day
Wait, so if all of the above insurance is free, what do you need to pay for?
Sand and Ash Protection (SAAP)
This covers the exclusion of damage to the car from sand and ash. This is when your car essentially gets sandblasted by the materials that you'd find around volcanoes and in the ground.
Sand damage is more common in the south coast but only if there are large wind storms.
The liability is roughly around $900 USD but they say that damages can be upwards to $3,950 to $11,500 USD.
Typical cost: $10-$15 USD/day
Liability Waiver (LW)
You'll notice that there are still some hefty amounts you have to pay even if you are “covered” by insurance. The Liability Waiver essentially brings those amounts to $0.
They technically don't call this insurance but this is for those that want to make sure there are no extra costs at all if there is a claim.
Typical cost: $27 USD/day for 2WD or $32 USD/day for 4WD and vans
Personal Accident Insurance (PAI)
This is a personal medical insurance if you, the passenger(s), or third party gets injured from an accident. The amount will vary from agency to agency.
This is less common but some do offer it.
Is car rental insurance worth it in Iceland?
We've established that you need insurance on Iceland but is what the car rental agency offering worth it?
As with any kind of insurance, the frustrating thing about it is that it's not consistent. The truth is that it's a complicated mess.
In some ways, I feel like the included insurance allow the car rental companies to inflate their rates while still charging a sizeable deductible (they call it liability). Some will offer you tiers of packages but of course they start adding up quickly.
Overall, I can see the local car rental insurance to be convenient. You're sold on the convenience of just dealing with one company for claims and you just hope it's fair and easy.
So you need it but does it need to be with the car rental agency?
Can you buy a separate car rental insurance policy?
Depending on where you live, you may be able to find insurance companies that offer policies that include car rental in Iceland. In the US, companies like Allianz, Bonzah, RoamRight underwrite for Iceland with their rental car insurance.
- RoamRight – Auto Rental Insurance Plus (Bonzah also sells this)
- Allianz – Rental Car Damage Protector
In many cases, they provide great coverage with zero deductible for a much more affordable price. That said, you'll want to look very carefully at whether they include things like sand, ash, and gravel.
If it isn't clear, make sure to call them to ask.
Can you rely on your credit card's own rental car insurance?
This is probably the most important of all. In all other countries, I'd say this should be the default. However, in Iceland, things get complicated because CDW is included. So what do you do and how do you figure out whether credit card travel insurance covers your car rental?
Here's how it works.
- Premium credit cards offer car rental protection only if you decline all CDW coverage.
- You have to put all charges related to the rental onto that one card.
- The cardholder must be the primary driver.
What do most credit cards cover?
In looking at the Certificates of Insurance for the American Express Aeroplan Reserve Card, it explicitly says you're covered only if you decline all CDW coverage offering. You also must put the entire car rental charge on the card.
- It protects any car for up to the value of $85,000 CAD.
- Maximum of 48 day car rental.
- Only covers the vehicle itself and not personal injury or damage to property.
- No specific exclusions of sand, ash, or gravel.
AMEX cards in the US work similarly. They also have something called Premium Car Rental Protection. This is a paid service for AMEX card holders in the US. The flat rate starts at $12.25 for each rental (not per day).
By having a policy like this, AMEX becomes the primary insurance and so all your claims would go through them instead of the car rental company.
That's great but if car rental companies force a CDW on you, is there any way out?
But how do you decline insurance?
There is only company I know that allows you to decline insurances is Blue Car Rental and the international car rental companies. By doing this, this will allow your credit card insurance to kick in.
If you go to Blue Car Rental's insurances page, you'll see that you need to e-mail them to decline their insurances.
TIP: If no mention of declining insurance is mentioned on the website, it's likely they can still do it but you'll need to contact them individually.
If you're unable to decline CDW, AMEX in the US has the following verbiage in their Certificates of Insurance:
“You decline the full collision damage waiver (CDW) or similar option, or pay for a partial collision damage waiver, offered by the Rental Company.”
