How to Rent a Car in Iceland

Quick Guide to Renting a Car in Iceland

• Most rental companies require the driver to be at least 20 years old with a valid driver's license held for 12+ months to rent a standard car (23+ for SUVs and larger vehicles)
• Basic insurance (CDW) is typically included, but strongly consider additional coverage for gravel, sand/ash, and weather-related damage due to Iceland's unique conditions
• Book 3-6 months ahead for summer travel to secure better rates and vehicle selection; prices can be significantly higher in peak season
• The Ring Road and Golden Circle are accessible with regular cars, but F-roads and Highland areas require 4x4 vehicles with proper clearance

Congratulations! You’ve just booked a thrilling trip to Iceland. We can fully understand your excitement and we know you’re itching to plan every single moment of your time in the land of ice and fire. But where should you start?

One of the most common questions amongst those visiting Iceland is whether they should consider hiring a car. If you’re looking to explore the wonders of our beautiful country, then the answer is a resounding yes! So once you’ve arranged flights and accommodation, the next item on your checklist should be to arrange a car for your time in Iceland.

The first thing you need to know is that public transport in Iceland is fairly limited. When in Reykjavík you can easily get around without access to a car, however, if you want to get out and experience anything beyond the capital city or truly explore the magnificent Icelandic wilderness, there are definitely clear benefits of renting a car in Iceland.

Why Choose Iceland Car Rental

At Iceland Car Rental, we help travelers to safely explore our incredible country by road. Here's what sets us apart from other rental companies:

• Local Expertise: As an Icelandic-owned and operated company, we understand the unique challenges of driving in Iceland and provide insider advice tailored to your route
• Transparent Pricing: No hidden fees or surprise charges. The price you see online is the price you pay, with all mandatory coverage included upfront
• 24/7 Roadside Assistance: Real people answer our emergency line around the clock, speaking English fluently and ready to help wherever you are in Iceland
• Convenient Airport Service: Pick up and drop off your vehicle at Keflavík International Airport 
• Well-Maintained Fleet: Every vehicle undergoes rigorous safety checks before rental, with regular maintenance exceeding manufacturer recommendations
• Flexible Booking: Free cancellation up to 48 hours before pickup and easy modifications to your reservation as your travel plans evolve

We're committed to making your Icelandic adventure safe, affordable, and unforgettable.

Where to Start - Iceland Car Rental FAQ

First things first, there are a few key rules to follow when hiring a car for your trip to Iceland, outlined below. 

What are some important things to know about renting a car in Iceland?

• Only rent from a trusted company with positive reviews
• Ensure the company has plenty of availability for your dates of travel
• Find out if they offer airport transfers to make collecting and dropping off your car easier
• Shop around and make sure you’re getting a fair price

What are the Car Rental Requirements in Iceland?

In order to hire a car in Iceland, there are a few requirements you must meet. These requirements act as an assurance for both yourself and the hire company. Find out these requirements and how to make the most of your vehicle in Iceland.

How Old Do You Have to Be to Rent a Car in Iceland and What License Do You Need?

As a rule, you must be 20 years old or older to hire a car in Iceland. You do not need to have an international driver’s license, but you must have a valid license from your home country with full driving privileges and you must have held it for at least 12 months. This means that a driving permit or provisional driving license will not be adequate. In addition, if you want to rent an SUV or larger vehicle, the age requirement for renting a car in Iceland is 23.

Check out our guide on Driving Age in Iceland to learn more about the regulations.

License Requirements for International Visitors

If you're visiting from outside Iceland, here's what you need to know about driver's licenses:

• UK, EU/EEA, US, and Canadian licenses: Generally accepted in Iceland if they are full, valid, physical licenses.
• Non-Latin Alphabet Licenses: If your license uses Cyrillic, Arabic, Japanese, or other non-Latin scripts, bring an International Driving Permit or an accepted translation.
• License Validity: Your license must be valid for the full rental period, and digital copies or temporary paper licenses are not accepted.

What are the insurance requirements for renting a car in Iceland?

You’ll also be required to have minimum car insurance for your vehicle. The minimum that is accepted is third-party liability insurance, which is normally included for free with your rental agreement. But just because this is included doesn’t mean that it’s suggested that you go with the minimum. 

There is additional coverage you can choose to opt for, and we’d certainly suggest that you consider this. It’s important to bear in mind that Iceland is a country of extreme weather - and not just snow. Wind can churn up significant amounts of dirt and gravel that can leave your vehicle more damaged than you might imagine. Here’s a breakdown of some of the different types of additional coverage you can opt for:

• Gravel Insurance; driving on the F-Roads and in the highlands, your 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.

When collecting your car, make sure to speak to a representative, tell them about the types of areas you plan to drive and they can advise you on any additional insurance you may want to take out. Remember, if you don’t and the car gets damaged, you’ll have to pay out of pocket for any repairs, so it’s better to be safe than sorry.

How to Choose the Right Insurance Coverage

Making the right insurance decision depends on your travel plans, risk tolerance, and budget. Use this guide to determine what coverage makes sense for your trip:

Minimum Coverage (CDW Only) - Best for:

• Best for short summer trips on paved roads, especially if you’re comfortable with the deductible.
• Best for travelers who are comfortable with a deductible and want to keep costs down.
• Short rental periods (1-2 days) in urban areas
• Budget-conscious travelers willing to drive very carefully

Recommended Coverage (CDW + Gravel + SCDW) - Best for:

• Most visitors: strikes the best balance between cost and protection
• Anyone driving gravel roads or accessing less-touristy areas
• Multi-day Ring Road trips where you'll encounter varied road conditions
• Travelers who want peace of mind without paying for maximum coverage

Maximum Coverage (Platinum/Full Coverage) - Best for:

• Best for travelers who want the highest level of protection, especially in winter or on more demanding routes.
• F-road and Highland exploration
• First-time Iceland visitors unfamiliar with local driving conditions
• Best for travelers who want the highest level of protection and the least surprise cost.
• Rental periods over 7 days where peace of mind is worth the premium

What Kind of Car Should I Rent in Iceland?

