Driving in Iceland : Everything you need to Know
Updated: May 9, 2023
Driving Rules, Car Rental Vendors, Car Insurance Comparisons, Vendor Recommendations and much more..!
Iceland is one of the most unique places in the world. You can experience everything right from grasslands to snow-capped mountains to glaciers to volcanoes - there is something for everyone in this incredible place.
The country is famous for its Route 1 or famously called The Ring road, a ~2000km loop that encircles the country and allows travellers to explore its stunning landscapes. While planning for a trip to Iceland, it is very crucial to figure out the mode of transportation and how one would get around.
Table of Contents
Getting around Iceland
While taking tour buses is one of the most convenient and affordable options, the routes are not always direct and the stops are limited. Iceland also offers a range of guided tours, which are relatively more comprehensive. But, guided tours also have their set of restrictions with a strict itinerary and schedule to follow. People who may have a rush for the adrenaline may also consider hitchhiking across the country, but it's not the recommended option due to the adverse weather conditions and relying on strangers to get to your next stop.
For our trip, we decided to rent out a car to explore the country. We wanted something that gives us the freedom to plan our route and experience Iceland in a way that suits us the best!
We traveled to Iceland in early April 2023, which is normally considered the spring season there. While it is the onset of summer, you can still find winter conditions in some parts of the country and some of the roads/attractions are closed to tourists due to dangerous conditions.
Driving in Iceland - The Rulebook
Ok, no matter how beautiful this country is, it can be extremely dangerous as well. Iceland is infamous for its drastic weather conditions which change dramatically throughout the day.
In fact, during our trip, we were so fed up with switching on our car wipers every few minutes! We would normally start off on a pretty sunny day and only after a few kilometers it would start to pour down with all its might! We braved very high gusts of winds (up to 100KmpH sometimes), which would literally shake our humble Hyundai and it would be a challenge to keep the car under control.
So, needless to say, in such conditions following a rulebook to the T is an absolute must for one’s safety and safety of the others.
Which Vehicle will be Suitable for Iceland?
Most of the roads around Route-1 are paved and are in excellent condition with a speed limit of 90 kmph. One can opt for any kind of vehicle (2WD/4WD) on these roads. However, based on your itinerary, some attractions may require you to take gravel/unpaved roads or “F-Roads”- which can be a little bumpy and strictly require 4WD vehicles (2WD vehicles are prohibited on F-Roads).
One of the most common questions from anyone who is planning for Iceland trip is which car should they prefer. The answer depends on what exactly you want to explore and in which season.
If your itinerary is strictly around Ring Road (Route 1) - you can easily navigate with a smaller car in any season, provided you have studded tires during winter. However, if you plan to get more adventures and want to explore the highlands via the rugged F-Roads, you will have to rent a bigger 4WD vehicle.
We travelled in early April, when we did get Icy conditions on some roads, but were able to comfortably navigate in our Hyundai i20 (Automatic, 2WD). Our vendor, Blue Car Rental, provided us with free studded winter tires for a stress-free driving experience (which was a big plus!).
Do we need an International driver's Permit in Iceland?
We were told that it is recommended to travel with an International Driver’s Permit (IDP) to avoid any kind of inconvenience of our Indian Driving license not being recognized. However, throughout our journey, we did not come across any such situation where we had to produce our official documents.
As per the Icelandic rules and regulations, any driving license (DL) that is printed in Latin characters would be acceptable. So, as long as your DL is in English, you may not need IDP in Iceland.
But because there were too many things (read non-cancellable bookings) riding on this rental vehicle, we decided to not take any risks and get our individual IDPs anyways! One can get their IDP at a small fee (around INR 4000) by visiting their RTO with the following documents:
Valid Driver’s License
Valid Passport
Valid Visa
Return Tickets
Two Latest Passport Size Photographs
Driving Rules in Iceland
While most of the rules are similar to driving in other countries, following are a few things you need to keep in mind and adhere strictly to while driving in Iceland:
Driving on the Right side of the road - Iceland is a Left-hand drive country, which means that one needs to drive on the right side of the road. So, for someone like us, who was traveling from India (right-hand drive country), it took a little bit of adjusting before we hit the road. An automatic vehicle is extremely helpful for those who are not entirely familiar with a left-hand vehicle.
Always keep the Headlights On - It is mandatory to keep the headlights on irrespective of the daylight conditions. This is one of the rules that you will begin to appreciate only after you have driven in Iceland. Sometimes, with extremely heavy rainfall, the visibility on the road gets massively compromised and headlights keep everyone around safe.
