Renting a car in Iceland
Driving a car in Iceland is a great experience. It’s fun, safe and gives you the freedom to move out of the beaten, track avoiding group tours.
On this section, you will find the answer to some of the most common questions about renting a car in Iceland.
What car should I drive in Iceland?
A 4WD or 4×4 car.
Even if you are not planning on crossing rivers, gravel roads are very common in Iceland and a 4WD will allow you to drive comfortably on them. They also offer good space for both occupants and luggage, as you travel from accommodation to accommodation.
Cheap models like the Dacia Duster or the Suzuki Vitara do not represent a big jump in car rental cost compared to 2WD cars.
If you can afford the price difference, I would certainly recommend a Toyota RAV4. It’s my go-to option when renting cars in Iceland, the sweet point between price, size and comfort, including heated seats, a very welcomed feature to recover from the wind, cold and rain you will certainly encounter along the way. I have driven thousands of miles through roads, gravel roads and even F-roads on a Toyota RAV4, and I could not be happier with its performance.
A fun option for a shorter trip could be a Suzuki Jimny.
There could also be reasons for a bigger 4WD or SUV. If you are planning on a lot of gravel road driving or crossing many F-roads a Toyota Land Cruiser, Nissan X-Trail or Jeep Wrangler can do the trick. If you are 5 or more occupants, consider a Large 7p SUV.
What about 2WD cars and electric vehicles?
They are not the best options, unless your plan is driving only on the ring road, which is a shame as you’ll be missing most Iceland has to offer.
2WD cars will limit your freedom of movement and will make your trip more uncomfortable.
Beware that water damages to electric car batteries are not covered by car insurance, if you drive an hybrid or electric SUV do not enter F-roads. They are rough and you might need to ford rivers, with a high risk of damaging the vehicle.
Best rent a car company in Iceland?
A local company named Blue Car Rental. They have a huge fleet of modern cars and very good rates.
I’ve been working with them for so many years at my travel agency job and their service is spotless.
By clicking on any Blue Car Rental link or banner on this website you will enjoy a 5% discount on your rent.
You might find other local low cost companies, but they usually have older car fleets and worst service, very often not worth the savings.
International companies such as AVIS, Europcar, Hertz, etc… tend to offer more expensive rates compared to local companies in Iceland, I would avoid them.
What car insurance do I need in Iceland?
Collision Damage Waivers
Collision Damage Waiver (CDW) or Super Collision Damage Waiver (SCDW) are a must. You will soon discover that prices and cost of living are high, car repairs are no exception.
Zero liability waiver
Check carefully your liability and consider reducing it to zero if the extra cost is worth it or if you are, no offense, a clumsy driver or prefer to drive without worrying about damaging the car or weather and natural events related risks, such as sand or ash storms.
This insurance usually includes roadside assistance and SAAP insurance.
Roadside assistance
Roadside assistance because of an accident, damage or other reasons that are the renter’s responsibility, are usually not covered on standard rental car rates.
Consider adding this insurance if you are not purchasing a zero liability waiver.
SAAP insurance
Iceland’s weather and volcano eruptions are a factor to consider.
Damages caused by sand, gravel or other earth materials being blown onto the vehicle, unless you purchase the SAAP insurance or the zero liability waiver.
In my experience, chances of any of these events happening to you are low, but when they do you are helpless, and the damages could cost between 500.000 to 1.500.000 ISK to fix (3.500 to 11.000 USD/EUR).
Sandstorms can happen at any time, but are more typical in the south of Iceland and in winter months.
Uncovered damages
Liability waivers though don’t cover all damages. Here are some usual examples, among others (check with your rent a car company):
- Damage caused by wind blowing up doors or to the underside of the vehicle (unless you purchase the zero liability waiver)
Intentional damages. - Damages resulting from the driver being under the influence of alcohol or other substances (legal or illegal).
- Damage to tires, wheels, suspensions, batteries, glass, etc… (unless you purchase the zero liability waiver).
- Damage to the vehicle when driving over rivers, pools or lakes (unless you purchase the zero liability waiver).