Iceland’s Car Hire Industry Adapts to Meet Surging Tourist Demand

Iceland’s dramatic landscapes, winding coastal roads, and remote natural wonders make it one of the best countries in the world for a self-drive adventure. Renting a car gives you the freedom to explore at your own pace and experience the raw beauty of the Land of Fire and Ice beyond the typical tourist hubs. For travelers planning their first trip, booking through a trusted local company like Blue Car Rental ensures a smooth and reliable start to the journey.

To help you plan the perfect road trip, here are the top tips for car rental in Iceland.

Book Your Rental Early

Iceland has become an incredibly popular travel destination, especially during the peak summer months (June through August). Car rentals can sell out quickly, and last-minute bookings often come with higher prices. To secure the best rates and widest choice of vehicles, especially if you need a 4×4 for more rugged routes make sure to book your car rental several months in advance.

Bonus Tip: Booking early also gives you more flexibility in choosing add-ons like GPS units, Wi-Fi routers, or child safety seats if needed.

Choose the Right Vehicle for Your Itinerary

The type of car you rent should depend heavily on your travel plans:

• 2WD cars are perfect for Reykjavík city trips and popular routes like the Golden Circle and South Coast.
• 4×4 SUVs are recommended if you plan to visit the Highlands, drive on F-roads (mountain tracks), or travel during winter.

Remember, F-roads (marked with “F” on maps) are only accessible with a 4×4 vehicle and often require river crossings and rough terrain navigation.

Understand Iceland’s Insurance Options

Iceland’s weather and road conditions can be unpredictable. Strong winds, flying gravel, and sudden weather changes are common.

Most car rental companies offer additional insurance coverage options beyond the basic Collision Damage Waiver (CDW). Popular add-ons include:

• Gravel Protection (GP): Protects against damages from gravel hitting the car.
• Sand and Ash Protection (SAAP): Important if traveling near volcanic areas.
• Theft Protection (TP): Theft is rare but gives extra peace of mind.

Pro Tip: Full insurance packages can save you significant costs and worry if unexpected damage occurs.

Pick Up and Drop Off at Keflavík Airport

Keflavík International Airport (KEF) is Iceland’s main international gateway, located about 45 minutes from Reykjavík. Picking up your rental car at the airport allows you to start your adventure immediately without needing expensive airport transfers.

Most major rental companies, including local favorites, have desks or shuttle services available at the airport, making the pick-up and drop-off process simple and efficient.

Know the Rules of the Road

Driving in Iceland is relatively straightforward for most visitors, but it’s important to be aware of a few unique local rules that help keep everyone safe on the road:

• Headlights must be switched on at all times, regardless of whether it is day or night.
• Seat belts are mandatory for every passenger, no matter where they are seated.
• Speed limits are strictly enforced and vary: 50 km/h in cities, 80 km/h on gravel roads, and 90 km/h on paved rural roads.
• Off-road driving is completely illegal and carries hefty fines; it also causes significant and lasting damage to Iceland’s fragile landscapes.
• Single-lane bridges are common outside the city — always yield to the car closest to the bridge.
• Animals on roads are not uncommon in rural areas. Always slow down and be alert for sheep and horses near roadways.

Stick to marked roads, respect all traffic signs (especially those related to weather warnings), and remember that defensive, cautious driving is the best approach to Iceland’s dynamic conditions.

Monitor Weather and Road Conditions Daily

Icelandic weather is famously unpredictable and can change in mere minutes. A bright, sunny morning might quickly give way to fierce winds, heavy rain, or even a sudden snowstorm by the afternoon. Travelers must be prepared for all kinds of weather conditions during a single day, no matter the season. Dressing in layers and having waterproof gear on hand is essential for staying safe and comfortable while driving and exploring.

Before setting out each day, check:

• road.is for road closures and conditions
• vedur.is for weather forecasts and alerts

If conditions are unsafe, it’s better to delay your drive rather than take risks, especially in winter months.

Fill Up on Fuel When You Can

Gas stations can be few and far between once you leave populated areas. It’s a good habit to top up your tank whenever you pass a fuel station, especially in remote regions like the Westfjords, the Highlands, or the East Fjords.

Many gas stations are self-service and operate 24/7 with credit cards.

Tip: Some rural stations only accept specific fuel cards—ask your rental company if they provide one.

Pack Essentials for the Road

Even short drives in Iceland can be isolated, so it’s smart to pack some essentials:

• Water and snacks
• Warm clothing layers
• Phone chargers and power banks
• A printed map in case of GPS signal loss
• First aid kit and basic tools

Winter travelers should also carry blankets and extra food in case of road closures.

Drive Carefully on Gravel Roads

Gravel roads are common outside major routes. They can be tricky if you’re not used to them:

• Drive slower than you would on asphalt.
• Brake gently to avoid sliding.
• Be extra cautious when approaching single-lane bridges.

Many accidents in Iceland happen when drivers transition from paved to gravel surfaces too quickly.

Respect Nature and Other Travelers

Iceland’s stunning landscapes are fragile. Always:

• Park only in designated areas.
• Stay on marked paths and roads.
• Avoid disturbing wildlife.

By respecting the environment, you help preserve Iceland’s magic for future generations.

Final Thoughts

A rental car gives you unparalleled freedom to explore Iceland’s stunning natural wonders, from thundering waterfalls to remote fjords. With the right preparation and respect for local conditions, driving in Iceland can be one of the most memorable experiences of your trip.

By booking early, choosing the right vehicle, and staying informed, you set yourself up for a smooth and safe adventure. Ready to start your journey? Begin by reserving your car with a trusted local provider like Blue Car Rental and get ready to experience the road trip of a lifetime.