Driving in Iceland: The Complete Guide to Car Rental, Roads, and Safety

20-02-2025

Driving in Iceland is unforgettable, but only if you know what you're doing. Tourists roll up thinking it's just another road trip, then find themselves stuck on a gravel road, wondering if their rental insurance covers bad decisions.

Ever heard of wind so strong it can take your car door off? That's a thing here. And let's not forget those one-lane bridges where you'll awkwardly stare down another driver, waiting to see who goes first. But don't stress.

With the right tips, you'll handle Iceland's roads like a pro and actually enjoy the ride. Let's get you fully prepared for what it takes to drive in Iceland.

Why Renting a Car is the Best Way to Explore Iceland

Tour buses rush you, public transport skips some of the most amazing places, and hitchhiking? Not exactly a solid plan. Renting a car in Iceland isn't just the best way to explore. It's the only way to do it right.

Driving in Iceland means pulling over for hidden hot springs, chasing waterfalls no tour will take you to, and staying as long as you want instead of racing against a bus schedule. The Ring Road is made for self-drive trips, but the real magic is in the spots you won't find on a tour map.

Public transport won't get you to places like remote black sand beaches, tucked-away canyons, or that one geothermal pool you saw on Instagram. When the weather flips from sunshine to a storm, your car is your escape. Northern Lights looking good at 2 a.m.? Go for it. Renting a car means Iceland is yours to explore with no restrictions.

Essential Driving Rules in Iceland

Iceland's driving rules aren't just mere suggestions. Ignore them, and you might end up with a fine, a wrecked rental, or a viral video starring you in a ditch. Here's what you need to know:

• Drive on the right side of the road. It sounds obvious, but you'd be surprised how many people forget.
• Off-road driving is illegal. Iceland's landscape is fragile, and tearing up the terrain could get you a massive fine.
• Be aware of animals on the road. In rural areas, sheep and horses wander freely. They don't care about traffic, so stay alert. 
• Park where you're supposed to. Random roadside stops near attractions? That's how accidents happen. Always stop in designated parking areas or pull off the road. Look for blue signs with a white 'M' to find safe stopping points.

Speed Limits and Traffic Regulations

Speeding in Iceland isn't just reckless. It's an easy way to fund the local police department. Fines are no joke, and speed cameras are everywhere. If you're driving around Iceland, know the limits before you hit the road:

• Urban areas: 50 km/h (31 mph). Pedestrians, cyclists, and unexpected stops make speeding here a bad idea.
• Rural paved roads: 90 km/h (56 mph). Smooth roads don't mean you can floor it. Wind and sudden weather shifts can change everything fast.
• Gravel roads: 80 km/h (50 mph), but good luck hitting that without skidding. Slow down unless you like fishtailing into a ditch.

Roundabouts (Traffic Circles)

Roundabouts are more common near Reykjavik and larger towns like Akureyri. Get this wrong, and you'll frustrate every local driver around you:

• Know which exit you plan to take before entering.
• Signal only when exiting, not when entering.
• Use the outside lane only if taking the first exit.
• For all other exits, use the inside lane.
• If you're in the outside lane but need a later exit, signal toward the inside lane, but stay put until you can exit safely. Signal again when leaving.

Seatbelts, Headlights, and Alcohol Laws

Buckle up, keep your lights on, and stay sober. Here's what you need to know before getting behind the wheel.

• Seatbelts are non-negotiable. Everyone in the car, front and back, must wear one. No excuses. Caught without it? Police actually enforce this, so don't think you can get away with it.
• Headlights must be on 24/7. Yes, even in the middle of summer when the sun never sets. Icelandic law says headlights must be on at all times, regardless of natural light.
• Drinking and driving? Don't even think about it. Iceland lowered the legal blood alcohol limit from 0.05% to 0.02%. That's basically zero tolerance. If you've had even one drink, don't drive. Get caught, and you're looking at huge fines of up to ISK 100 000 ($710) or even jail time.

