Iceland car rental tips according to our experience: everything you need to know

rent a car in iceland tips

This post is also available in: Español

If you are reading this post is because you are planning your trip to Iceland and you have reached the time to book your car. We have synthesized all the necessary information for you to get the car rental that best suits your needs so here we bring you the ultimate guide with the best Iceland car rental tips.

Car rental in Iceland according to the weather

It is very important to take into account the weather when renting a car in Iceland, because in winter, it is very likely that you will find ice on the roads and need a car prepared for it. If, on the other hand, you are traveling in summer and do not plan to visit the Highlands or drive on complicated roads, a normal vehicle may be sufficient.

Iceland Roadtrip views

What car to rent in Iceland according to my itinerary?

If you are only going to move along the “road number 1” also known as Ring road or Road 1, you can drive with any vehicle, but if you want to go a little off the itinerary you will most likely end up on “F”roads, this is a very common type of road in Iceland and only 4-wheel drive vehicles can circulate.

Warning that in winter you can not visit them, but on the other hand it can be snowy and a 4×4 always brings much more security.

What kind of car to rent in Iceland

The first thing you need to decide is whether you want a camper/caravan or a car. Keep in mind that in Iceland overnight stayis not allowed on public roads, so even if you travel by caravan you will have to spend the night (and pay) a campsite. However, it’s also true that we’re all drawn to that sense of freedom.

On the opposite, if you are determined to stay in hotels, Airbnbs, hostels, etc, your option is definitely a car, but … which one? Well, taking into account the areas to visit and the season of the year you will find the answer. The vast majority of people opt for a 4×4, which although not strictly necessary, is always safer in a climate as changeable as the Icelandic one and with its roads, many unpaved.

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Which insurance to get when renting a car in Iceland?

We explain the types of insurance they offer and what it covers. Basically they have a vehicle protection with different deductibles (the amount that you will pay in case of damage) that does not include certain damages, which have to be contracted as additional.

General insurance

  • CDW: an insurance that covers damage to other vehicles, our own and the occupants (both our vehicle and others). This insurance has a high excess, around 3000€, so when you pick it up they will “block” that money on your card to cover any damage caused.
  • SCDW: it is the same insurance as the CDW but reducing the excess to about 600€ (approximate, depends on each car rental company).
  • Zero excess: it is the CDW but without excess and normally includes all the additional coverages (sand, theft, ash…). What we mean by a full comprehensive without excess.

Rearview rental car in Iceland

Additional coverages

  • TP: theft insurance. In one of the safest countries in the world, we find it somewhat dispensable. It is not included in the CDW, so it is offered separately.
  • SAAP (Sand & Ash Protection): insurance that covers damage in case of sandstorms or volcanic ash, which can seriously affect the vehicle. It is not common for this to happen, but… It is not included in the CDW.
  • GP (Gravel Protection): protects from any type of “stone” or gravel that can damage the vehicle, to be taken into account since many roads as we have mentioned, are not asphalted and normally the CDW insurance does not include the crystals.

Finally, you will find insurance with other names (PIP, Combo…). They are simply combinations of the insurances that we have already explained to you.

In our case the experience at the time of delivery of the car has been very good. They have not tried to look for the slightest damage to keep part of the franchise, although there are travelers who have not had this luck.

Tip Howlanders: when you pick up the vehicle look for a place with good light and take lots of photos and videos. Tell it to the person who attends you as it is also very useful for them, because this way if there is any damage when you deliver the car, you will have the photos to compare.

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Where and when to pick up the rental car in Iceland?

Almost all companies are based in Reykjavik or very close to Keflavik International Airport. When choosing a pick-up location, if you choose Reykjavík, please note that some companies offer airport transfers (usually at a cost) and if they do not, you will have to arrange it on your own.

At the time of choosing a pick-up location, if you choose Reykjavík, please note that some companies offer airport transfers (usually at a cost) and if they do not, you will have to arrange it on your own.

On the other hand if you pick up and drop off the vehicle at the airport (or surroundings, in that case the free transfer to the airport is always included) is more comfortable and you know exactly the price.

It is important to take into account the opening hours, as you can always return the car leaving the key in your mailbox, but for the pick-up you will have to make sure that it is open. Some companies work 24/7 while others usually close for a few hours, for example from 2AM to 7AM. Outside these hours it is possible to pick up the vehicle but there is usually an additional cost of around 150€.

Some rental cars in Iceland

What is the best car rental company in Iceland?

There are many and they all offer many options, so we can’t point to one or the other. Keep in mind that the big car rental chains are not always the cheapest. There are many local companies with very good reputations and very good prices. These are some of our favorites, although I’m sure there are many more that work very well:

When to book

The further in advance, the more likely you are to find good prices. Forget about last minute deals, they are not usually seen. It is better to plan and book early. Look closely at the cancellation policies, many after the pandemic are very flexible, being able to cancel for free even just a few hours before.

What is the approximate price of renting a car in Iceland?

A rental car in Iceland can be around 30-50€ per day (passenger cars), 80-120€ per day in the case of 4x4s and between 150€ and 300€ per day (campers or caravans). Obviously prices vary according to the season, demand, duration of the rental…

Last step: the reservation

This is a matter of how much you want to complicate it. We advise you to make a companies list you want to compare, making sure they have a good reputation (blessed online reviews), take a pen and paper (or open an excel if you’re more techy) and write down prices and vehicles. For example at the time of writing this post, we see differences of €300 for the same car between one company and another.

At the time of booking you can also opt for comparators or search engines. In addition to the websites of the companies themselves, you may find something, it is a matter of search and patience.

Iceland traveler with her rental car

Now you know, courage and search, do not forget that when you have your car you can go to unique destinations. Traveling to Iceland is well worth it, and we hope we have helped you to make the organization a little easier. Enjoy your trip!


Javi, along with Daniel, was the one who gave life to Howlanders and formed this team. Each of his trips and the experiences he accumulated in his backpack, gave him the idea of helping other travelers to live them too.

At Howlanders, he is one of the people in charge of deciding which tours we offer. While in this blog he gives us his travel diaries.

He has traveled Torres del Paine for all its circuits and knows it to perfection, so he gives us all the recommendations and tips that can't be found elsewhere.

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  1. Thank you for this comprehensive guide! As someone planning a trip to Iceland, these car rental tips are incredibly valuable. From insurance options to navigating the Icelandic roads, this article covers it all. Can’t wait to put these tips into action for an unforgettable adventure!

  2. Great info! Keeping this for sure. It was full of great tips for renting a car in Iceland. This was a really fascinating blog to read! You provided interesting and thorough information about Car rental Along with these services, we also offer blogs on topics like car rental services in Iceland , choose your favorite car and explore the beauty of Iceland. For more information, visit our website Firefly Car Rental.

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