This is exactly the scenario in Iceland since most policies come with a deductible or a self-risk amount which they call a liability.
Unfortunately, this only seems to only applies to New York State residents.
If you happen to find the above line or something similar, you might be in luck.
As it goes with insurance, it's all in the language and phrasing of things. When in doubt, call and ask about your specific scenario.
If you're looking for more information, I found that this thread on TripAdvisor was handy to hear about first-hand experiences.
Does travel insurance cover car rental damage?
In general, no but there are exceptions.
As covered in our guide on how and where to buy travel insurance, you'll see that World Nomads Explorer Plan in the US that there is a line in the policy that covers rental car damage of $35,000 USD.
Some policies may have special car rental add-ons.
What's not included with car insurance
Much of the policy you've seen so far has all been about the exterior body of the car and the windshield. What about the other things?
These things aren't covered by car insurance in Iceland
- Personal injury
- Personal possessions in the car
- Normal wear and tear
- Interior damage
- Driving while intoxicated
- Driving into water and rivers
- Driving off-road (excludes F-roads and the publicly maintained gravel roads that are marked)
In the case of tires, you should have a spare tire but when you go back to get a new full tire or change a car, you'll have to pay out of pocket. Credit card car rental insurance may cover this.
When it comes to personal injury, your auto policy back home may cover this as a result of an accident. Note that credit cards often exclude coverage for liability or personal injury so keep that in mind.
For your personal effects, typically, your home insurance can cover this or travel insurance policy.
Conclusion about car insurance
There's unfortunately no “one size fits all”. That said, if I can impart any sort of wisdom, my thought process going to Iceland today would look like this:
- Can you decline insurance with the company you want to rent from?
- Yes -> Does your credit card has good car rental coverage?
- Yes -> Use your credit card
- No -> Stick to the local insurance and pay the extras OR find an international car rental policy at home
- No -> Do you have a credit card with special terms on it that allows you to work around the Icelandic car insurance
- Yes -> Use your credit card
- No -> Stick to the local insurance and pay the extras OR find an international car rental policy at home
- Yes -> Does your credit card has good car rental coverage?
I think it's a bit of a scam that they pull out this sand and ash, and gravel damage explicitly to either make you pay for it or throw in a high deductible. It's one of the few places I've seen this.
I can only speculate that this is a tactic to cash in on tourists because of how frequently things like gravel, sand, and ash damage can happen.
I like the credit card insurance because it's free and quite comprehensive but in the case you can't use it or there are gaps in coverage, I'd just save the hassle and go with what they're offering locally or try to find a policy in your country that you can buy.
Read next: Curious what Icelandic souvenirs you should buy before you head home?
Do you need a 4×4?
Now that we have insurance out of the way, another common question you'll have is whether you need to have an SUV/4×4/4WD vehicle.
We ended up with a Dacia Duster with Blue Car Rental which is a 4×4. I enjoyed driving this SUV but for the weather and road conditions we encountered, I never felt like I needed the 4WD or higher stance at any time.
When do you need a 4×4?
- You plan on driving the F-roads through the highlands.
- You're driving in winter conditions and need the 4WD for better control on the snow and ice even with studded tires.
- You're travelling in a large group and need that extra interior space and have lots of luggage.
- You are used to driving SUVs back home and are looking for the familiarity.
- You're less experienced with gravel roads and would be more comfortable with a 4×4.
If you follow our 8 days in Iceland, the only precarious parts of the trip were the gravel roads to Saxoll Crater and Fjadragljufur Canyon where it had been raining, there were plenty of pot holes, and it was quite wet. It was a bumpy ride and I drove very slowly but I easily saw smaller economy and compact cars make it through with no issues.
I'm going to say what other websites shy away from saying: Most of you don't need an SUV if you're there from June – September. Cut your costs and get a smaller car.
Tips on renting a car
Here are a few handy tips to have in your back pocket when booking and picking up your car.
