Driving in Iceland
Some say cars are essential to travelling in Iceland. There are no trains or undergrounds anywhere. To get from A to B you’ll need to walk, cycle, drive, take a taxi or take a bus. For some destinations you’ll also need to take a ferry or a plane (the small islands surrounding Iceland).
- Find the cheapest car rentals in Iceland: Car rentals in Iceland
- Find a 10 day self drive tour in Iceland: Ring road self drive tour
Even though the country’s population is only 330,000 people, the size of the country is not that much smaller than the whole of England – and it is bigger than Portugal and about two and a half times the size of Denmark.
Iceland’s main attraction is its countryside, so whereas it’s perfectly fine to walk or cycle within the capital city, the best way to get out of the city and explore the nature is to go by car. Taxis are very expensive – and surprisingly, buses are too.
There are not many bus routes in the country and they are infrequent and more or less only operational during summertime. If you are traveling on your own, it may be cheaper to travel by bus – but as long as there are 2 of you or more, renting a car in Iceland becomes a cheaper option – and obviously providing you with much more flexibility and fun.
Car rentals in Iceland
Iceland has a paved ring road around the island, accessible by any type of car. There is only one lane going each way and there are very few cars on the road. Traffic jams are unheard of in Iceland.
If you’re adventurous and plan on taking a self drive tour to access some of Iceland’s highlands, then you’ll need to be driving a 4x4 WD. Take notice that off-road driving is illegal in Iceland, as it damages the delicate nature, and is punishable with very high fines, which will likely be more than the cost of your entire trip. Driving on highland tracks is not considered to be driving off-road and is not punishable by fines - only if you leave the track and drive in the unspoilt nature.
There are several car rentals in Iceland, offering a variety of cars to choose from. 5 seater 4WD SUV’s or mini trucks are popular outside city limits, such as Subaru or Toyota, with plenty of luggage space. The Cheaper 4 or 5 seater, Yaris, is popular within city limits and on paved roads, although those are smaller and don’t have much luggage space.
Frequent questions about driving in Iceland
How old or young do I have to be to rent a car in Iceland?
There are some age requirements for renting a car in Iceland. The minimum age to rent a passenger car in Iceland is 20. The minimum age to rent a 4WD or a minibus is 23. You must present a valid driver’s license held for minimum of one year at the time of rental.
What else do I need to know to rent a car in Iceland?
You need to have a credit card, a driver’s license in English (or with an official translation) and driving experience of more than one year to rent a car.
The one who reserves the car does not need to be the driver. You will be asked for a credit card and the driver’s license upon delivery of the car.
How does picking up or dropping off the car work in Iceland?
Depending on which car rental company is listed on your voucher, a person may be waiting in the arrival terminal with a sign bearing the rental name and the name of the rental company.
If you do not see a person bearing a sign with your name, you may need to take the airport shuttle to the rental offices near the airport. You can also arrange to go directly to your accommodation in Reykjavik on the Flybus, and have your rental car delivered to you there, but you must make arrangements for this with your car rental company before your arrival.
If you are unsure what to do, contact the car rental company for help. The phone number will be printed on your voucher. You can also visit the car rental desk within the airport yourself to begin the process.
To drop off the car at the airport at the end of your trip, please follow the instructions that the car rental representative will give you upon delivery.
To drop off the car in Reykjavik or elsewhere than the location named in your rental contract, follow the instructions or leave the car keys with the reception of your hotel and the exact location of the car with the hotel staff.
Leaving the car earlier than booked does not entitle the customer to a refund. Please notify the car rental if you are going to leave the car earlier than expected.
Do you use manual or automatic cars in Iceland?
Most cars in Iceland are manual. If you want an automatic car, be sure to ask for it.
What car insurance should I take?
CDW is often included in the car rental price, with more optional insurances such as PAI, SCDW, GP, TP, SAAP/SADW and Premium Insurance. It's advised that you add gravel protection especially if driving the south coast of Iceland past the Mýrdalssandar outwash plain on a windy day (they are located between the town Vík and Skaftafell Nature Reserve).
It is important to know that all the insurance types are based on self risk, meaning that if any damages incur that are found to be the driver’s fault, the customer is liable for X amount of the total damage, outlined in the CDW/SCDW section of their rental agreement.
Normally, CDW liability is around 350,000 ISK and SCDW is half of that. This can vary significantly across rental car companies, so be sure to ask your rental representative if you have any questions.
Some customers ask to waive the CDW since it is covered by their credit card. We do NOT recommend this because, in the case of an accident, the customer will be fully liable for all damages done to the car, people and/or property. Depending on the severity of the incident, it can be very expensive and must be paid up front.
In the case of an accident, towing of the vehicle is not covered by car insurance and will have to be covered by the customer.
Damages done to the car on F roads, regardless of the car being a 4x4 or not, are not covered by the insurance policy. Customers proceed at their own risk. We advise all our visitors to avoid crossing rivers in any vehicle, which can be treacherous at any time of year.
Any damage to tires, the body of the car, undercarriage or engine are also not covered. A few companies cover tyres, but this is rare.
In winter, all cars have winter tyres - required by law - but studded tyres are up to the car rental to install since they are not mandatory.
How fast can you drive in Iceland?
Standard speed limits in Iceland are 50 km/h (31mph) within cities, 80 km/h (49mph) on dirt roads and 90 km/h (55mph) on all other paved roads. While you may not see police cars on the roads very often, there are active speed cameras everywhere. If you go over the speed limit you may get a hefty fine.
Which side of the road do you drive on in Iceland?
People drive on the right side of the road in Iceland.
How much does gas cost in Iceland?
The price of gas (95 octane) is around 200 ISK per litre (January 2017). Diesel is a little cheaper, with prices per litre around 190 ISK. The price fluctuates somewhat and was around 250 ISK in the summer of 2014.
