Driving your own car allows you to hunt for the Northern Lights whenever the sun has set!

The Ultimate Guide to Driving in Iceland

Nanna Gunnarsdóttir
By 
Nanna Gunnarsdóttir
Verified Expert

A road twists through the mist in East Iceland.

What are the major do's and don'ts regarding driving in Iceland? How do you rent a vehicle for your stay? Which side of the road do Icelanders drive on, and how's their reputation behind the wheel? Read on to find out all you need to know about driving in Iceland.



Iceland’s spectacular attractions, such as its glaciers, volcanoes and hot springs, can be found in beautiful pockets all over the country. They fill every corner with colour and possibility.

Whereas it’s perfectly fine to walk or cycle within the capital, Reykjavík, the best way to get out of the city and explore these incredible places is undoubtedly by driving a car.

Driving a car, particularly a four-wheel drive, allows you to tailor a holiday within this incredible country to your own desires. 

You will be able to hunt the Northern Lights at your pleasure in winter. In summer you can reach the remote Highland locations. And throughout the year you’re able to take the Ring Road around the country and spend as long at each attraction as you like.

While some destinations, such as the Westman Islands, require you to find passage by ferry or plane, this article will focus on everything you need to know about driving in Iceland.

Do I Need a Car in Iceland?        

The aurora borealis swirling above a snowy road in Iceland.

Whether or not you need a car depends on what you are expecting from your holiday.

If you yearn for freedom and flexibility and want to immerse yourself as much as possible in nature, driving yourself around Iceland is highly recommended. 

There are several alternative ways of enjoying the country, however.

Bus passports, available in the summertime, allow travellers to reach some of the island's most remote spots without renting their own cars.

They are provided by licensed coach companies, and either apply for the completion of a predetermined route or for a certain number of days.



Utilising the bus passport is a convenient means of travel if you are planning on spending a large amount of time at each of your chosen locations.

They are particularly recommended to those looking to hike longer trails, for instance.



A map revealing certain bus routes around Iceland.

The local bus transport system, Strætó, runs all year long to selected towns.

Usually, the only interruptions to the normal schedule occur when the weather is being truly tempestuous.

Still, one should not rely on the local public transport to get you far from urban areas. There are not many bus routes in the country and they run infrequently (some just a few days of a week). They are also surprisingly pricey.

Taxis, too, are very expensive, and drivers will often be unwilling to take you far from the city limits.

Of course, you also have the option of staying in the capital and going out on guided tours.

Guided tours range from sightseeing to action-packed activities, such as scuba diving and glacier hiking.

It is also possible to book vacation packages around Iceland, which take all the stress of planning an immersive holiday from your shoulders.

Hitchhiking is safe (and common) although not very dependable and impractical for a company of people or for those with a lot of luggage.

Hitchhiking is also very ill-advised outside of the summer months due to the ever-changing weather conditions.



Renting a Car in Iceland          

There are a wide range of different vehicle types to choose from.

There are several car rentals in Iceland offering a variety of vehicles to choose from.

Renting four-wheel-drive SUV or mini truck, such as a Subaru or Toyota are popular outside city limits as they hold plenty of luggage and are capable of managing most terrains you’ll encounter.

Whereas the cheaper four or five-seater Yaris is popular within city limits and on paved roads. They are notably smaller, however, and don't contain much luggage space.

Please note that if you are planning on driving any Highland roads (marked as F-Roads), you will need a four-wheel-drive.

It is also highly recommended to book a four-wheel-drive if you are travelling in winter.

The Highlands of Iceland can only be reached in a four-wheel-drive.

Those renting a car in Iceland should familiarise themselves with the Ring Road that encircles the island.

This road is accessible and easily traversed in any type of vehicle and it’s the main road that circulates around Iceland's many attractions.

For the entirety of the road, there is only one lane going each way and you will find a tiny amount of traffic. In rural Iceland, traffic jams are unheard of.

To see updated information about which roads are open and their condition at any given time, visit road.is or call the number 1777 for information in English.

Be aware that any off-road driving in Iceland is Illegal. Off-road driving damages the delicate nature and is punishable by high fines.

Driving on highland tracks is not considered to be driving off-road and is not punishable by fines. You are only committing a serious offence if you leave the track and drive out into the unspoiled nature.

Not only is driving off-road seriously dangerous for drivers own safety but it also damages Iceland’s pristine nature. So, please respect the rules and Icelandic nature when driving in Iceland.

Flexibility in Booking an Iceland Car Rental          

When renting a car in Iceland, you can arrange to pick it up at the airport or in Reykjavík.

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 minutes 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 if you want a specific car.

However, it’s worth noting that you are very likely able to rent a car in Iceland with a day’s or a few days’ notice.

Parking in Iceland         

There is parking under Harpa in Reykjavík, but it is expensive.