Familiarize yourself with road signs - It is important to know the most common road signs prevalent in Iceland to avoid any last-moment confusion. Pay special attention to warning signs, such as slippery and narrow roads, speed limits, end of tarred roads, and single lane bridge.
Do not drive while under the influence of alcohol or drugs: Iceland provides enough thrill anyways, why go for the thrill of driving under the influence? Iceland has a VERY STRICT rule against drunk driving. The maximum permitted level of alcohol in the driver’s blood is 0.05% (~half a beer). If the level of alcohol exceeds this, severe penalties include the withdrawal of your driving license, a prison sentence, and up to a 160,000 Krona fine (~INR 95,000).
Do not make sudden stops/pullovers: While this may be common sense, tourists often make stupid decisions to take that one picture-perfect shot. Route-1/Ring Road is a single-lane highway with very fast-moving traffic and stopping suddenly can get really dangerous (even for a bathroom emergency). It is prohibited to stop the car along the road unless it's a designated pull-over spot.
Do not over speed - Make yourself familiar with the speed limit of various roads in Iceland. There are speed cameras all over and if caught severe penalties can be imposed (Upto ~INR 35,000).
Fun tip : We had actually put away around INR 50,000 in our budget only for fines/challans. Thankfully, we had an "uneventful" trip challan wise and did not have to use any of that money! But we have put together a comprehensive budget for Iceland trip and shared tips/tricks to save money! Check it out here.
Gas Stations in Iceland
Given the geographical location of the country, the fuel is imported into Iceland. This is the main reason why fuel is so expensive there.
Apart from that, Gas stations form a crucial part of your planning the Ring Road trip as the gas stations are few and far along the route. It is important to keep the following points in mind during your road trip:
Map ‘em all: Google Maps is a huge saviour as it indicates the available gas stations along your route and aids in planning for your day. As a rule of thumb, always re-fuel when you hit half-tank. Given the drastic weather conditions in Iceland, it is always recommended to have enough gas in your vehicle for any unwanted situation. You will also find a self-service Tire-Air Pressure pump at most of the gas stations.
Refuelling the car and your tummy: Most of the gas stations also have a mini grocery/refreshment store attached. You can purchase common utilities or grab a bite along your way. As the number of public washrooms is limited, gas stations will generally be the ideal stopover to freshen up as well. However, keep in mind that some fuel pumps are “Self-Service only” and would not have groceries/washrooms, etc. So check it out on google maps before adding it as a stop.
Filling in the right fuel: Again, as commonsensical as it may sound, a lot of tourists often make the mistake of pumping in the wrong fuel in the car. The Green hose is for Petrol/Gas and the red one is for diesel. Be aware that no car insurance, whoever is comprehensive, will cover the damages caused by pumping in the wrong fuel!
Paying for Fuel: All gas stations in Iceland accept credit cards with a 4-digit pin. So, make sure you are carrying one of them for smooth transactions. We have also covered our experience with a Global Currency Credit Card with Zero Forex Markup in our blog here. Check it out for additional tips!
Make the most of your discounts: Most of car rental vendors provide complimentary discount chips with car keys. You can tap the chip at the respective fuel station to avail of discounts on every liter of fuel you purchase. For eg: Blue Car Rental provided us with an Olis/OB discount chip. Every vendor may have collaboration with different gas stations like N1, Orkan, Olis, etc
POTENTIAL FRAUD AT GAS STATIONS: Okay, we had to write it in capitals to grab your attention. This is important. You can lose a lot of money (or rather a substantial amount of money can get blocked on your credit card for a long time) if you don't pay attention to this part :
Never go for the “Full Tank” option - Every gas station will require you to key in the amount (in Icelandic Krona) equivalent to your fuel requirements. Among all other options, there is one called - Full Tank. Pressing that blocks a lot of money (~USD 250) on your card. While it is eventually returned to your account, it takes a few days and it is really inconvenient.
Be Cautious at Olis/OB Fuel stations: This happened with us twice on our trip. As our rental car vendor provided us with the discount chip for Olis, we went to refuel from their outlets. On both occasions, I was charged almost 5 times the amount I had keyed in. After the second time, we never returned to the Olis/OB gas stations and instead used N1, where no such problem happened. Both the transactions (almost ~INR 20,000) were reversed after 3 weeks, but it was something that ruined our mood during the trip!
Car Rental in Iceland: Considerations, Options, and Recommendations
As mentioned previously, the most important consideration for deciding which is the best kind of vehicle for you depends upon your itinerary and what you plan on doing in Iceland.
Car rental options
2 Wheel Drive (2WD) Vehicle
Is Suitable for traveling in summers or light winters (with studded tires). If you plan on going to major tourist spots along the Ring Road or Golden Circle, a 2WD will be smooth throughout.
