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Driving In Iceland – Your Ultimate Guide to Renting a Car

One of the best ways to travel around Iceland’s diverse landscapes while making sure that you can see all of the sights is to hire a car. Iceland is prone to adverse weather conditions - in all seasons, and that can affect your trip. If you are planning on heading to some of the more remote locations around Iceland, such as the rugged Highlands, then these are almost impossible to reach by public transport. 

Car rental also allows you to set your own schedule, so you are much more likely to squeeze more sights into your short trip. When you can set your own timeline, you can avoid the crowds heading out on large coaches and organised tours. But it’s important to know how to get the most out of your rental car.

Choosing a Rental Car in Iceland

The first thing that you have to think about when renting a car in Iceland is what kind of car you’re going to choose. This is because you will find a wide range of cars, SUVs and even minibuses for hire in Iceland at varying price points. While the obvious choice is to base your decision on price, there are several important factors you shouldn’t ignore.

Type of Rental

Main Roads?

F Roads?


All Weather?

















Although this might seem like the SUV is the best option when travelling to Iceland, it really does depend on your plans. Many of the main attractions, such as the Blue Lagoon, Golden Circle route and sights in Reykjavik, are all accessible via main roads, which are navigable with ease in a hatchback. If you plan on being more adventurous during your time in Iceland, then you should think about an SUV as these are able to navigate all terrains in Iceland and in most normal weather circumstances. The added benefit of a campervan is that you can, of course, use campsites around the country, saving money on hotels.

Should I Get Insurance When Renting a Car In Iceland?

One of the biggest tips we can offer when renting a car in Iceland is to make sure that you get insurance. It’s important not to skip this part, as it is essential you have the right kind of coverage or you could be left with a nasty bill should the worst happen. Even if you have your own insurance coverage through a bank account or credit card, insurance often only costs a little more on top of rental car costs and makes things much easier. 

Although many rental companies offer some insurance included in the price of the rental, you should also check what this includes as there are many additional extras that could end up costing you. Some additional insurances you should consider include;

  • Gravel Insurance; driving on the F Roads and in the highlands, you car can get damaged from loose gravel, especially from the cars in front of you.
  • Sandstorm Protection; although this is not a regular occurrence, if you do encounter a sandstorm this can damage your car.
  • Zero Liability; most insurance providers will only cover you up to a certain cost of damage as standard. If you have a serious accident you could be left with a hefty bill.

Getting Around Iceland By Car – GPS & Maps

A big concern for people thinking about car rental when heading to Iceland is whether or not they will be able to find their way around. But getting around Iceland by car is actually a lot more straightforward than you might initially think. The main Ring Road that runs around the outside of Iceland can actually take you to most of the famous attractions around the country. 

Cell phone coverage in Iceland is actually also quite good, so you can use your phone for directions while on the road. You can also save routes on Google Maps for offline viewing too which can be handy to save data and in case signal coverage drops off. Many rental cars are also available with built-in GPS so you don’t have to worry about finding your way around.

What Are The Driving Regulations In Iceland?

Driving regulations vary between each country so you should make sure that you familiarise yourself with the laws of the road before travelling to Iceland. It is important that you abide by the rules of the road as legal penalties can be quite severe. We have put together a list of the driving laws you should be aware of;

  • Speed Limit: 90 km/hr or 55mph on most of the Ring Road, which is slower than elsewhere in Europe. It is 80 km/hr or 50mph on gravel roads but you will want to go slower.
  • Residential Areas: most of the residential areas in Iceland have a speed limit of 50 km/hr which is roughly 30mph.
  • Zero Tolerance on Drink Driving: you can’t have more than 0.05% blood alcohol content, which means you cannot drive after having a drink. You will also have to leave enough time for the alcohol to come out of your blood content before driving again.
  • Off Road Driving Is Illegal: although it might seem tempting to get closer to an attraction, off-road driving is actually illegal and extremely frowned upon.
  • Headlights Should Always Be On: due to many months of darkness in Iceland it is law that your headlights must always be on.
  • Rental Age is 20: you will need to be at least 20 to rent a car but this goes up for SUVs as you will need to be at least 23 to rent one of these.
  • Call 112 For Emergencies:  in case of any emergency like a collision or a sudden change in your health, call 112 for assistance.

You should also be aware of speed cameras around the country as fines for speeding can be very expensive. What’s more, the insurance company will generally charge your credit card for these costs before you leave. Fines can vary massively from $80 to more than $1000 for excessive speed so make sure to take notice of warning signs.

What Driving License is Needed to Drive in Iceland?

A full UK, US or European license is all that’s needed to drive in Iceland as a tourist, providing you have held it for at least 12 months. There are no requirements for an international driving permit or license, however, your license must have a legible license number as well as the full name and full address of the holder.

As mentioned above, there is also a minimum rental age of 20 to rent a standard car or 23 to rent an SUV, despite the fact that in some countries, a valid driver's license can be obtained from 16 years of age.

Driving Hazards In Iceland – What To Be Aware Of

Many areas of Iceland are rural and remote and you are likely to encounter some driving hazards that you might not have come across elsewhere around the world. One of the best tips is to take caution when driving in Iceland to make sure that you spot any hazards you might encounter before you come to them. Some of the top hazards include;

  • Single-lane bridges and tunnels; there are a few of these dotted around Iceland and they can be confusing for visitors. If traffic is coming in the opposite way, then you must pull over to the designated area and wait until the way through is clear
  • Rivers and Creeks; some of the roads in Iceland are intercepted by rivers and creeks that can be treacherous to cross. If you don’t know how deep it is or haven’t seen a car cross, then don’t attempt it to be safe.
  • Sheep; one of the most common things you see when travelling around Iceland is the abundance of free-roaming sheep, horses and goats. They can sometimes occupy the road so take caution.
  • Gravel Roads; some of these roads can be loosely gravelled and deeply rutted, so take extra caution when travelling on gravel roads around Iceland. Travel slowly and make sure you are vigilant.

Driving F-Roads and Gravel Roads In Iceland

The F-Roads in Iceland are highland access roads that are only open during the summer months when the weather is good. These access roads allow you to explore much more remote locations around Iceland but they are much more difficult to navigate and require an SUV by law. You are likely to encounter a number of obstacles such as snow, ice, mud and even rivers so don’t attempt these routes with a normal car. You are likely to encounter many gravel roads on the way to the many attractions around Iceland. Make sure you take plenty of caution and drive slowly on these roads even if the speed limit is high.

Other Top Tips for Driving In Iceland

By following our guide to driving in Iceland, you shouldn’t have any trouble and should be able to travel around the country with relative ease. If you abide by laws and plan your journey beforehand, then you shouldn’t have any problems driving around Iceland. Here are just a few more tips that could help you when driving around Iceland;

  • Plan Petrol Stops: many petrol stations around the ring road can be few and far between so it is important that you plan on fueling up well in advance.
  • Check the Weather Forecast: you should make sure that you regularly check the weather forecast as this can change suddenly without warning.
  • Don’t Stop On the Road: it can be tempting to stop in order to capture a great picture, but this can be very dangerous, even if the road seems empty.
  • Plan your Parking: Most destinations in Iceland offer free parking, however, if you are parking in Reykjavík then you will need to be aware of the different zones and restrictions that are in place.