Driving in Iceland is not only a necessity, it’s also a big part of the fun! Imagine driving mile after mile surrounded by nothing but moss-covered lava fields with Icelandic sheep and waterfalls everywhere you look.

Nevertheless, renting a car in a foreign country is always a bit intimidating since every country has their own rules. You may be wondering, what is gravel insurance and do I need it? Do I need an SUV or 4WD Vehicle? And what are F-roads? There are many questions when it comes to renting a car in Iceland, so I’ve put together this guide to cover some of the primary items you’ll need to consider.

Recommended Reading

• Our 9-Day Trip Around Iceland’s Ring Road
• Roughing It in Iceland: Wild Camping, Campsites, and Campervans
• Our Destination Wedding in Iceland
• All other Iceland-related posts

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About the Ring Road

If you’re planning on venturing outside of Reykjavik, you’ll likely spend some time driving on the on Route 1, or the Ring Road as it’s often called.

As its name suggests, the Ring Road is a highway that circles the entire country. It’s well-maintained and well-marked, making it nearly impossible to get lost. Even in the winter, the majority of the road is plowed and accessible. The vast majority of the road is two lanes wide with a speed limit of 90 km/hr (roughly 55 mi/hr). Route 1 is about 1,300 km (or 830 miles) long and therefore takes around 13-14 hours to drive. 

Speed enforcement cameras are widely used around the country, so it’s important to monitor your speed and pay attention to posted speed limit signs. Even when there’s no one around, your speed may still be monitored by satellite — several of the guests that attended our Iceland wedding were surprised to receive speeding tickets in the mail weeks or months after returning home.

Do I Need to Rent a 4WD Vehicle?

Before renting a car in Iceland, you will need to have a general itinerary or route planned for your trip in order to determine whether or not a 4WD vehicle will be necessary.

SUVs and other 4WD vehicles are much more expensive than your standard sedan or compact car and many car insurance companies won’t cover off-road vehicles, meaning you may end up needing to purchase additional coverage from the rental company. Your rental car is likely to be your biggest expense, so it’s important to understand what’s necessary for your trip.

Some roads in Iceland, called F-roads, are only accessible to 4WD vehicles. These roads are indicated on maps with an “F” before the name of the road and are primarily located in the highlands, which is the inner, unpopulated part of the island. F-roads are usually gravel roads with ruts and other obstacles (some even require fording rivers to pass).

It’s a good idea to check weather conditions before setting out on an F-road — call 1777 or visit www.road.is for the latest. These roads are only open in the summer months as well.

The majority of visitors to the country don’t enter the highlands and therefore won’t encounter any F-roads on their trip. If you’re planning to take the Ring Road route, a standard car is all you’ll need.

Rental Car Companies

Many of the usual car rental companies have locations at Reykjavik’s Keflavik Airport, including Avis, Budget, Hertz, Thrifty, Sixt, and Europcar. There are also a number of local car rental companies with competitive rates (especially for 4WD, SUVs, and other specialty vehicles). We’ve rented from both Thrifty and Budget as well as a family-owned company called Ice Rental 4×4.

Our favorite experience was with Ice Rental 4×4. A representative from the company met us at the airport to hand off the vehicle — the whole process was efficient and straight-forward. They also had the best rates we found anywhere for a 4WD vehicle. We rented the compact Suzuki Jimney for our 9-day trip around the Ring Road.

We had a very bad experience with Sixt, who charged us over $400 for an imperceivable dent on the drivers-side door. Their customer service was also very off-putting and unprofessional. Luckily, we our credit card insurance reimbursed us for our expense, which brings me to our next topic…

Insurance

Check with your credit card company before booking to determine whether or not you will have coverage with your rental car in Iceland. The company will need to know the type of car (make and model) — luxury cars and some SUVs will likely not be covered by your plan. Also, some insurance policies exclude certain countries, so be sure to check that Iceland is on their list of approved countries.

Rental car companies in Iceland are required to provide Collision Damage Waiver (CDW) as a part of the standard rental contract. Most credit cards will require that you decline CDW in order to be covered by their insurance. Since this coverage is compulsory, you may have an issue fully declining the coverage (some companies allow you to, others don’t). We’ve always just called the credit card company before our trip to discuss this issue.

When we spoke with Visa, they understood the mandated CDW situation in Iceland and said to try to cancel it if we could, but if not we would still be covered. Luckily we had no issues getting reimbursed by the credit card after Sixt’s damage claim.

As with any rental car, always take pictures at the start and end of the rental period. These were a huge help in streamlining the reimbursement process. Also, if damage is reported when you drop your car off, don’t sign anything. Sixt made us to believe we had to sign paperwork then and there outlining the damage, which we did begrudgingly. The credit card company was able to work around this, but told us to refuse if we ever find ourselves in the same situation in the future.

Supplemental Insurance

The rental car company will offer you a number of options for supplemental insurance, some of which you’ve likely never encountered. The two most common are gravel protection and sand and ash protection.

• Gravel Protection will cover damage to the windshield caused by gravel. If you’re plan is to stay on the Ring Road and not venture into the highlands on F-roads, then this insurance is likely not necessary. Gravel Protection insurance does not cover damage and dents to other parts of the car. For this reason, we haven’t opted for the gravel protection and have had no issues to date, although as with any insurance you should consider your own risk aversion.
• Sand and Ash Protection covers damage done to the finish of the car by sand and ash. Some parts of the island (such as the southern coast) have large amounts of small particulates that can cause damage to your car if the winds are strong enough, essentially sand-blasting the car. This is possible even if driving on the Ring Road, although windy conditions extreme enough to cause this are uncommon. With some planning and a flexible itinerary, you could easily wait out any unfavorable conditions before crossing sandy and ashy stretches of road in the off chance that there are higher-than-usual winds.

Other Things to Consider

• You drive on the right side of the road in Iceland. For additional info on the Rules of the Road, click here.
• As is the case in most European countries, manual transmission is the standard. You’ll therefore pay a premium (and will have fewer choices) for an automatic car.
• The majority of gas stations you’ll encounter will require that you use a credit card with a PIN. You can call your credit card company to assign a PIN to your card before your trip. In the less-populated parts of the country, gas stations are few and far between and are sometimes unattended, so be sure you have your PIN set up before your trip.
• Be sure to try the gas station hot dogs! Trust me, these are high-quality hot dogs and are delicious.

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