Information on Driving a Rental Car in Iceland

Driving Overview

The major highway in Iceland runs along the coast of this small island country. You can depart from Reykjavik or Keflavik in a rental car and easily get to any coastal community. Travel to the interior of this country can lead you on a series of unpaved roads. Many of these roads are impassable in midsummer due to mud and travel is allowed only on prescribed roads.

Car Rental Age Requirements in Iceland

To rent a car or passenger van in Iceland, you must be at least 18 years old (age may vary by car category) and have held your license for 1 year. Drivers between the ages of 18-20 will find vehicle options with suppliers including Avis, Budget and Payless. Drivers over the age of 20 but under 25 will find additional vehicle options from Hertz and Sixt, in addition to Avis, Budget, and Payless. Drivers under the age of 25 will likely incur a young driver surcharge between $5-$10 USD a day, this fee is generally capped in Iceland at a maximum of 7 days.

Rules of the Road

Traffic travels on the right and passing occurs on the left. Iceland it is forbidden to drive off roads or on marked tracks. Exercise extreme caution when passing a horse and rider. Always give right of way to domestic animals.

Speed Limits & Gas Stations in Iceland  City: 31mph/50kph Open Roads: 49mph/80kph Highways: 55mpg/90kph Gas Station Availability - In the Reykjavik area, gas stations are open usually from 7:30am to 8pm. Some stations are open until 11 pm. Outside of the city, gas stations hours vary, but most stations are open until 10 pm.

Parking & Tolls in Iceland There are no toll highways in Iceland. However, there is a toll of approximately ISK 1,000 to use the Hvalfjudor Tunnel. Parking meters are a common sight in downtown Reykjavik, most offering a two-hour limit. There are a few parking garages in Reykjavik but they are not as common elsewhere in Iceland.

Car Insurance Information in Iceland

General Information

Car rental insurance varies widely, so please review the information below prior to making your reservation. Regulations of the country where you rent the car will be in effect for the duration of your rental.

All our car rental rates include fire and third party liability insurance. Our inclusive rates also provide collision and theft coverage at an advance purchase discount. You may elect to decline collision and theft coverage. If you plan to take advantage of coverage offered by your credit card, please contact your card issuer directly for details. Specific insurance information for your reservation will be printed on your confirmation voucher.

The following guidelines apply to car rentals commencing in Iceland.

Required Coverage

Fire and third party liability insurance is mandatory and is included in all rentals. Third party liability insurance offers up to US$11,200,000 for bodily injury and US$1,940,000 coverage in case of damage to property, outside of the rental car. Rates also include Personal Accident Insurance (PAI) for driver only, and cover up to approx US$ 848,000.

Optional Coverage

Collision Damage Waiver (CDW) and theft protection are included in our inclusive rates at a discount. CDW, if purchased at the rental counter, costs approximately US$20 - US$30 per day. Theft protection, if purchased at the rental counter, costs approximately US$20 - US$30 per day. CDW and theft protection reduces the deductible (responsibility of the client) to US$1745 - US$2965, depending on vehicle type. Super CDW may be offered locally to reduce the deductible as low as zero. Optional insurance coverage is available with select suppliers only, rates subject to change without notice.

Car Rental Restrictions in Iceland

All rental cars must remain on Iceland. There is no travel allowed outside of Iceland with a rental car.

Restricted Countries

Travel is not allowed outside of Iceland.

One-Way Rentals in Iceland

Domestic one way car rentals and one-way van rentals are available for an additional fee of approximately US$82. International one-way rentals are not available from Iceland.