Mobile Phone Use and Road Etiquette

Driving a car rental in Iceland isn't the time to multitask with your phone. Holding your phone while driving is illegal, but beyond that, Iceland's roads demand your full attention. If you need to check your GPS, use a hands-free system or pull over properly. If a road is too narrow for two cars, be the one who pulls over and lets the other pass.

Choosing the Right Rental Car for Your Iceland Road Trip

Picking the wrong car and driving in Iceland gets frustrating fast. Here is what you need to know.

2WD vs. 4WD: Which One Do You Need?

The choice between a 2WD (two-wheel drive) and a 4WD (four-wheel drive) vehicle depends largely on your planned routes and the time of year:

• 2WD is fine for summer if you are sticking to paved roads like the Ring Road and hitting the usual tourist spots. It is cheaper and burns less fuel.
• 4WD is a must if you are heading into the Highlands, tackling F-roads, or driving in winter. Better grip, better control, and fewer chances of sliding off the road.

Not sure which model you want? Have a look at our range of vehicles here and find the best fit for your trip.

Rental Car Pick-Up and Drop-Off Options

If you are planning to travel to Iceland, getting your rental car should be the easiest part of your trip. Here is how to make it work for you.

• Airport pick-up: Flying in and ready to hit the road? Pick up your car at Keflavík International Airport and start your trip without wasting time.
• Reykjavík pick-up: If you are hanging out in the city first, grab your car later. No need to pay for rental days you do not use.
• One-way rentals: Not coming back to where you started? Some companies let you pick up in one place and drop off somewhere else.

Understanding Insurance Options (Gravel, Sand/Ash, Theft, Collision)

Iceland's roads are unpredictable, and insurance gives you the flexibility to drive without worrying about surprise repair bills. Here is what you need to know about your car insurance options:

• Collision Damage Waiver (CDW) is included in most rentals and covers damage from collisions, but it often comes with a high deductible. At Iceland Cars, we include the Silver Insurance Plan (CDW) in every rental, giving you essential protection from the start.
• Super Collision Damage Waiver (SCDW) lowers or removes that deductible, so you are not stuck paying a fortune if something goes wrong.
• Gravel Protection is a must if you plan to leave the city. Loose stones can easily crack windshields and damage the car's body.
• Sand and Ash Protection (SAAP) is crucial in areas with volcanic activity. Windblown sand and ash can strip paint and ruin windows.
• Theft Protection is rarely needed, but it adds peace of mind, especially in urban areas.

We recommend the Gold Insurance Plan (from ISK 3,700/USD 25 per day) as a minimum. It includes Gravel Protection (GP), covering damage to the windshield and body from gravel or rocks, and lowering the deductible/self-risk amount with the SCDW.

For full peace of mind, while exploring remote areas, we suggest the Platinum Insurance Plan. It covers a wider range of damages and comes with a 0 ISK deductible/self-risk.

Road Types and Conditions in Iceland

Iceland's roads are as wild as its landscapes. One minute, you are on a smooth surface; the next, you are battling loose gravel or a steep mountain pass. Road conditions change fast, and if you are not prepared, they will catch you off guard. Know what you are driving into or risk learning the hard way.

Paved Roads and the Ring Road (Route 1)

The Ring Road (also known as Route 1) is the backbone of the roads in Iceland, wrapping around the entire island for 1,332 km (828 miles) and connecting most major towns. It is paved, well-maintained, and the easiest way to explore Iceland by car, but that does not mean it is always smooth sailing.

It is open year-round, but don't assume that means easy driving. In winter, ice, snow, and sudden storms can make certain sections dangerous or even impassable. You can also expect heavy traffic in popular tourist areas during the summer months.

Gravel Roads and How To Drive on Them

Think driving in Iceland is just smooth highways and easy roads? Think again. Many routes to Iceland's best natural wonders are gravel, and they do not play nice with careless drivers. If you do not adjust your driving, you will either lose control or wreck your rental.