- Take photos when picking up – Go around the entire car, taking photos of everything and also focus on existing damage. Take photos of the interior as well if there's anything to note. This is evidence of the car's condition when you picked it up.
- Make sure everything works – Check the lights, windshield wipers, wiper fluid, signals, radio, cigarette adapter, heater and air.
- Spare tire – Hopefully you won't need it but look to see that the tire, jack, and tools are where they're supposed to be. Also check the condition of the tire to make sure it's not balding.
- GPS – Many cars like the trusty Dacia Duster we had, have it built in. It's a good back up but you'll want to use Google Maps on your phone for guidance since it'll be much easier to search and find locations. Icelandic names are incredibly hard to type on the car's local GPS. So no, it's not worth it to pay for GPS rental.
- Unlimited mileage – Pay careful attention to your booking and make sure it's unlimited mileage. Limited mileage is way too stressful and can end up costing you a lot.
- Expect a thorough inspection – They will go through your car with a fine tooth comb. I'm stating the obvious, but be careful and do your best to not cause any damage.
- Double check the transmission – Quick clicks on a website might mean you accidentally booked a manual car when you wanted an automatic one.
- Early arrivals to Iceland – Many flights arrive in Iceland before 6AM. Find out when your car rental opens so you'er either prepared for a bit of a wait or if you can head there directly.
- Rental location at KEF – Your rental company should provide you with instructions on how to get to their office. There may be a shuttle service but if it's by the airport, you're better off walking across the parking lot.
9 Tips on Driving in Iceland
1. Speed traps
The speed limit in Iceland is 30-50 km/h (18.6-31 mph) in populated areas, 50km/h (31 mph) on single lane bridges, 70 km/h (43.5 mph) in tunnels, 80 km/h (49.7 mph) on gravel roads in rural areas, and 90 km/h (55.9 mph) on paved roads.
Iceland is not a country where you want to mess around with the speed as they do have fixed speed traps and police cars that are looking to catch speeders.
The speed cameras set up throughout the island but luckily they're not hidden. There's a very clear blue sign that lets you know that there's a speed camera few hundred meters away.
Practically speaking, you'll find that most people drive between 100 – 120 km/h on the main highway known as Ring Road.
If you're curious what the fines are, take a look at the Iceland's auto fine page. If you're over 10 km/h, you're looking at $165 USD and $329 USD if you're over by 20km/h.
In the situation that you are caught by a speed camera, the rental car companies will pass along your information and you'll receive a ticket months later. If you're pulled over by the police, you can pay your fine on the spot using a credit/debit machine or you can mail it in later. I suggest you pay it on the spot to avoid incurring fees.
2. Filling up
There are plenty of gas stations along the Ring Road but they work a little differently than what you expect.
Gas is expensive – You won't have too much say on this matter since you'll have to fill up but factor this in your budget. In 2022, it's roughly 202.9 – 237.1 ISK per liter which translates to $6-7 USD per gallon.
Know your credit/debit PIN – All machines in Iceland require a PIN, gas stations included. If you can, make sure you set up a PIN on your credit card, otherwise, it will be declined. A good back up is your debit card, but again, make sure you have a PIN. If the pump is giving you issues, you can try to get the attendant to process payment.
Prepaid gas cards – Worst-case scenario, if your cards give you trouble, gas stations such as N1 sell prepaid cards in 3,000 and 100,000 ISK denominations. I recommend you buy 3,000 ISK at a time.
Hours of operation – Gas stations are mostly 24/7 but it may not look like it. Thee building will be closed at 8PM (or later) but the pumps themselves remain on.
Don't wait to fill up – While there are a lot of gas stations, there are still stretches where you won't see one for awhile. Don't let your tank get close to the red line. Learn from the mistake we made in New Zealand and fill up often. If you're at half tank, fill it up. You definitely don't want to be stuck in the middle of nowhere with no gas.
