Car rentals in Iceland

Driving in Iceland: Essential Rules

Iceland is one of the world's great self-drive destinations — the Ring Road circles the entire island, and a hire car is genuinely the only practical way to reach the waterfalls, black-sand beaches, and glacier views that define an Icelandic trip. Driving here rewards preparation more than almost anywhere else in Europe: the roads are good, but the weather, surfaces, and a handful of strict rules catch out visitors who treat it like a typical road trip.

• Side of the road: In Iceland you drive on the right-hand side, and all hire cars are left-hand drive. Overtake on the left.
• Off-road driving is illegal — full stop: Driving off marked roads and tracks is against the law everywhere in the country, to protect fragile moss and volcanic terrain that can take decades to recover from a single tyre track. Enforcement is strict, with fines reported well into six figures in Icelandic krónur, and rental insurance explicitly excludes any damage caused off-road.
• Alcohol limit: Iceland's blood alcohol limit is 0.02% — among the strictest in Europe. A single drink is often enough to put you over it. Roadside breath testing is routine, including on popular routes like the Golden Circle, and penalties include steep fines and licence suspension. If you plan to drive, do not drink at all.
• Wind — a genuine driving hazard: Sudden, powerful gusts are common, particularly in coastal areas and the highlands. Strong wind can tear open a car door and bend the hinges or frame if you're not holding it firmly when you get in or out — this is one of the most common and expensive insurance claims in the country, and it is frequently excluded from standard cover. Check wind forecasts before setting out and hold the door firmly in gusty conditions.
• Gravel roads: A large share of the network outside the paved Ring Road is gravel, and gravel can look deceptively similar to asphalt at a glance while offering far less grip and a much longer braking distance. Slow down the moment pavement ends, and expect stone-chip windscreen damage to be one of the most frequent rental insurance claims in the country.
• F-roads: Iceland's highland mountain roads, marked with an "F" before the route number, are legally restricted to 4x4 vehicles and typically open only from late June to early September. Many involve unbridged river crossings. Taking a standard two-wheel-drive car onto an F-road is illegal, and driving one voids your rental cover entirely, leaving you personally liable for the vehicle.
• River and water crossings: No rental insurance, at any level, covers damage caused by driving into or across rivers and streams — this is standard across every supplier in the market. If you would not cross a given ford on foot, do not attempt it in the car, on an F-road or otherwise.
• Single-lane bridges: Still common in rural areas, including sections of the Ring Road. The vehicle that reaches the bridge first has the right of way, but always slow down and be ready to yield if another vehicle is already crossing.
• Sheep on the road: Free-roaming sheep are a common summer hazard on rural routes — slow down well in advance where you see them near the road.
• Headlights: Dipped headlights must be on at all times, day and night, year-round.
• Roadside stops: Stopping on the shoulder of a high-speed road to take photos is illegal except in a genuine emergency, and a leading cause of accidents involving visiting drivers. Use marked viewpoints and pull-offs instead.
• Seatbelts: Mandatory for every occupant.

Iceland has no toll roads in the conventional sense — most tunnels are free, with the notable exception of the Vaðlaheiðargöng tunnel near Akureyri, which carries a toll. As of January 2026, Iceland has also introduced a kilometre-based road charge for all vehicles, replacing part of the former fuel tax; rental companies bill this automatically as part of your final charges, either per kilometre driven or as a flat daily rate, so check how your supplier applies it.

Iceland Car Hire Insurance

Every car hire listed on eCarBookers includes the supplier's standard collision damage waiver (CDW) in the basic rate. Standard CDW carries an excess — the amount you would be responsible for in the event of damage. Excess amounts vary by supplier and vehicle class, and the exact figure is displayed clearly before you confirm your booking, so there are no surprises at the desk. You confirm your booking online and pay the balance at the rental desk when you collect the car — unlike most booking platforms, eCarBookers does not charge the full rental amount at the time of booking.

If you prefer to drive with no excess at all, fully comprehensive zero-excess cover is available directly from your supplier when you collect the car. The cover comes from the hire company itself, not a third-party insurer — so once added, there is no excess to pay and no reimbursement claim to file. Because your booking confirmation shows the standard excess that applies, you arrive knowing exactly what the cover replaces.

Certain situations fall outside standard CDW cover across the car hire industry. Tyres, glass, underbody damage, lost or damaged keys, and a flat battery caused by driver error — such as leaving the lights on while the vehicle is unattended — are typically not covered and may result in a separate charge if they occur. Iceland carries several destination-specific exclusions worth understanding before you book: gravel and wind damage are common but frequently sit outside standard cover, sand and volcanic ash damage on the south coast is typically a separate protection entirely, and damage from driving on F-roads or through any river or water crossing is excluded from every level of cover offered in the market, regardless of vehicle. Check your booking confirmation for the specific cover terms applicable to your hire, and ask specifically about gravel, wind, and sand protection if your route includes unpaved roads or the south coast.

Popular Car Hire Locations in Iceland

eCarBookers compares car hire across Iceland's key collection points. Keflavík International Airport handles nearly all arrivals and is the natural starting point for the Ring Road, with Reykjavík serving city and downtown collection. Every location follows the same model: book online, see every cost before you confirm, and pay the balance at the desk on collection.