Parking spaces in most of the country are free of charge except for in central Reykjavík, central Akureyri and Seljalandsfoss waterfall.

Stopping or parking your car temporarily on a side of a road in the countryside, however, is highly discouraged as it can be very dangerous, particularly in icy or wet conditions. 

If you feel the need to stop, make sure that you find somewhere off the main roads,  and make sure your car is visible from all angles and not interrupting any traffic.



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.

Also, do not walk too far from your car if visibility is poor for your own and others safety.

Parking Zones (and Prices) in Reykjavik          

There are only four parking zones in Reykjavík, mostly located around the downtown region.

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 metres and ticket machines also display which zone they are in.

The basic rule is that the closer you are to Laugavegur (main shopping street), the higher the price of parking.

Parking map of downtown Reykjavík.

Red zone: 

  • 320 ISK per hour.
  • Mon-Fri 9 am to 6 pm. Sat 10 am to 4 pm. 
  • Free on Sundays

Blue zone:

  • 170 ISK per hour.
  • Mon-Fri 9 am to 6 pm. Sat 10 am to 4 pm. 
  • Free on Sundays

Green zone: 

  • 170 ISK for 1st & 2nd hour. 50 ISK per hour after 2nd hour.
  • Mon-Fri 9 am to 6 pm. Sat 10 am to 4 pm.
  • Free on Sundays

Orange zone:

  • 170 ISK per hour.
  • Mon-Fri 8 am to 4 pm.
  • Free on Saturdays and Sundays

Additionally, there are 6 parking garages in central Reykjavík that permit temporary parking. They are open from 07:00-00:00 every day.

These garages are Stjörnuport and Vitatorg (80 ISK first hour, then 50 ISK hourly), and Kolaport, Vesturgata, City Hall and Traðarkot (200 ISK first hour, then 120 ISK hourly). 

Find updated availability for Reykjavík's parking garages here.

There is also additional parking available underneath Harpa Concert and Conference Hall at 250 ISK for an hour or 1800 ISK for eight hours.

Hazards When Driving in Iceland           

Below are some of the most common causes of road accidents and car damage in Iceland. By familiarising yourself with them you will reduce the chance of you being involved in an accident.



  • Under-inflated or damaged tyres: Iceland's road surfaces differ greatly. In rural areas many are gravel or else littered with potholes. It is important, therefore, that you ensure your tires are in good condition every time you set out. Flat tyres are not covered by insurance
     
  • Slipping on ice: Iceland's winter brings freezing temperatures across the country, meaning drivers must be extra vigilant when behind the wheel. Even in summer, many mountain passes can be veiled in ice. If you know that you may be driving in such conditions, ensure you book a four-wheel-drive
     
  • Sheep crossing the road: The hundreds of thousands of sheep that call Iceland home roam free in summer, and they are known for running out into the roads when panicked. Not only would you have a sheep's death on your conscience if you hit one, but you may be liable to both your rental company and the sheep's owner
     
  • Doors caught in the wind: The strong winds in Iceland can cause damage even to a parked car. In stormy weather, open your doors slowly and with a firm grip, lest a gust rip it from its hinges
     
  • Losing traction on gravel roads: Many of Iceland's more remote locations are only accessible by driving on gravel. Note that you should approach the point of the road when tarmac becomes gravel slowly and without breaking, and keep a lower speed on this type of road surface
     
  • Driving in snowstorms: Snowstorms in Iceland can reduce your visibility to mere metres; if one has been forecast, it is highly recommended you do not attempt any driving that day. While snowploughs will try to maintain a passage and bright yellow markers line many of the roads, it is incredibly easy to get stuck in snow and cause a crash. Always check the weather before driving in Iceland
     
  • Speeding: With the aforementioned ice, gravel and unpredictable weather, it should come as no surprise that you should travel within limits and lower your speed accordingly should conditions become adverse

Is it Easy to Drive in Iceland?

Driving in Iceland is a wonderful experience and is really the main way to fully navigate the island.

Whether you’re looking at renting a car and creating your own journey or following a self-drive tour, you’ll always find adventure exploring our shores.

If you don’t have experience of driving in ice, snow and strong winds it can sometimes be a little daunting for first-time visitors when encountering these conditions - particularly in winter.

The best advice, other than to respect Iceland’s driving rules, is to stick to a safe driving speed, give yourself enough space from other vehicles and don’t rush your journey.

Part of the adventure of a road trip in Iceland is to fully explore the terrain and take in the sights and stops at your leisure. Rushing yourself and driving too quickly frequently results in accidents, so please avoid doing so.

Sunset in Reykjavik by Hallgrimskirkja

The road conditions completely vary based on the location. For example, Reykjavik’s roads are usually very well maintained as you’d expect from a small city. You will, however, encounter some worn parts of the road as a result of years of weathering.