• Slow down. Gravel roads are not for speeding. The recommended limit is 80 km/h (50 mph) or lower, and for good reason.
• Loose gravel is tricky. Hit it too fast, and you might skid. It also kicks up rocks, which can crack your windshield.
• Keep your distance. If you tailgate, expect a windshield full of flying stones.
• Transition smoothly. When switching from pavement to gravel, ease off the gas instead of slamming the brakes. Sudden changes lead to accidents.
• Gravel protection insurance exists for a reason. Consider getting it to avoid hefty repair costs if something goes wrong.

F-Roads and What You Need To Know Before Driving on Them

F-roads are not your average scenic drive. These mountain roads lead deep into Iceland's Highlands, where the tarmac disappears, and things get real. They are rough, unpaved, and only open in summer. If you are not prepared, you will regret it fast.

• A 4WD is mandatory. Standard rentals are not just a bad idea; they are illegal on F-roads.
• Crossing rivers is part of the deal. Some routes require you to drive through rivers. Check the depth, go slow, and never assume your rental can handle it.
• There are no gas stations or services. Bring extra fuel, food, and emergency gear. If you break down, help is not just around the corner.
• Roads close without warning. Weather shifts fast. Always check road conditions before heading out.
• If you are unsure, do not go. F-roads require confidence and skill. If that is not you, book a tour instead.

Handling Single-Lane Bridges and Tunnels

Driving in Iceland means dealing with single-lane bridges and tunnels, and if you do not know the rules, you are in for some awkward standoffs. These roads were built for function, not convenience, so pay attention unless you enjoy reversing in tight spaces.

Single-Lane Bridges

• The vehicle closer to the bridge has the right of way. Do not assume the other driver will stop.
• If you are unsure, yield and let the other car go. It is better than playing chicken.
• Slow down before the bridge. If two cars enter at the same time, someone is backing up. Do not let it be you.

Single-Lane Tunnels

• Look for passing places. Signs will tell you who has the right of way.
• Headlights on. Even during the day, visibility is key.
• Be patient. If you are driving a big rental, it is easier to let smaller cars pass first.

What To Do When Encountering Animals on the Road

Wildlife encounters are common on Icelandic roads. If you are not paying attention, your rental car might get an unexpected (and unhappy) hitchhiker. To avoid any animal-related accidents, follow these tips.

• Sheep are the biggest culprits. They love hanging out near roads and will randomly bolt in front of your car.
• Slow down immediately, but do not swerve. Hitting an animal is bad, but losing control of your car is worse.
• Honk if necessary. Sometimes, a little noise helps move them along.
• Be patient and wait for them to clear the road. Do not try to chase or herd them yourself.
• Watch for larger animals. Horses, cows, and reindeer are less common but still a hazard, especially in rural areas.

If you hit an animal, Icelandic law requires you to report it. Call the police or ask a local for help. Do not just drive off and pretend it did not happen.

Fueling & Charging Your Rental Car

Luckily, fueling up in Iceland is just like anywhere else. The only difference? We have 3 hydrogen stations too. Unless you are driving an electric car, you will probably stick to regular gas stations or smaller towns with pumps that sell diesel and unleaded.

Where To Find Gas Stations and EV Charging Points

Running low on fuel in Reykjavík? No problem. Running low in the Westfjords or Eastfjords? That is a different story since they are spread far apart in these regions. If you plan to travel to Iceland, knowing where to fill up or charge your car can save you a major headache.

Gas stations are easy to find along the Ring Road, with brands like N1, Orkan, Olís, and OB scattered throughout the country. Around Reykjavík, there are about 80 stations to choose from. Outside the city, gas stations are spaced roughly 100 km (62 miles) apart, which works unless you forget to refuel. In remote areas like the Westfjords, North, and Highlands, stations are few and far between. If your tank hits half, top up.

EV drivers pay attention. Iceland's charging network is growing, but it is still not as widespread as gas stations. There are over 200 public rapid chargers, plus Tesla Superchargers in key locations. Apps like eONE EV Charging and ON Power help find stations before you run out of juice.

