11 Essential Iceland Car Rental Tips

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by Michael Rozenblit

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Unless you want to hitchhike, you’ll most likely end up renting a car in Iceland if you plan to drive around the country. There are however several things to keep in mind when doing so, so we’ve created this list of Iceland car rental tips to consider when visiting Iceland!

11 Tips for Car Rental in Iceland

1. Book your rental car (and accommodation!) well in advance in peak season

Iceland gets extremely popular during the summer months of July and August so if you’re planning on renting a car I would book as early as possible both to avoid missing out and also to save money.

This is particularly crucial if you plan on renting a camper van as this is becoming a very popular option for travellers!

We recommend browsing RentalCars.com to find deals on car hire as they aggregate prices across many of the major rental car companies available in Iceland. We use RentalCars.com anytime we want to rent a car abroad and find it’s the best way to compare prices on car hire

This advice also extends to booking accommodation if you’re driving a regular car and options are limited, especially if you want to stay near Vik or the Glacier Lagoon

Some of the popular hotels book out well in advance and you want to avoid having to backtrack because you can’t find accommodation on your chosen route!

Jökulsárlón Glacier Lagoon
Jökulsárlón Glacier Lagoon

2. Buy gravel protection and sand & ash insurance

Iceland is expensive and nobody wants to spend their hard-earned travel dollars on insurance, however, gravel protection insurance is simply a must.

A lot of the roads in Iceland are full of little rocks which can cause damage to your car, potentially even cracking the windshield.

Similarly, in windy conditions, volcanic sand and ash can also result in unwanted damage to your vehicle. Don’t take the risk of having an unwanted travel expense and pay up for the extra insurance! All the Iceland car rental companies we researched offered this as an additional addon when purchasing your policy.

3. Buy car hire excess insurance from a third party

Another potential money-saving tip when renting a car in Iceland is to get insurance that covers any potential excess payments.

Collision Damage Insurance is included as standard for car rentals however the excess can be quite high meaning you could be out of pocket thousands of dollars if you need to make a claim.

Some car rental companies offer additional insurance to cover this, however, the most cost-effective option tends to be to buy from a third party.

We like to buy policies from ICarHireInsurance who offer full excess coverage at a fraction that car rental companies charge.

Plenty of amazing views while driving in Iceland!
Plenty of amazing views while driving in Iceland!

4. Don’t bother with theft insurance 

Unlike gravel protection and sand & ash insurance, one of the best money-saving tips is to not bother with theft insurance.

Thefts are extremely rare in Iceland and unless you openly leave your car running with the keys in the ignition it’s very unlikely that anything bad will happen.

That being said, the choice is always up to you and The World Was Here First takes no responsibility if you are unfortunate enough to experience a rare case of car theft! 🙂

5. Don’t forget travel insurance!

On any trip abroad, it’s always a good idea to make sure you have a valid travel insurance policy so you’re covered for any unfortunate events.

If travelling in Iceland on a tight budget, an affordable option is SafetyWing which offers travel medical insurance policies – click here to get a quote from SafetyWing.

6. A 4WD drive is nice to have but not necessary

Depending on where you want to drive in Iceland, a 4WD drive can certainly be helpful. However, there is plenty you can see with a normal vehicle.

The main reason to rent a 4WD is if you want to drive on any of Iceland’s F-roads which are predominately in the highlands or, possibly, if driving in winter.

In the summer and shoulder seasons, if you’re planning on sticking predominately to the Ring Road then save your money and opt for a regular car.

7. Hold onto your door!

One of the first things you’ll likely hear when you rent your vehicle in Iceland is to hold onto your door when you enter and exit your car as strong winds have been known to blow off doors!

It’s important advice to remember as insurance typically doesn’t cover you in this unlikely event. If you are forgetful though, don’t worry as there will likely be stickers inside of your car to remind you!

Snowy roads in Iceland
Weather can be unpredictable in Iceland!

8. Don’t stop in the middle of the road

One of the most dangerous things you can do in Iceland is to stop in the middle of the road to snap a photo. Roads in Iceland can be narrow and have plenty of turns so stopping in the middle of the road is just asking for trouble!

There are plenty of places to pull off on the main roads so when you see a pretty view, I’m sure you won’t need to wait long for an opportunity to stop!

Need tips on what to wear in Iceland? – Check out our all season Iceland packing list!