In the countryside, the roads are usually single-carriageway. The most used road is Route 1 which circumnavigates the whole island.

When venturing off Route 1 you will likely encounter much rougher terrains. These often include gravel roads and deep potholes as a result of less road maintenance.

A road driving through Landmannalaugar
If you’ve decided to rent a 4-wheel-drive vehicle you can always drive into the highlands. It’s much better to do this in the summer season for less volatile weather and more light when you’re driving.

Please note, driving in the Highlands is incredibly different to navigating Iceland’s other roads. The terrain is much rougher and you will frequently have to ford rivers on your journey.

If you don’t have experience or confidence driving in these types of conditions it may be preferable to instead take a highlands tour from a provider than drive yourself.

Frequently Asked Questions        

You don't need a car to see all of Iceland's attractions; a city bus will take you to the beautiful lighthouse and nature reserve at Seltjarnarnes just by Reykjavík.
To try and alleviate any concerns that you might have about driving in Iceland, we have included a thorough FAQ to answer your most commonly asked questions.

If there are any questions you might have which have been missed here, please make sure to include them in the comments below. We will be sure to answer your questions as soon as possible.  

What age must I be to rent a car in Iceland?

The minimum age to rent a passenger car in Iceland is 20 years old for insurance and safety reasons.

The minimum age to rent a 4WD vehicle or a minibus is 23 years old, as these vehicles require further experience and a more intimate knowledge of vehicle handling.

You must present a valid driver’s license (held for a minimum of one year) at the time of rental as a means of proving your age.

What else do I need to rent a car in Iceland?

To rent a car in Iceland, you will 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.

Take note that the individual who reserves the car does not need to be the intended driver.

You will be asked to display your credit card and your driver’s license when you sign the rental contract.

Renting a four-wheel-drive will allow you to get off the beaten track in Iceland.

How does picking up and dropping off the car work in Iceland?

Depending on which car rental company is listed on your voucher, a representative of the company may be waiting in the arrival terminal,  bearing either your name, the name of the rental company or your particular booking number.

If you do not see a person bearing a sign with your name or the name of the rental company, you may need to take an airport shuttle to the rental offices near the airport. First, however, you should try phoning the company you booked with.

You can also arrange to go directly to your accommodation in Reykjavik by taking a trip on the Flybus.

You can have your rental car delivered to you in the city if you make prior arrangements with your car rental company before your arrival.

If you are unsure what to do, contact your chosen car rental company directly for help.

The phone number will be printed on your voucher. You can also visit the car rental desk within the airport to further clarify any outstanding issues. 

At the end of the trip, you will, of course, have to return the car.

To drop the car off at the airport, please follow the instructions that the rental representative will have given you upon the vehicle's initial delivery.

To drop off the car in Reykjavík or elsewhere than the location listed on your rental contract, follow the representative's instructions or leave the car keys with the reception of your hotel.

If you’ve agreed with your car rental company to leave the keys with a member of your hotel's reception ensure you let them know the exact location of the vehicle. 

Leaving the car earlier than booked does not entitle the customer to a refund. Please notify the car rental company 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 the car rental companies directly.

Gullfoss waterfall is one of the three sites that can be driven to on the Golden Circle.

What car insurance should I take?

CDW (Collision Damage Waiver) is often included in the car rental price, and many companies offer optional insurances such as SCDW, GP, TP, SAAP/SADW and Premium Insurance.

It's advised that you add gravel protection if it is available, especially if you are planning on driving the South Coast of Iceland or accessing the Central Highlands. 

It is important to know that all the insurance packages are based on self-risk/self-liability. In case of an accident, you are responsible for up to X amount of damage. This is outlined in the CDW/SCDW section of the rental agreement.

Customers arriving from North America often wish to decline CDW as it is covered by their credit card insurance. It is best to check if this is an option when making the booking, as it is not often possible to remove CDW from an existing reservation.

Usually, 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 as to the specific price.

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. Towing costs usually start at 55,000 ISK.

CDW/SCDW does not cover damage to the tyres and undercarriage. A few companies cover the tyres, but this is rare.

In winter, all cars are equipped with winter tyres as required by law. However, studded tyres are optional. You can request studded tyres, and most car rental companies will try to accommodate you based on availability.

It is not possible to request chains on any vehicles in Iceland.

F-roads are treacherous to drive, and large rocks can cause damage to the undercarriage of the car which is never insured.

Crossing rivers can lead to significant water damage, which again is not covered. Customers proceed at their own risk, and we advise all our visitors to avoid crossing rivers in any vehicle.

Many insurance packages do not cover 'animal damage'. Be careful of sheep on the sides of the roads.

Make sure you reduce your speed when encountering sheep, and beep your horn to help incentivise the sheep to move. Horses are also quite fond of gnawing on cars, so be careful where you park.

Finally, if camping, especially in the summertime, be careful not to leave your car open for long stretches of time as mice may hop in for shelter.