Is not recommended in case you are traveling in peak winters or icy conditions. Also, if you plan on traveling to the highlands/mountains via the F-Roads, 2WD vehicles are prohibited there and heavy fines would be imposed if violated.
SUV with 4-Wheel Drive:
Is suitable if your route has any F-Roads. These are extremely rugged roads with water crossings etc, where a normal 2WD would ideally get stuck.
Automatic vs Manual
For obvious reasons, the manual version of the car would be the cheaper alternative, however, choose it only if you are extremely comfortable handling a stick while driving a left-hand vehicle. Apart from that, a lot of routes may have slippery slopes, where it is relatively harder to manoeuver a manual car, so it is recommended to go for the automatic version.
GPS or WiFi
Every car rental vendor would provide an add-on facility to get a portable GPS and/or WiFi device that can be rented on a per day basis. A navigation guide is extremely important in Iceland without which it can be dangerous to head on to a road trip.
While we researched for our trip, we read some drastic reviews about the patchy service of a portable GPS device. Users complained about it working in bits and pieces. This is not something one would like! Hence, we ditched the option of going with a GPS.
Instead, we decided to navigate via Google Maps, which are pretty accurate in Iceland. Although we had downloaded the Offline map of our route, it is always helpful to have Internet. While a WiFi router (that can be used by upto 10 devices) could be easily rented for around $10/day, we decided to buy International SIM card with 4G data. The Internet coverage was pretty smooth throughout and we have covered our detailed experience around the SIM cards we used in our blog here.
Car Insurance Options and Packages
First thing is first. Car insurance is absolutely compulsory for rental cars in Iceland. One needs to purchase the basic coverage and can choose to upgrade to higher coverage options based on one’s requirements.
This for sure is a very broad and confusing topic. As mentioned previously, Iceland has very volatile driving conditions which can make it slightly challenging to drive here. Things like flying gravel/Ash can damage the windscreen or the car body, which can mean shelling out a huge amount towards the damages (To give you a ballpark, a small scratch on the windscreen can cost you around INR 20,000-35,000).
Hence, getting bundled car insurance from the rental company or any other vendor is always a good idea. It gives you the peace of mind to drive freely abiet cautiously without worrying about the blow on your wallet.
There are many kinds of insurance options available in Iceland, and some of them would be very unique to the country because of the conditions prevalent here. Following is a high-level overview of the insurance options that you will find:
Collision Damage Waiver (CDW) protects you against damage to the rental car due to an accident, vandalism, fire, or theft.
Theft Protection (TP) protects you against theft of the rental car.
Personal Accident Insurance (PAI) covers medical expenses for the driver and passengers in case of an accident
Gravel insurance protects you against gravel which can crack on your windshield or causes vehicle damage
Sand and Ash Insurance (SAAP)
Super CDW is an additional insurance option which provides higher coverage than the basic CDW.
Most of the car rental vendors would provide you to opt for one or more of these insurance options as Ala-Carte and will charge you on a per day basis accordingly.
We, however went with Blue Car Rentals, which offers all-inclusive insurance package with a possibility of Zero Liability (100% coverage)! We had an amazing experience with them, and would highly recommend considering them while planning your Ring Road travel.
Our Experience with Blue Car Rentals
We had opted for an automatic 2WD vehicle and it came in with bundled insurance package. On top of that, we opted for the Liability Waiver option as we wanted zero liability against any possible damage. While, these add-ons can definitely increase the overall costs, we wanted to hedge all possible risks.
Quick math made us realise that even one small knick on the windscreen would have costed us much more than the overall cost of the insurance + liability waiver. So, eventually - it was a good deal!
Overview of the Car Rental Process :
Everything can be done online on Blue Car’s website.
They have free cancellation option, so you can just make tension free advance bookings
A few days before the travel, Blue Car would reach out (via email) to initiate online check-in process. This step is highly recommended as it makes the car pick up process absolutely hassle-free without any wait time
Blue Car’s airport office is at a walking distance from the Departure terminal of KEF Airport. As we had to pick up our car post 6:00 PM (after office hours), we were sent the details of the pick-up box with passcode.
We collected our keys and went straight to our car and finally hit the road!
Towards the end of our trip, we decided to drop off the car at their Reykjavik office. After a quick inspection, we were good to go.
Blue Car sends an inspection report of the current state of the car at the time of pick up. A similar report is sent to you after the car is dropped off.
Blue Car provides 24X7 Road side assistance (which is free of cost with zero liability package), fortunately, we did not avail those services throughout our journey :)
We hope this was helpful for you and it enables you to plan your best trip yet to Iceland! if you still have any doubts, feel free to drop a comment!
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