Because Iceland is a country with such varied landscapes, you’re likely to encounter a lot of different terrains depending on your plans. 

If you’re planning to stick to the areas directly around Reykjavík or paved roads like the Golden Circle and Ring Road, you’ll be fine with just about any type of car. Small city cars with no 4x4 capabilities will do just fine, however, if you plan to head onto any unpaved roads or tackle the Highlands, you’ll need a 4x4. This table will help you determine the best type of car to rent based on your plans.

Type of Rental	Main Roads?	F Roads?	Highlands	All Weather?
Car	Yes	No	No	No
Minibus	Yes	No	No	No
SUV	Yes	Yes	Yes	Yes

Find out more about How to Select the Right Car for Your Iceland Trip. 

Frequently Asked Questions About Renting a Car in Iceland

We've compiled answers to the most common questions about renting a car in Iceland. If you don't find what you're looking for here, contact our team for personalized assistance.

How much does it cost to rent a car in Iceland?

Car rental prices in Iceland vary significantly based on season, vehicle type, and rental duration. But for rough guidance, summer prices are usually higher, especially for economy cars and 4x4 SUVs. Winter and shoulder-season rates are often lower. Week-long rentals usually offer better daily rates than 1-2 day rentals. Additional costs to budget for include insurance, fuel, and extras like GPS, child seats, or WiFi hotspots. Booking well in advance for summer travel can often help reduce costs.

Do I need a 4x4 to drive around Iceland?

No, you don't need a 4x4 if you're sticking to Iceland's main paved roads. The entire Ring Road (Route 1) and all major attractions like the Golden Circle, South Coast waterfalls, and Reykjavik area are fully accessible with standard 2WD vehicles year-round. However, you must have a 4x4 if you plan to drive F-roads (mountain roads requiring high clearance), explore the Highlands, or venture onto unpaved roads in remote areas. During winter months (November-March), while not legally required, a 4x4 provides significantly better traction and stability in snow and ice, making it the safer choice for anyone uncomfortable with challenging winter driving conditions.

Can I drive the Ring Road in winter?

Yes, the Ring Road remains open during winter, but conditions can require extra preparation and caution. Snow, ice, and strong winds are common from November through March, and sections can close temporarily during severe storms. Check road.is daily for current conditions and road closures before each day's drive. Winter tires (studded) are mandatory on all rental cars from November 1 to April 14, and we strongly recommend choosing a 4x4 vehicle for better handling. Plan shorter daily driving distances than you would in summer - 100-150 km per day is realistic versus 300-400 km in summer - because speeds are slower and daylight is limited (4-5 hours in December/January). Some South Coast and East Iceland sections are most prone to closures, so build flexibility into your itinerary.

Where should I pick up my rental car - Keflavik Airport or Reykjavik?

Keflavik Airport is the most convenient pickup location for 90% of visitors. Located 45 minutes from Reykjavik, it allows you to start driving immediately after arrival and skip the $30-40 taxi or shuttle to the city center if you don't plan to spend time in Reykjavik first. Our office is just 5 minutes from the terminal via complimentary shuttle. Choose Reykjavik pickup if: you're spending your first day/night in the city and want to explore on foot, you're arriving very late/early when driving isn't ideal, or you have connecting domestic flights from Reykjavik Airport. Keep in mind that Reykjavik pickup may require you to coordinate your flight arrival with office hours, while Keflavik offers 24/7 pickup availability.

What happens if I damage the rental car?

If damage occurs to your rental vehicle, here's the step-by-step process: First, ensure everyone's safety and call 112 if there are injuries or the vehicle is inoperable. Then, contact our 24/7 roadside assistance line immediately—the number is on your rental agreement and dashboard sticker. Do not admit fault or make repair arrangements independently. If safe to do so, take photos of all damage from multiple angles and note the exact location and time. If another vehicle is involved, exchange insurance information and contact details. Your insurance coverage will determine your financial responsibility: basic CDW (Collision Damage Waiver) covers major damage but includes a deductible; SCDW (Super CDW) lowers it significantly; Platinum coverage offers the highest protection with little to no out-of-pocket costs. Damage from negligence (off-roading, driving in unauthorized areas, river crossings without approval) voids all insurance and you're liable for full repair costs plus loss-of-use fees.

How far in advance should I book my rental car?

Booking timeline significantly affects both availability and pricing. For summer travel (June-August), book 3-6 months ahead to secure better rates and vehicle availability—popular types like fuel-efficient cars and SUVs often sell out months before peak season. During this time, prices tend to rise noticeably the longer you wait. For shoulder season (May and September), 2-3 months advance booking is usually sufficient. Winter travelers (October-April) have more flexibility and can often book 4-6 weeks out with good options. Last-minute bookings (1-2 weeks before arrival) are risky in summer—you may face higher prices and limited vehicle choices. Our free cancellation policy (up to 48 hours before pickup) makes early booking low-risk to lock in rates.

Ready to Explore Iceland?

We're the experts when it comes to all things driving in Iceland. If it's time to hire your car in Reykjavík, our fleet is ready and waiting. Browse our rental cars to find the perfect vehicle for your adventure. Let's hit the road!

Have more questions about car rental in Iceland? Visit our comprehensive FAQ page or contact our team for personalized advice tailored to your specific trip plans.