Payment Options and Fuel-Saving Tips

Want to make your trip to Iceland smoother? Learn how to pay for fuel before you hit empty. Most gas stations require a credit or debit card with a 4-digit PIN.

Payment Options

• Credit or debit cards with a PIN are your best bet.
• Fuel cards come with all our rentals, so use them to save money.
• Apple Pay and Google Pay are accepted at some stations but do not count on it everywhere.

Fuel-Saving Tips

• Diesel is more fuel-efficient. If you are covering long distances, consider a diesel rental.
• Fill up in Reykjavík. Prices are lower in the city than in remote areas.
• Use apps like Tankste! They compare fuel prices so you do not overpay.
• EV drivers take note. ON Power customers get better rates at home and charging stations with the ON app and ON key.

Important: If you select the 'Fill Up' option at the pump, a hold of ISK 15,000 to 20,000 ($107 to 140) may be placed on your card. To avoid this, choose a specific amount instead.

Best Apps & Tools for Driving in Iceland

We cannot stress this enough: a good app can make all the difference when driving in Iceland. With these apps, you will be better prepared for any situation on the road.

Real-Time Road and Weather Condition Apps

If you are driving in Iceland, checking weather and road conditions is not optional. The right apps can mean the difference between a smooth trip and getting stuck somewhere you do not want to be.

• Vegagerðin (Road.is): Your go-to for real-time road conditions. It has live webcams, closures, and updates on wind, ice, and flooding. Check it before hitting the road.
• Vedur: Iceland's official weather app. Some prefer the website, but if you want forecasts and storm alerts, it gets the job done.
• SafeTravel: Run by Icelandic Search and Rescue, this app sends out weather warnings and lets you submit travel plans in case you need help.

Navigation and Offline Maps for Remote Areas

Losing signal in Iceland is not a maybe, it is a guarantee. If you are heading into the Highlands or anywhere far from Reykjavík, you need offline maps. Do not assume Google Maps will save you when you are deep in the middle of nowhere.

Here is how to find out everything you need for navigation:

• Google Maps: Works well in cities, but download offline maps before your trip. Some remote roads will not load without them.
• Maps.me: Let you download the entire Iceland map, including hiking trails and smaller roads. Solid backup option.
• Gaia GPS: The go-to for hikers and off-roaders. The premium version has topographic maps, perfect for those exploring beyond the main roads.
• Organic Maps: A free, lightweight app with a downloadable map that includes key points of interest.

Parking Apps for Reykjavik and Major Attractions

If you choose to drive in Reykjavík or at popular attractions, finding parking can either be simple or a frustrating time-waster. Get the right app, and you will avoid circling the streets like a lost tourist.

• Parka is the most widely used app for parking payments in Reykjavík and major tourist sites. It lets you pay directly from your phone, extend your parking time remotely, and avoid running back to feed a meter. Set up your credit card in advance for a hassle-free experience.
• EasyPark is another option, though not as commonly used. It works similarly to Parka, allowing you to pay and manage parking through the app.

Parking in Reykjavik & Tourist Attractions

It can be tricky for tourists to navigate parking in Reykjavík. Here are some tips and tricks for making it easier:

Parking Zones and Pricing

Parking in Reykjavík is not free, and if you park in the wrong spot without paying, expect a fine waiting for you. The city center is split into four color-coded zones, and each comes with different rates. Know where you are parking before you assume it will be cheap.

• P1 (Red and Pink): The most expensive and busiest area. Costs $4.30 per hour with a 3-hour max stay. Paid parking from 9:00-21:00 weekdays, 10:00-21:00 weekends.
• P2 (Blue): A little cheaper at $1.60 per hour but still central. Same paid hours as P1.
• P3 (Green): Starts at $1.60 per hour for the first two hours, then drops to $0.40 per hour. Paid parking from 9:00-18:00 weekdays.
• P4 (Orange): Costs $1.60 per hour, but only applies from 8:00-16:00 on weekdays.