3. Where are you allowed to drive?
For most of you, you'll be driving on the standard paved roads and sticking to the Ring Road. These are paved, extremely well maintained, and easy to drive.
Splintering away from these paved roads are typically gravel roads that leads to some sort of sight or attraction. You are allowed to drive on these roads but make sure to drive slowly and be mindful of pot holes. On our trip to Iceland, this was needed for
TIP: On gravel roads, stay a large distance away from cars in front so they don't kick up rocks at you. Also, drive slowly when turning into gravel roads from paved roads.
You've no doubt heard about F-roads. These are designated dirt and gravel roads that cut through the interior of the island. These are legitimate roads but they're only open in the summer and a 4×4 is mandatory. These are legal roads to drive but you need to be prepared and rent the right car.
You are not allowed to go “off road”. This means going off designated roads and onto the natural landscape. Not only is it illegal, you'll also do irreparable damage to the ecosystem so just don't do it even if you see someone else do it.
4. Don't get surprised by the tolls
Iceland is known for a country that doesn't have any fees for national parks or large stretches of tolled roads but there is in fact one toll that can come out of nowhere if you're not prepared.
- Vadlaheidargong Tunnel Toll – This is located in North Iceland and connects Eyjafjordur Fjord with Akureyri. The cost is 1,500 ISK and you pay online. There's a 3 hour window you have to pay after you drive through. If you know you're going to use it, pay the day before. If you forget to pay, the bill will be sent to your car rental company and you'll incur a service/handling fee (4,500 ISK for Blue Car Rental)
- Hvalfjordur Tunnel Toll – This is the most common tunnel you'll encounter to shave off tons of time to get up to Snaefellsnes and Westfjords from Reykjavik. The good news is that since September 2018, this has been turned into a free tunnel.
- Icelandic National Parks – There's technically no toll but Thingvellir National Park and Skaftafell National Park both have a parking fee which you can pay for online.
5. Driving etiquette
Every country has their own unspoken and spoken rules so it's good to make note them before you hit the road.
- Single lane bridges – There are quite a number of these in the south. Whoever closest to the bridge has the right of way. If you see another car coming, stop at the drawn line and let the oncoming car drive through. If you're on a long bridge, there may be pullouts built in so use those if you need to.
- Lane passing – If you need to pass a slower car, show intent by using your left blinkers, speed up, and once you've passed the vehicle, turn on your emergency blinkers for two flashes to thank the car that you just passed. Of course, only pass when it's safe and not at bends or uphills.
- Night time driving – Turn on your low beams when driving at a minimum. On stretches where it's very dark, you can use high beams. If you see an oncoming car, change from high beam to low beam so you don't blind the oncoming car. While not a local etiquette, around blind bends, corners, and on single-lane bridges, I always honk and flash the high beams to let other cars know that I'm there.
- Headlights – By law, car headlights (low beams) must be on day or night. Rental cars should be adapted for this but it's good to check to make sure.
- Roundabouts – You'll find many two-lane roundabouts in Reykjavik and you need to know that the inner lane has right of way over the outer lane. As a rule of thumb, use your blinkers when you are leaving the roundabout but not when you enter it. When you plan on exiting on the first exit, stay on the outside lane but if you're planning on exiting later, go to the inside lane. If you happen to be in the outside lane but don't exit on the first exit, signal towards the inside lane (but don't actually change lanes) and switch blinkers when you want to exit.
6. Side of the road stops
With so much incredible beauty around you, I don't blame you for wanting to stop on the side of the road to take photos.
You can do this but do it safely:
- Pull over fully onto the side of the road. Ideally look for extra wide pull overs or turn into sideroads.
- Turn on emergency blinkers.
- Stay away from the road when taking photos.
- For those returning to the car on the road-side, make sure the way is clear.
- Do not pull over when it is dark, there's poor visibility, or when the road is not clear (ie. snowbanks).
