While many people who come camping in Iceland either rent a campervan or motorhome, there are those who choose to pack up their tent into a car and head into the great outdoors. It’s possible in the winter, but in general, this type of camping in Iceland tends to be more of a summer activity. We previously covered the top campervan and motorhome rental companies, and today we’d like to discuss the top car rental companies in Iceland for those who’d like this more economical alternative. We’ll also cover some car rental basics like whether or not you need insurance, how to compare prices, and things to keep in mind when renting a vehicle. We’ll finish with some general tips driving in Iceland to keep you safe and happy. Let’s go!

Woman receiving the keys to her Iceland car rental

Benefits of Renting a Car in Iceland

One of the benefits of renting a car in Iceland is that you have more freedom of mobility than with the traditional motorhome or campervan rental. Renting a 4×4 off-road vehicle gives you the option of exploring Iceland’s Highland and F-roads when they’re open. Having a four-by-four vehicle is a legal requirement for driving on these mountain roads, and you can also go off-roading. Iceland is a wild country that is meant to be explored. Rental a car or SUV lets you go places you otherwise wouldn’t be able to.

It’s also less expensive than a campervan or motorhome rental. You can still stop at campsites to stay the night. Depending on the make and model of your vehicle, you’ll pay 4-10 times less if you rent a car.  

What to Look For In a Car Rental Company in Iceland

We’re fortunate that we live in a day and age where almost anything we want to know is right at the tip of our fingertips. Want to know cheap hotels in Reykjavik? Just Google it. The same applies when looking for a dependable car rental company in Iceland. It’s important to read what people have to say on TripAdvisor and Google Reviews.  If a company has hundreds of 4 and 5-star reviews, they are most likely reliable, have excellent customer service, and will give you a positive experience overall during your trip to Iceland.

It’s also extremely important to buy local whenever you travel. Locally owned and operated businesses are the lifeblood of the tourism industry in Iceland. You’re also likely to get better customer care and more personalized attention than with some big multinational like Hertz or Enterprise. Don’t worry about a language barrier if you need to contact your rental company. Icelanders speak excellent English.

Customer service agent at Iceland car rental companies

Things to Keep in Mind When Comparing Prices

It’s important to note that finding the lowest price is not everything when considering which car rental company you want to use in Iceland. The company you choose to rent from may not have rock-bottom prices, but you will always get what you pay for in terms of quality. Having peace of mind and excellent customer support in the event of a problem with your rental really has no price.

Additionally, there are several companies that already offer different insurance packages as part of the price you are quoted online. Rental insurance is different in Iceland. Because of the climate, harsh elements, and unpredictable weather, you actually need it here. Due to this, many car rental providers have started including it in the cost of their rentals. They do this to save you money in the long run. In fact, CDW insurance (Collision Damage Waiver) is required by law.

We’ll touch upon this more a bit later, but it’s always a good idea to get at least basic coverage while driving in Iceland. When you factor in the price of insurance, that cheap car rental you found may end up costing you more than the one that looked more expensive at first glance. Daily rates aren’t all that matter. Comparison shop and always take insurance into account.

Recommended Car Rental Companies in Iceland

So now on to what you were really waiting for: the best car rental companies in Iceland.  We’ve chosen local companies with an excellent reputation, and that offer competitive prices, have a lot of positive reviews and are known for their exceptional customer service. There are a large number of car rental companies in Iceland, and these are but a handful, including the types of protection they offer.

Wide selection of vehicles at Iceland's best car rental companies

Cars Iceland

This company has been a leader in the car rental market in Iceland for many years now. Cars Iceland offers a wide range of vehicles and prices. This provider also has both automatic and manual transmissions as well as gas and diesel engines. You can rent everything from the iconic Land Rover Defender 4×4 to the simple and sporty Kia Picanto. All of their rentals include Collision Damage Waiver (CDW), Super Collision Damage Waiver (SCDW), Gravel Protection (GP), and Theft Protection (TP). Sand and Ash Protection (SAAP) is optional, but we recommend getting that as well, especially if you are traveling the along the South Coast. Southern Iceland is known for its sand and ash storms. Yes, that’s a real thing; I told you Iceland was special!  So don’t get caught without protection.

Reykjavik Cars

Reykjavik cars is another one of the top car hire providers in the country. With great customer service and competitive prices, it’s easy to understand why. This is the perfect option for those looking to have a low-cost rental and are not particularly concerned with insurance coverage. The vehicles from Reykjavik Cars come with the minimum CDW  insurance, which is standard with all car rentals in Iceland. They have small vehicles such as the Toyota Aygo and 4×4 SUVs such as the Kia Sorrento and Subaru Forester.

