A rental car is the right way to see Iceland, and also where most trips go wrong financially. The driving is not technically difficult — traffic is light, roads are well signed, everyone drives on the right — but unfamiliar hazards and aggressive insurance upselling catch people out. Here is what actually matters.
Getting the insurance right
Basic collision damage waiver (CDW) is included in essentially every Icelandic rental, but the excess is high and it excludes exactly the things most likely to happen to you.
- Gravel Protection (GP) covers chips and cracks from stones thrown up on gravel roads and by passing cars. If you are leaving the Ring Road at all, this is worth taking — windscreen and paint damage from gravel is the most common claim in Iceland.
- Sand and Ash Protection (SAAP) covers paint stripped by wind-driven volcanic grit. Not theoretical: on the sandur plains around Mýrdalssandur a storm can strip a car to bare metal in minutes, generating a claim running into thousands. Driving the south coast, take it.
- What no policy covers: damage from driving into water, including any river crossing; damage to the underside of the car; and damage caused by wind catching an open door.
Check what your credit card already covers before buying duplicates, and photograph the whole car — including every existing scratch — before you drive away.
Wind is the biggest hazard
Icelandic wind will take a car door off its hinges, and rental companies specifically exclude this because it happens so often. Always hold the door firmly with both hands when opening it, park facing into the wind where you can, and get passengers to open doors on the sheltered side.
Wind also affects driving. Above about 15 m/s you will feel the car pushed around; above 20 m/s, high-sided vehicles and campers become difficult; above 25 m/s, do not drive. The Met Office publishes wind speed forecasts by location, and road.is issues warnings.
Choosing 2WD or 4WD
In summer, a two-wheel-drive car is perfectly adequate for the Ring Road, the Golden Circle, the south coast and Snæfellsnes. You do not need a 4x4 to see the headline sights, and the fuel saving is meaningful.
You need a 4x4 in two situations: if you intend to drive any F-road, where it is a legal requirement rather than a recommendation; and in winter, when the extra traction on snow and ice is genuinely useful. Studded winter tyres are standard on Icelandic rentals from roughly November to mid-April.
F-roads and the off-road rule
F-roads are the mountain tracks into the interior — Landmannalaugar, Askja, Kerlingarfjöll. They are unsurfaced, often include unbridged river crossings, and are legally restricted to four-wheel-drive vehicles. They open when the snow clears, usually somewhere between mid-June and early July, and close again in September; the Icelandic Road Administration publishes the opening dates at road.is.
River crossings are excluded from every insurance policy in the country. If you are not confident reading a ford, do not attempt it — take the highland bus instead.
Driving off marked roads and tracks anywhere in Iceland is illegal and carries heavy fines. Icelandic moss and vegetation take decades to recover from a single set of tyre tracks, and the prosecutions are real.
Road features that surprise visitors
- Einbreið brú — single-lane bridges, common on the Ring Road especially in the east and south. The vehicle closer to the bridge has priority. Slow right down and be prepared to stop.
- Blindhæð — blind rises, where the road crests and you cannot see oncoming traffic. Slow down and keep well to the right.
- Malbik endar — the point where asphalt ends and gravel begins. Brake before it, not on it; hitting loose gravel at speed is the classic way to lose control.
- Free-roaming sheep, everywhere, all summer. If a sheep is on one side of the road, its lamb is usually on the other and will run across. You are liable if you hit one.
- Speed limits: 50 km/h in built-up areas, 80 on gravel outside them, 90 on paved rural roads. Cameras are common and fines are severe.
- Headlights must be on at all times, day and night, by law.
Fuel, tolls and parking
Most fuel stations in rural Iceland are unstaffed self-service pumps, and they require a card with a PIN. Contactless-only or signature-only cards are frequently rejected, so confirm you have a PIN before you travel, and consider buying a prepaid fuel card at a staffed N1 or Olís as insurance.
Refuel at half a tank rather than a quarter, particularly in the east, Westfjords and north, where gaps between stations can exceed 100 kilometres and some close in the evening.
The Hvalfjörður tunnel has been free since 2018, but Vaðlaheiðargöng near Akureyri is tolled and paid online rather than at a booth — do it the same day. Parking fees now apply at Þingvellir, Seljalandsfoss, Skógafoss, Jökulsárlón and other major sites, usually enforced by plate recognition.
Check the conditions every single morning
This is the tip that matters most. Check road.is for closures and wind warnings, vedur.is for weather, and safetravel.is for alerts — every day, before you set out. The correct response to a red warning is to change the plan, not to attempt it carefully. Icelandic rescue teams spend their winters retrieving visitors who did the latter.
Written by
Erika Sand
Erika has spent the last decade driving, hiking, and hot-spring-hopping across Iceland in every season. She writes NRF.is’s itineraries, guides, and trip reports to help travelers see the country safely, affordably, and without the tourist-trap detours.