- Do not take photos in the middle of the road
- Do not stop the car in the middle of the road
7. Road conditions can change in a flash
The weather is wildly unpredictable in Iceland. You could be driving in cloudless sunny skies in one moment and then deal with torrential rain in the next.
While you certainly can't control it, you can plan for it. It's highly recommended that you check Iceland's SafeTravel page and their travel conditions map to see what roads are open/closed/have warnings. Subscribe to text messages as well during your trip. Another handy site to use is Road.is which covers road conditions and weather in great detail. Lastly, there's a Veður app on iOS and Android that's handy to have on your phone.
TIP: Bookmark both pages so you can pull them up on your phone quickly!
When bad weather is predicted or there are potential road closures, plan ahead of time by driving around it, letting it pass, or through it (carefully).
High winds are something that can pass through and so you'll feel your car pull a certain way so you'll have to compensate. Also, be careful with your doors because they can swing wildly in the wind.
8. Watch out for animals on the road
While it's not that common, you may encounter wild animals and livestock on the road.
Pay attention when driving and slow down for any animals crossing the road.
9. Driving in the winter
Whether you're chasing the Northern Lights or fascinated by how dramatic the landscape can be in the coldest months, understand that Iceland is completely different in the winter.
Conditions can change even more dramatically and accidents are more frequent. Stay safe with these winter driving tips.
- Get a 4×4 – I know, I said that 2WD cars are fine but in heavy snow and ice, you'll need all the traction you can get with a 4×4.
- Studded tires – Since snow chains aren't allowed in Iceland, make sure your rental cars are equipped with studded tires. Most reputable companies will have this in place from November 1 to April 15 as they're actually not allowed outside of this time period.
- Drive slow – Go way below speed limit and don't get intimidated by fast local drivers.
- Planning is even more important – Be informed of road conditions, weather, and road closures with Road.is and SafeTravel.is.
- Avoid driving at night – It might not be possible if you're out for the Aurora Borealis but try not to if you can.
- Pack an emergency kit – Car rental companies don't have this as an add on but if always make sure you have a good stash of snacks, first aid kit, extra clothes, and something like this trail quilt.
- Black ice – This forms at around 0°C so drive even more cautiously because even roads that look clean can have deadly ice.
10. Know your road signs
Here's a collection of Icelandic road signs put together with English translations.
6 Common Mistakes Driving in Iceland
From personal experience and talking to other travellers that have been, these are easy mistakes to make when driving in Iceland. Knowledge is power!
- Not booking your car rental early enough – Procrastination gets the best of us and car rentals will either shoot up in price or run out of supply. Immediately after you've booked your flight, book your car rental.
- “Auto” light settings is not enough – By law, lights are required at all times, all year round. Don't rely on the “auto” setting and set it to be permanently on. At the same time, make sure to turn your lights off when you turn the car off so you don't accidentally drain your car battery.
- Car seats – FYI, children under 135cm are legally required to use car seats
- Relying on Google Maps – Earlier, I said that your phone's GPS is way better than any car GPS. This is true but we did encounter some strange behaviour. In some instances where you're looking for something that's really off the beaten path (i.e. Seljavallalaug Pool), you might have an English name or maybe an Icelandic name. What do you do when you don't get a result? This is when you'll want to prepare ahead of time the longitude and latitude coordinates. This is much more accurate than even an obscure Icelandic road name and number.
- Living with a faulty car – Make sure to try everything in the car before you drive off the lot because once you leave, you're not coming back until the end. In our case, we found out that our cigarette adapter was broken and we needed it to keep our devices charged with this handy device. We immediately asked to get a different car. I'm thankful we did because with our long days of driving, we could have a constant rotation of battery top off. Since you'll likely arrive at your accommodations late each day, you'll only get to charge a limited number of devices.
- Not getting insurance – Between car insurance and travel insurance, I strongly recommend that you make sure you're covered.
5 Apps You Need To Download For Iceland
Since you'll most likely be relying on your smartphone for navigation and other travel-related assistance, you'll want to make sure you load everything up before you leave home.