Blue Car Rental

This is another company that is well known in Iceland. All of their vehicles come with Theft Protection (TP), Gravel Protection (GP), Collision Damage Waiver (CDW), and Super Collision Damage Waiver insurance (SCDW). It has already been included in the cost of the rental. Blue Car Rental also offers low prices and a wide range of vehicles.

Other Car Rental Options

These are not the only companies out there. We’ve also heard great things about Reykjavik Auto, Route 1 Car Rental, and Auto Iceland. Check Google Reviews to see ratings and what people have to say about these car rental providers. Whichever option you choose, make sure your car rental company has pickup and dropoff offices in your preferred location. Some are at Keflavik International Airport (KEF), some are in downtown Reykjavik, and some are outside of the city. 

  • Cars Iceland

  • Reykjavik Cars

  • Blue Car Rental

  • Reykjavik Auto

  • Route 1 Car Rental

  • Auto Iceland

Also, keep the following in mind when renting a car in Iceland:

  • The minimum age for renting a car in Iceland is 20 years of age
  • Your license must be in English (or one of the other approved languages). Other licenses need to be translated.
  • You must have had your license for at least a year
  • You’ll need a credit card to secure the booking

Types of Car Rental Insurance in Iceland – SAAP, GP, TP, CDW, and SCDW

As I mentioned before, car insurance in Iceland is necessary. It’s not just the rental companies trying to upsell you something you don’t need, I promise. A volcanic island close to the Arctic Circle is going to have very different driving conditions and weather than what you are probably used to. It’s easy to have a false sense of security, but don’t fall into that trap. There are freak hailstorms, ash storms, sandstorms, and other surprise elements. But what do all these crazy acronyms mean? We’re here to clear up some of the confusion. Let’s take a quick look at the different types of protection that the companies offer and what they’re used for.

Storm damage on a car rental in Iceland

Sand and Ash Protection (SAAP)

Many parts of the country remain covered in sand and ash after the 2010 eruption of Eyjafjallajökull in South Iceland. Unexpected sandstorms and ash storms can swirl up at any time. This insurance covers you from dust and damage you may incur along the way.

Gravel Protection (GP)

Many roads in Iceland are not paved, and it can turn into a bit of a mess quite quickly. This Insurance protects you from damage and scratches caused by flying pebbles, splashing mud, and other elements of wild terrain. You definitely want to get this type of insurance if you plan on driving on Iceland’s F-roads and exploring the mountains or the country’s Highlands.

Collision Damage and Super Collision Damage Waiver (CDW and SCDW)

These types of insurance will protect you in the event of an accident. The difference is that the Super Collision Damage Waiver provides a more considerable amount of protection. This means that you’ll end up paying less if you do have an incident. No matter how careful of a driver you are, icy roads and snowy conditions will automatically put you at a disadvantage. Even if your driving record is spotless, take into account that there are lots of drivers on these roads. Not everyone will be paying attention at all times or have the experience of handling a vehicle sliding out of control on black ice. This is probably why the government made this type of insurance mandatory for car rentals.

Theft Protection (TP)

The crime rate in Iceland is pretty low.  Theft is not really something that you have to worry about. For this reason, many car rental companies offer insurance that covers the full cost of a rental vehicle in the unlikely event that someone steals it. To be perfectly honest you are much more likely to have your car damaged by gravel or hail than to have it stolen.

Driver receiving the keys to their Iceland car rental at Keflavik Airport

Best Car Rental Companies in Iceland

Finding a cheap, high-quality car rental in Iceland is integral to making the most of your trip. We hope our recommendations will steer you in the right direction of finding the best option for your needs and budget. Some other helpful tips we can offer are to plan your gas stations in advance and pay close attention to signs intended for drivers. Iceland has long stretches of road, and the last thing you want is to see the gas tank meter inching closer to that red E without knowing if you’re going to be stranded in a remote location.

Lastly, heed the signs on the highways and inner roads. If the Icelandic Road and Coastal Administration has closed an access point or has lowered the speed on a particular stretch of highway, it’s always for a reason. Thinking you know better than the people whose job it is to safely maintain these areas could result in some serious consequences. Taking a road trip around Iceland’s Ring Road is a great way to see the country. Let’s make sure you choose the perfect car rental company and have an amazing time. 

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