Renting a car is a fantastic way to get around and see the sights. You have the freedom to go where you want, when you want, at the pace you want. But of course, there are many things to consider, so we wrote this Iceland Car Rental guide.

Rent a car in Iceland - Take a look at different prices and book a rental car for your vacation in Iceland.
iceland car rental
Photo by Berglind Jóhanns

General Iceland Car Rental Info

When renting a car in Iceland, there are several factors to consider, as conditions here are most likely very different from what you’re used to. During the winter it can be snowy, icy or rainy, and in the summer the sun is out all day long. How does this affect your driving?

During the summer, you can probably get away with a smaller car, especially if you intend to travel in an area close to the city. In the winter, however, 4WD and studded tires are essential.

The further you get away from the city, the more likely it is that you will be driving on gravel roads that have its own set of peculiarities.

Generally speaking, renting a car is a great way to save some money if you’re two or more people travelling in the summertime, but in wintertime, you may want to do away with the intricacies of driving in an Icelandic winter and just go on some day tours.

Always check the weather forecast before you head out, for instance on

Also read: Common Mistakes While Driving in Iceland

What Kind of Driver’s Licence do I Need for My Iceland Car Rental?

A normal driver’s licence will work, but it should be readable to an Icelander. This means that if you have an English language licence, you’ll be fine, but if your licence is in another language, it’s probably good to apply for an international driver’s licence.

This is usually a small paper translation of your licence, with a photo of you and a stamp from your government or driver’s licence institution saying you’re really qualified to drive. It can save you a lot of trouble to get one of these before you come to Iceland.

Comprehensive Guide to Iceland Car Rental
Photo by Ian Funk

How Old Do I Have to Be to Rent a Car in Iceland?

This depends a bit on the company. Generally, as long as you have a driving licence, you can legally rent a car. Some companies only rent to over 21-year olds since younger people are the most likely to have accidents.

If you’re younger, they may not rent to you, or they may ask you to pay for extra insurance, or leave a deposit.

If you’re out in a good time, there are very good odds we can find you a rental car even if you’re younger than 21. Just contact us.

How Long in Advance Do I Need to Book My Iceland Car Rental?

This depends on the season. In summer it’s good to book at least 2 weeks in advance, but it’s probably safer booking a whole month before. You have fewer, more expensive options if you wait longer, and you may not get a car at all if you wait longer than that.

During the winter it’s not as rushed, but over the Christmas/New Year’s holidays and into January it can be quite busy. The winters are always getting busier and busier too, so the sooner the better.

How Much Does a Car Rental Cost?

That depends entirely on what kind of car you get, and where you rent it. What’s On works with a number of reliable Icelandic car rentals which offer quality cars in reliable condition and good service, and you can see the price range in the rental booking portion below. For more options, send us an email or write to us on live chat, but the price range will be similar to the one below.

Comprehensive Guide to Iceland Car Rental
Photo by Berglind Jóhanns

Is Renting a Car in Iceland Expensive?

That depends on what you compare it to. Any industrialised country where you rent a car for several days will cost a bit of money, though there are countries where everything, including car rental, is cheaper.

When you compare the price of a car rental with guided tours, especially for two or more people, you usually end up saving money.

Also: you get what you pay for

It also depends which car you get (see below) and whom you rent it from. A lot of the time, it’s a good idea to pay the price for a quality product. There are many car rentals in Iceland, but What’s On, being a neutral third party, can vouch for the cars and service of all of our car-rental partners. Contact us for additional options to the ones available online.

What Kind of a Car Do I Need in Order to Drive in Iceland?

What kind of car you should get depends on the season, where you’re going and on your budget.

In the winter you need studded tires (the smallest models might not have these) and we recommend 4WD for safety.

In the summer you can get away with a less hefty vehicle. (Unless you’re going to the highlands, such as Landmannalaugar, Thorsmork and such routes. They are actually illegal for non-4WD vehicles.)

In addition to this you might want to give some thought to your comfort – if you’re spending 7 days driving, you might want to spring for a little extra leg room, and/or a car that feels good to drive for days at a time.

Here you can see prices and book different models.

Also read: Renting a Car in Iceland in Winter

Comprehensive Guide to Iceland Car Rental
Photo by Golli.

What Kind of Insurance Do I Need With My Iceland Car Rental?

Specific insurance packages depend on the rental agency but there are some trends. Most all rental cars usually come equipped with a Collision Damage Waiver.

CDW – Collision Damage Waiver:

This is some very basic insurance which varies from agency to agency but generally has a fairly high deductible. This means that if the car gets wrecked or damaged, but you have to pay the for the first … usually several thousand dollars, and after that it’s covered so you don’t have to pay the whole thing.

In addition to the CDW most agencies have a number of potential ad-ons.

SCDW – Super Collision Damage Waiver:

Not boring a superhero, the SCDW usually brings your deductible (the amount you have to pay yourself) significantly down. Often by like 70%. Please note, SCDW often doesn’t cover chassis damage, such as a large rock hitting the underside of your car. Ask about this. Some agencies might have additional chassis insurance too.

Zero Execess

ZE reduces the renters’ financial responsibility to zero in cases of damage and/or theft. The renter can only be held responsible for a maximum amount as follows – 0 ISK – All vehicle categories. Also included in the ZE product is Tire/Windshield Protection and Sand and Ash Protection.

Windshield/Gravel Protection

There is a number of different versions of this. It is basically for small nicks and scratches that will never reach your deductible but can still be considerable amounts, such as paint scratches, dings and windshield scratches. Can be highly advisable since considerable parts of the countryside road system are gravel roads.

Sand and Ash Protection

If you’re going to the highlands, you may be advised or required to get the sand insurance. This is because the desert highlands sometimes get sandstorms that can strip the paint off your car, and the rental companies are not fond of that. Ash insurance sounds like a bit of a joke to me, but I guess you might be grateful for it if a volcano erupted nearby. In any case, they are usually lumped together.

Theft Insurance

You might have heard that crime is almost unheard of in Iceland. And it is. It’s unlikely though not impossible, and you would be happy you had this if something happened. You might be covered for theft by your travel insurance though. In any case this is often lumped in with other things in a package so it doesn’t hurt to have.

Insurance Packages 

Many agencies have packages with more than one thing (say, SCDW, Gravel protection and sand & ash) for a much lower price. This can be a great deal so look out for these.

Wait a minute – Doesn’t my credit card cover me for insurance? 

Some credit cards cover you really well. That’s for you to find out about. Often, they will cover your deductible as long as you paid the whole rental with the credit card and don’t buy any additional insurance.

What this means: let’s say a car is badly damaged. The deductible is $2.500 USD, but the damage is $10.000. This means the customer pays 2.500, the insurance pays the rest. But if they paid with some major credit cards, the card company will cover the $2.500. Prepare for your trip by finding out about your credit card’s coverage!

Please Note: You are DEFINITELY NOT INSURED for driving through rivers. 

As far as I know, it’s impossible to get insurance for this. If driving through rivers never occurred to you, great. However, in order to drive to some places such as Thorsmork, you need to cross rivers. If you want to do that, that’s at your own risk. We tend to recommend taking a tour there.

Don't hesitate to contact us if you have any questions!

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