- Google Maps – The tried and true navigation app with the most comprehensive data around points of interests, roads, and features like street view. Before you go, make sure you use the “Ok Maps” trick to save the entire island offline. You can also create custom Google My Maps ahead of time and access them through the app. Note that you'll need data to see all the pins though.
- Waze – I am not sure if that many locals use the app so using it to spot police speed traps but if you're used to using this for navigation, Waze is a great alternative although it is less detailed.
- Maps.me – As we talk about in the best offline map apps for travel, this is a great alternative with excellent offline capabilities. Download it, save the Iceland map offline, and use this is a back up.
- Veður – This is an Icelandic app that presents weather conditions on the island. You can download this for iOS and Android.
- Spotify – This just happens to be my music streaming app of choice but whichever it is, make sure to download the songs for offline use because if you don't, you're going to be burning a LOT of data. Trust me, I've made that mistake before.
Bonus: A few of these have been mentioned before but make sure to bookmark Road.is, SafeTravel.is, and Vedur.is (for forecasts and aurora forecasts).
Are you hiking?: If you plan on doing something like the Laugavegur Trail, make sure you have the Gaia GPS app and the Premium Membership (discount included) so you get offline maps.
5 Things You Need To Buy For Your Iceland Road Trip
Here are a couple of things you'll want to buy and pack at home before you head to Iceland.
- Dock for your phone – You'll be relying on your phone for your for navigation and so you'll want it in view when you're driving. Normally, I'd recommend a car vent mount like this one but I learned from my trip to Iceland that this type of clamp doesn't work for a car like the Dacia Duster. Instead I recommend this type of mount which has a locking mechanism to clamp onto an air vent.
- Cigarette adapter USB outlets – You'll likely have one USB outlet but won't be enough to charge all of your gear so multiply this with a simple cigarette adapter. Most cars have at least 1 or 2.
- AUX cable – I know it feels old school to still bring an AUX cable but this is the tried and true way to jam to tunes in the car. For iPhone users, yes this means having your lightning headphone jack adapter.
- Snacks from home – Yes, you can buy cheaper snacks at the discount grocery store, Bonus, in Iceland but if you want to keep costs low, why not bring a bunch of snacks from home to munch on. Think granola bars, trail mix, chocolate, candy, and healthy snacks.
- Portable wifi hotspot – You're going to be hitting the ground running when you land in Iceland and you really won't have time to mess around with buying a prepaid SIM even though Siminn offers one that you can ship to your hotel. Your best bet is to buy a Skyroam hotspot that you can share with everyone in your group and rely on your home SIM to receive text messages if you set a notice up with SafeTravel.is (free to receive SMS).
Frequently Asked Questions
Yes, you can pay for car rentals with credit cards that include but are not limited to Visa, MasterCard, American Express, Union Pay, Discovery, Diners Club, and JCB. Debit card is also accepted in some situations.
If you're confident that your plans won't change, paying in advance is perfectly fine because it comes with some savings typically. However, if you'd like to stay more flexible, paying later is recommended because you never know what might happen. That said, you'll find that most car rental agencies and platforms like RentalCars require a deposit (15%).
The simple answer is yes, you absolutely need it because of the unique road and weather conditions but the more complicated answer lies in what type and from where so make sure to read the article for a more in-depth answer.
Yes, you can add an extra driver. Cost varies but as a guideline, it's roughly around 900 ISK ($7 USD) a day.
The VAT in Iceland 24% and is included in the listed price.
This comes down to this being an island nation where import costs are expensive in addition to high taxes. Combine that with the high demand for limited supply of cars means that car rental rates can be higher than most other countries but is certainly not unreasonable.
There are no tolled roads in Iceland, only 1 tolled tunnel which is in Northern Iceland, Vadlaheidargong Tunnel.