Car parks and multi-storey garages usually charge $1.70 for the first hour, then $0.85 per hour after that. Some tourist attractions also charge for parking, like Jökulsárlón Glacier Lagoon and Diamond Beach ($7.50 fee). Parking is free on Sundays and national holidays, so if you are in town, then enjoy the savings.

How To Pay for Parking in Iceland

Paying for parking in Iceland is simple if you know what to expect. If you are parking on the street, look for a ticket machine or parking meter.

• Ticket Machines in Reykjavík: Enter your license plate number, choose how long you are staying, and pay with coins or a card. Some machines print a ticket, but others log your payment digitally.
• Parking Meters: These older meters only accept 10, 50, and 100 ISK coins and do not take cards. They are mostly found on side streets, so carrying a few coins is a good idea.
• Multi-Storey Car Parks: Take a ticket when you enter. Before leaving, insert it into a machine to calculate your fee. You can usually pay with coins or a card.
• Mobile Apps: As we already mentioned earlier, apps like Parka and EasyPark let you pay for parking remotely in certain areas.

Final Tips for a Safe and Enjoyable Road Trip

Driving in Iceland safely and efficiently is all about preparation. Make sure you have the right apps, check road conditions regularly, and always be aware of your surroundings on the road. Here are some final tips for a successful road trip in Iceland:

How to Plan Stops Along Your Route

Planning stops is key to making the most of driving in Iceland. There is a lot to see, and you do not want to rush past the best spots.

• The Golden Circle (300 km/190 mi) covers Thingvellir National Park, Geysir Geothermal Area, and Gullfoss Waterfall. It is Iceland's most famous route for a reason.
• The Diamond Circle (260 km/160 mi) in North Iceland includes Húsavík, Dettifoss, and Godafoss waterfall. Fewer crowds, just as stunning.
• The South Coast is packed with waterfalls, glaciers, and black-sand beaches. It's one of the best routes for epic scenery.

Plan for Driving Times and Conditions

• Allow extra time for unplanned stops. Iceland's landscapes will make you want to pull over more than you expect.
• Expect longer driving times than maps suggest. Gravel roads, sudden weather changes, and narrow bridges slow things down.

Emergency Numbers to Save on Your Phone

If you run into any issues on the road, here are some emergency numbers to have on hand:

• Police and Emergency Services: 112
• Medical Emergency: 112 or 1770 (non-emergency medical line)
• Icelandic Road Administration: 1777

Frequently Asked Questions About Driving in Iceland

Do I need an international driver's license?

If your license is in Latin characters (English, German, French, etc.), you do not need an international driver's license. If not, get an official translation or an IDP.

Can I drive on F-roads with a rental car?

Only if you rent a 4WD. F-roads are rough mountain roads, and 2WD vehicles are not allowed. Even with a 4WD, check road conditions before driving, as closures are common.

What should I do in case of an emergency?

Call 112, Iceland's emergency number. If stranded, stay with your vehicle and check the SafeTravel app for alerts. For breakdowns, contact your rental company for roadside assistance.

Can you drive to Iceland?

No, Iceland is an island with no road connections. You can ship your car by ferry from Denmark via the Smyril Line, but flying and renting a car is easier.

How to drive in Iceland?

Drive on the right, keep headlights on at all times, and follow speed limits. Roads can be unpredictable, so check road conditions and be prepared for gravel, wind, and sudden weather changes.

Can you drive around Iceland?

Yes, the Ring Road (Route 1) circles the island and covers most major sights. It is 1,332 km (828 miles) long and takes about a week to drive comfortably.

Driving in Iceland Done Right

Most people land in Iceland clueless about its roads, and that is how they end up stuck, lost, or worse. Driving in Iceland is easy, but only if you do it right. You can either be the tourist who panics at the first gravel road or the one who plans ahead, rents the right car, and knows exactly what to expect. Your choice.

Rent a car in Iceland and take control of your trip. If you have any questions, reach out to us at Cars Iceland. We are here to help you 24/7 should you have any questions. Drive smart, stay safe, and make your Iceland road trip one to remember.