9. If you have data, you don’t need GPS

Many car rental companies offer you GPS as an optional extra. However, if you buy a SIM card with data in Iceland then it’s not particularly necessary as you do get good 4G coverage around Iceland. I would only suggest buying GPS if you plan on doing a lot of off-road driving during your time in Iceland.

To avoid excess roaming charges, there are many SIM cards that you can buy before leaving your home to ensure you have data as soon as you land at an affordable price. Two of the best options available on the market currently are the Three Prepaid SIM with 12GB data or the Orange Prepaid SIM with 30GB Data

10. Don’t wait until the last minute to buy fuel

One of the most important tips for hiring a car in Iceland is to make sure to plan ahead when it comes to filling up your fuel tank.

As you get further away from Reykjavik, fuel stops become further and further apart so I suggest beginning to think about filling up when you are at about half a tank full.

11. Don’t be afraid to pick up a hitchhiker!

Iceland gets quite rural the further away you get away from Reykjavik so if you do happen to drive past a hitchhiker who has a friendly look about him then don’t be afraid to give him a ride!

Iceland weather is unpredictable and rides can be few and far between for hitchhikers who are more often than not simply travellers who want to see Iceland on a budget! Plus you can never have too much good karma! 🙂

Car in Iceland
Book your car in advance when travelling to Iceland!

Having a rental car in Iceland is simply one of the best ways to see this spectacular country, however, please keep in mind these Iceland car rental tips to ensure your trip is as hassle-free as can be!

Are you planning on renting a car in Iceland? Have any questions? Let us know in the comments below! 

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Michael is a co-founder and writer for The World Was Here First. Both solo and with his partner, Maggie, he has travelled to over 50 countries across the globe and has a particular affinity for the Balkans and Eastern Europe. He’s lived in numerous countries worldwide but currently resides in his hometown of Melbourne, Australia. Read more about Michael


  1. Hi, we are planning a trip to Iceland and I am researching about car hire. Can you suggest the best car hire. Also the car hire company provides CDW and third party insurance in the cost. Do we have to buy SAAP and gravel protection also in addition to excess car insurance ?

    • Hi Archana, you can browse all the options on Rentalcars.com, deals change all the time so I think this is the best way to get a good deal. SAAP & Gravel will typically be a separate inclusion to excess insurance – make sure to read the policy deals so you’re clear on exactly what it covers.

    • Hi Xiuyuan, it depends on where you plan to travel in Iceland. If you’re going on F-Roads a 4WD is required, otherwise, if you’re mainly sticking to the Ring Road then a regular car is fine.

  2. Hi Michael!
    This article was really helpful, big thanks for it! Still i’m a bit confused now about the “gravel protection and sand & ash insurance” part. Is it also needed/recommended to buy these if I purchase an excess insurence from the recommended icarhireinsurance.com website, or it is covering the possible costs of the repair of such damage? So If I pay for the excess insurance, should i still pay to the rental company to the sand & ash insurance?
    Thanks in advance for your answer!

    • Hi György! The excess insurance from iCarHireInsurance won’t cover you for gravel protection and sand/ash, it will just cover you if any excess is needed to be paid on your policy. I’d therefore definitely recommend getting the sand & ash insurance separately as it’s very easy for your car to get damaged from it! Hope that helps! 🙂

      • Thanks a lot, Michael, this definitely helped! I just booked the car with sand/ash +gravel protection, and also bought iCarHireInsurance excess insurance so we won’t have to be afraid of huge costs in kind of any case… I read the policy of iCarHireInsurance and I found that it covers not only the excess, but also the damage of tire and undercarriage of the car, so just what i needed to complete the insurances that I have bought at the rental. Thanks again for the great article and your quick response! 🙂

  3. Hi Michael, thanks for sharing your experience. We are a family of 5 adults and planning to drive the ring road up to Vestahorn on Sep 17-29. We donot intrnd to go to the F Road. What would be the type of vehicle we need to get?

    • Hi Gigi! If you don’t plan to drive on F-Roads then you can get any kind of car you want! There aren’t any special requirements for driving on the Ring Road and the roads are incredibly well maintained 🙂

  4. We are planning a trip to Iceland and the tips about the car rental are very helpful. A car should be chosen according to the requirement, and I agree with the fact that a 4WD drive is not necessary. No one wants to spend unwanted travel expense and the tips are very helpful in not doing so. From my personal experience, the car should be properly inspected before taking it as a rent and proper insurance should be chosen for the car.


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