How much does it cost to rent a car in Iceland?
Small cars are from 5000 ISK to 20 000 ISK per day (35-145 USD or 35-140 GBP).
SUV’s are from 7500 ISK to 45 000 ISK per day (55-330 USD or 50-320 GBP).
Large discounts apply for longer rentals and prices are about 100% higher in the summertime compared to wintertime. It's advised that you reserve your car rental early as it can sometimes be hard to find car rentals in Iceland during high season.
Things to be aware of when driving in Iceland
These are some of the most common causes of road accidents in Iceland. By familiarising yourself with them you will reduce the chance of you being involved in an accident. Above all else, please drive carefully and sensibly.
- Damage to wheels and tyres by flat or under inflated tyres. Flat tyres are not covered by any insurance.
- Exiting the marked road as a result of icy conditions or visual distractions.
- Domestic animals on or crossing the road.
- Damage to doors when opened in extremely windy conditions. In a storm, you can expect average winds at 50m/s (112 mph).
- Losing traction on gravel roads. This is particularly common where the asphalt road suddenly turns to a gravel road and the driver has not reduced speed to compensate for this.
- Driving into sand and/or snowstorms or fording rivers.
Parking in Iceland
Parking spaces in most of the country are free of charge. Parking in central Reykjavík and central Akureyri may not always be free (general rule of thumb is if there’s a meter, then you have to pay!)
Stopping or parking your car temporarily (just for a short while, to take pictures for instance - not overnight) on a side of a road in the countryside can be perfectly fine if there are no lines on the edge of the road, just make sure it’s not in the way of other cars and that it’s visible from all angles (don’t park immediately below a hill or in a blindspot). If it's dark outside, foggy or for some other reason bad visibility, then make sure you put your hazard lights on so other drivers can easily see you.
Parking zones (and prices) in Reykjavik
There are four parking zones in Reykjavík. The way to know which zone you are in is to look at the P-signs that are located on lamp posts around the city. The meters and ticket machines also display which zone they are in. The basic rule is that the closer you are to Laugavegur (main shopping street) and the downtown area, the higher the zone.
Red zone: 230 ISK per hour. Mon-Fri 9am to 6pm. Sat 10am to 4pm. Free on Sundays.
Blue zone: 125 ISK per hour. Mon-Fri 9am to 6pm. Sat 10am to 4pm. Free on Sundays.
Green zone: 85 ISK for 1st & 2nd hour. 20 ISK per hour after 2nd hour. Mon-Fri 9am to 6pm. Sat 10am to 4pm. Free on Sundays.
Orange zone: 125 ISK per hour. Mon-Fri 8am to 4pm. Free on Saturdays and Sundays.
Additionally, there are 6 parking garages in central Reykjavík that permit temporary parking. They are open from 7:00-24:00 everyday. Those are: Stjörnuport and Vitatorg (80 ISK first hour, then 50 ISK hourly), Kolaport, Vesturgata, City Hall and Traðarkot (150 ISK first hour, then 100 ISK hourly). Find updated availability for Reykjavík's parking garages here.
There is also additional parking available underneath Harpa Concert and Conference Hall, the price is a little higher, or 225 ISK hourly.
Flexibility in booking an Iceland car rental
Most rental car companies in Iceland are flexible with pick-up and return dates, as well as pick-up and return locations. If you are working with a good rental company, flexibility is almost never an issue. Usually you can pick your car up at Keflavík International airport (40 minute drive from Reykjavík) and drop it off there for a small extra fee.
If you are unsure of the length of time that you wish to rent your car in Iceland, you should ask the car company about their flexibility when determining which company to book with.
It is advisable to book in advance, especially for the summer season and if you want a specific car – but you are very likely able to rent a car in Iceland with a day’s or a few days’ notice.
Weather in Iceland
The weather can be unpredictable and harsh in Iceland, so we recommend that you check the forecast whenever possible. The weather can change every 5 minutes, from sunshine to a snow blizzard, even in summertime! (Snow blizzards are not likely on the Ring road in the summertime, but much more so the further into the highlands you go!)
Iceland in summer
Iceland in winter
In summertime (June to August) the nights are bright and the temperature is around 10-20°C (up to 25-7°C). Rain and wind can always be expected though.
It is rainier and windier during spring and autumn (April, May and September, October).
In wintertime, November until March, there may be icy, snowy, foggy, windy conditions. Storms have been known to break windows in cars and leave people stranded in the countryside.
People that are not used to driving in snow and icy conditions are advised against renting cars in the wintertime in Iceland. To drive Iceland safely, many cars have ‘year-round’ tyres. In the wintertime it’s mandatory for cars to either have year-round tyres or winter tyres.
Can I travel without a car in Iceland?
Like mentioned above, Iceland is not a small country. Traveling from one end of the country to the other can take about 8-12 hours by car (depending on start and stop locations).
Popular attractions such as the Blue Lagoon (30 minutes by car from Reykjavík) and The Golden Circle (5 hour drive in total) are serviced by buses daily – or even multiple times each day. Bus tours also go to various other tourist destinations, although mainly these are scheduled day tours that don’t offer much flexibility.
The country is mountainous and weather conditions change rapidly. The nature is breathtakingly beautiful and many people choose to explore new things like going on a glacier hiking tour or an ice cave tour.
Most people that do so, use an alternative way to reach their starting position, either a rental car or they go by bus. Hitchhiking is safe in the country, although not very dependable and not practical for a company of people or for people with a lot of luggage.
Car ownership in Iceland is amongst the highest in the world – and there’s a good reason for it. Because of it (or due to it) the bus system is expensive and infrequent. This also means that the best way for tourists to get around the country is by having their own car, that way they can also discover hidden secrets by exploring less used roads.