How fast can you drive in Iceland?

Standard speed limits in Iceland are as follows:

  • 50 km/h (31mph) within cities
  • 80 km/h (49mph) on dirt and gravel roads
  • 90 km/h (55mph) on paved country roads

While you may not see police cars on the roads very often, there are active speed cameras hidden in many locations.

Some of these speed cameras correspond with a sign around one hundred metres away informing you of their presence, others look to catch you out.

If you are caught driving over the speed limit, you will likely receive a hefty fine, and may be pulled over by the police at the side of the road.

Kirkjufell mountain is just a few hours away from Reykjavík to those who are driving in Iceland.

Which side of the road do you drive on in Iceland?

People drive on the right side of the road in Iceland.

During the winter, this can be difficult given the invading snow-stacks, forcing drivers further centre into the road.

If this is absolutely necessary, make sure to drive very slowly. Also ensure you keep your eye out constantly for oncoming headlights making sure to create sufficient space to allow other vehicles to pass you safely.

How much does gas cost in Iceland?

The price of gas (95 octane) is around 244 ISK per litre.  Diesel is only marginally cheaper with prices around 237 ISK per litre.

The price fluctuates somewhat and was around 250 ISK a several years previously, in the summer of 2014.

Here you can find an updated price list of gasoline and diesel in various gas stations in Iceland.

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

Small car rental costs vary from 5,000 ISK to 20,000 ISK per day, while SUV’s vary from 7,500 ISK to 45,000 ISK per day. 

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 rentals during high season.

Are there any laws I need to be aware of?

It is mandatory for everyone to wear seat belts in all cars and buses in Iceland. It is also mandatory for children to sit in appropriate children seats suitable for their age.

Many guests here will pull by the roadside safely to meet the Icelandic horses.

Are there many roundabouts, one way streets or difficult junctions? 

Iceland's roads are generally only one or two lanes.

However, in the centre of Reykjavík and the west part of town, there are several one-way streets. This means it can often be frustrating to navigate a car when driving in Reykjavik for the first time.

In the countryside, you may encounter some single-lane bridges or single-lane tunnels.

The etiquette is always to allow the vehicle closest to the crossing to go first. If there’s any hesitation it helps you can flash your headlights at the vehicles from the opposite direction to signal that they have priority of crossing.

Before you enter, there will be a sign showing the right of way. Drive slowly so that you can stop the car on the slip roads provided.

There are a few roundabouts in Iceland, mostly when entering Reykjavík or near larger towns. Make sure you note that the inside lane always has the right of way.

You also only need to indicate when leaving the roundabout but not when you enter it.

If you are planning on exiting the roundabout on the second, third or fourth exit, use the inside lane. If you are planning on exiting the roundabout on the first exit, use the outside lane.

 

If you enter the roundabout on the outside lane but don't exit immediately, then use the indicator towards the inside lane (but don't switch lanes) of the roundabout until it's time to exit. Make sure you then switch the indicator to the direction of your exit.

You can never switch lanes after you have entered a roundabout. There are never more than two lanes in roundabouts in Iceland.

There are not many complex junctions, only a couple of underpasses and overpasses within Reykjavík.

What should I do if I run into trouble or there is an emergency?

The emergency number in Iceland is 112.

If your car breaks down or you have a flat tyre, then contact your rental car office for information.

There is no official road assistance in Iceland, but you can contact safetravel.is for information about the nearest help centre or car repair.

Highland roads are monitored by search and rescue teams and they regularly check the roads in case someone needs assistance.

Other roads in Iceland have regular traffic and locals are quick to stop and offer help in case of a broken-down car or an incident.

If you are not entirely sure of where you are and your car breaks down, do not leave your car and start walking along the road. The weather can change suddenly and become foggy or very cold and dangerous.

What reputation do Icelanders have regarding driving?

Most Icelanders are capable behind the wheel, due to the fact that the icy, wet and regularly dark conditions make the consequences of recklessness very real.

Icelanders do, however, sometimes have a reputation for driving with a one-track mind. For example, Icelandic drivers frequently won’t pull out to the outside lane when other traffic is joining a dual carriageway from a slip road.

It’s best to ensure you stay vigilant, drive within the speed limit and stay aware of all other drivers around you to avoid any potential accidents.

Also, be aware that you will be sharing the road with travellers from around the world Some of these may only be used to city driving or driving in clear conditions. Always ensure you drive in a way that respects all other road users.

Driving your own car allows you to hunt for the Northern Lights whenever the sun has set!

We hope you have a wonderful experience should you choose to drive in Iceland. It gives you the flexibility to explore this wonderful country on your own terms and make the most of your trip. Make sure you stay safe and always follow Iceland’s driving rules to avoid any issues. Don’t forget to comment below about your questions and experiences driving in Iceland!