112. There's no national road assistance but SafeTravel.is is handy to have access to and sharing your plans if you're planning on going somewhere off-the-beaten path. Some car rental agencies have their emergency breakdown assistance service so make sure to note those phone numbers as well.
No, this is not allowed in Iceland.
No, an international drivers license (aka international drivers permit) is not required to drive in Iceland. The only exception are in countries that don't use the Latin characters and one is needed for translation (i.e. Russian, Chinese, Japanese, Korean, etc.).
They drive on the right hand side of the road which is the same as in Canada and the US.
The minimum age is 20 years old for 2WD and 23 years old for 4WD and vans. Some car rental companies charge a young driver fee if you're under 25.
There are many parking zones in Reykjavik, multi-level car parks, lots, and street parking that are divided into 4 zones (P1 – red, P2 -blue, P3 – green, P4 – orange) with the closest zone, P1, being the most expensive. Parking is free on Sundays. Also, if you're outside of the P1-P4 zones, you are free to park anywhere.
Icelanders are capable drivers with experience driving in extreme conditions but are known to pull to an outside lane to let someone pass.
The alcohol limit is 0.05% but there have been talks to reduce this to 0.02%. This means you pretty much can't have any alcohol in your system as it's so hard to gauge your blood alcohol level at such a low level. The fines (100,000 ISK = $826 USD) are incredibly high and not worth it.
Most gas stations are open from 8AM to 8PM but self-service is open 24 hours.
Iceland is quite easy to drive around its cities, towns, and along the main Ring Road. Where things get a bit more challenging is when you take any of the smaller gravel roads where there may be pot holes and traction is tricky. Of course, the most challenging driving comes in extreme weather like rain, ice, snow, and wind storms so extreme caution is required.
1) Headlights must be on at all times, 2) seat belts are mandatory, 3) children under 135cm are required to use appropriate car seats, 4) Using a cell phone while driving is not allowed.
Every car rental company offers something different but typically it's a mix of wifi hotspots, GPS, and various seats for children. Unless you need a child/baby seat because you didn't pack one, I would recommend relying on your smartphone for GPS and to purchase your own hotspot for your trip ahead of time. You can also get a local prepaid SIM card from Siminn.
Yes, almost all cars in Iceland have USB and AUX ports in addition to Bluetooth. That said, if you're renting from a company that has a really old fleet of cars, you should double check.
Yes, all cars are equipped with heated seats.
To return your car rental in Iceland, you go to the office (near Keflavik International Airport most likely) and drop off your car. The staff will do a thorough inspection of the car, you'll receive your receipt, and if available, you'll get a shuttle to the departure hall. If you're returning outside of operating hours, there is typically a key box to drop off your car keys.
Yes, most car rental companies have key boxes that allow you to drop off the car even when they are closed. If you plan on doing so, make sure you let the agency know ahead of time and re-confirm the process when picking up your car.
If you've picked up your car already and want to return it ahead schedule, don't expect to receive a refund. The only exception is if you made these changes before you pick up the car.
For Blue Car Rental, their policy is that you can cancel more than 24 hours ahead of the booking for a full refund. If you no-show or you cancel within the 24 hour window, they will charge the full amount.
Yes, it's possible but it will depend on the availability of cars. If it is available, they'll extend your contract via e-mail or phone and the extra charge will be applied.
Yes, many companies will take a deposit via an authorization on your credit card in the case you don't opt for their premium insurance package. As an example Go Iceland charges 350,000 ISK which is released when the car is returned.
Depending on the company, some have a 48 hour minimum rental period.
The best time to do your road trip depends on what you're looking for. For the best weather, July and August are fantastic and days are long. If you want to have a chance to see Northern Lights and are okay with some colder weather, February, March, September, and October are great months when crowds are also smaller.
Yes, a vehicle is required to drive the Golden Circle but if you are with a guided tour, you won't need your own car.
Hopefully this answered all of your questions on how to rent a car in Iceland but if we missed anything, don't hesitate to drop a comment down below.
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