What You Need to Know About Renting a Car in Iceland

Renting a car in Iceland gives travelers the ultimate freedom to explore the island without being tethered to a tour company’s schedule, or having to share the experience with a busload of fellow travelers. However, renting a car in Iceland comes with a unique set of challenges. The weather is unpredictable; the roads can be icy; and cars can encounter sand, ash, and loose gravel, which can damage cars. It’s important to research the many companies that offer cars, learn about the various insurance options, and select the right car that is appropriate for your trip.

The first mistake many travelers make is to simply go for the smallest car at the cheapest rate, forgoing extra insurance. It’s tempting, since car rental prices remind you that you are very much on an island with very little price competition. Some tourists think it’s wildly expensive to rent a car and pay for insurance, while gas prices are sky high compared to their home country. Going for a small, economy-size option might work for staying within Reykjavik, but if you plan to venture to the countryside, there are many different things to consider.

Easy driving on a summer evening in Iceland.
Easy driving on a summer evening in Iceland. Photo © topdeq/123rf.

If you plan on traveling on well-paved roads, such as the Ring Road, a compact car is often the best and cheapest option. However, if your trip includes a visit to the Highlands (only possible in the summer), don’t try to get away with renting the cheapest option. If you try to bring a compact car into a region that requires a 4×4, expect damage to the car at best, and being stranded and needing to be rescued at worst. Be smart and always be prepared. Interior roads are called F-Roads, and they require a 4×4 due to river crossings and incredibly rocky terrain. F-Roads are only open during June—the exact date depends on how much snow fell in the interior during the year. Check www.road.is for road openings.

So, which insurance options should you go for? Car rental companies in Iceland provide full insurance for each rental, which is the basic third-party insurance option. For an additional cost, drivers have access to extra insurance that includes a collision damage waiver. Lastly, there is Sand and Ash Protection (SAAP) insurance, which is pretty unique to Iceland. Remember the Eyjafjallajökull eruption in 2010? Because of the eruption, large parts of south Iceland were covered in ash and sand, which can cause significant damage to cars. The damage to cars can range from ISK 500.000 to ISK 1.500.000, but with SAAP insurance, your self-risk liability is typically set at a maximum of ISK 90.000. The details vary by car rental agency. If your travel plans include south Iceland, which includes the Golden Circle and other popular attractions, it’s a good idea to consider SAAP insurance. Be sure to choose the right insurance for the region you plan to travel to.

After you select your car and insurance package, make sure you are informed of the current weather and road conditions. Two websites to always consult are www.vedur.is for weather forecasts and www.road.is for road closures and weather warnings.

A 4x4 crossing a river in Iceland.
If you try to bring a compact car into a region that requires a 4×4, expect damage to the car at best, and being stranded and needing to be rescued at worst. Photo © Nadezda Murmakova/123rf.

Driving in Iceland can range from peaceful to harrowing, depending on the weather and time of year. The weather in Iceland can change quite quickly, so be sure to always check road conditions before you head out on a trip. If you are not an experienced winter driver, it would be the safest option to consider joining tours instead of renting a car. The winter, which begins in September and stretches to April, can bring snow, rain, sleet, ice, black ice, and wind gusts that blow cars off the road. Iceland is not the place to learn how to drive in winter.

Campervans and motorhomes are popular for those that enjoy camping, but keep in mind that campsites are only open during the summer and wild camping is not allowed. Therefore, campervans should only be rented during the summer months.

You can rent a car in advance or at the rental office at Keflavík International Airport when you land, at BSÍ bus station, or within Reykjavík once you’re settled. It’s recommended to arrange your rental in advance as some dealers sell out early and you can get the best deals in advance.

Travel map of Iceland

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