Photo credit: Iceland

Planning to rent a car in Iceland? The island of fire and ice has become one of the world’s top destinations and has risen to the top of every major travel magazine’s “must go” list. Exploring the island’s dramatic landscape with its colorful fishing villages, volcanoes, geysers, hot springs and lava fields is only possible if you have your own wheels. Before you plan your trip, follow these tips to ensure a smooth ride.

Essential Tips for Renting a Car in Iceland

Book from home.

Waiting to book your reservation until you’re in Iceland will add more stress to your trip. In addition, you are almost guaranteed to pay more. Most major car rental companies allow free cancellations. So go ahead and book your trip from the U.S. ahead of time. The further ahead you reserve your car, the better the chance of landing a deal. In addition, you can watch out for price drops.

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You do not need an International Driving Permit.

All you need is a valid state-issued driver’s license to rent a car in Iceland, and obtaining an International Driving Permit is not necessary in this country where nearly everyone speaks passable English. The document is easy to obtain and simply translates the information on your driver’s license.

Choose the right car.

When selecting a rental car, consider the daunting driving conditions. Iceland’s roads range from paved highways to rugged mountain passages known as F-roads. Not every car can handle the variety of terrain. If you want to give off-roading a try, make sure to rent a car with four-wheel drive and give your rental car company a rundown of where you plan to take the vehicle to ensure those activities will be fully covered.

The damage waiver is included in the rate.

In Iceland, all cars need to be insured. However, there are a few different types of insurance and added protections to know about. Car rental companies generally include the Collision Damage Waiver (CDW) along with liability insurance, so declining this option is not only difficult but unwise. For example, an Enterprise rental car reservation at Keflavik International Airport lists the following coverage types automatically included: a damage waiver, theft waiver, supplemental liability protection (SLP) and personal accident insurance.

Consider additional insurance for gravel, sand and ash.

While the CDW covers you for damage from a collision or accident, Iceland’s extreme environmental conditions have inspired a few additional types of insurance that are recommended if you plan to do a lot of exploring. While the Golden Circle tour is an easy drive on a paved highway, venturing off the beaten path onto Iceland’s many unpaved roads can kick up loose gravel that is likely to damage the vehicle. Consequently, opting for gravel protection can be a good idea. Additionally, if you’re planning to tour the southern part of Iceland, make sure the policy includes Sand and Ash Protection (SAAP) to guard against volcanic ash and sandstorms.

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Pay for the rental in Icelandic krona.

You may have the option to pay for the rental in U.S. dollars, but this option will cost you more in the long run. Pay in the local currency to avoid Dynamic Currency Conversion fees. If you opt to pay in U.S. dollars, the rental car company converts the purchase amount from the local currency on your behalf. But this process is entirely unnecessary, since your credit card company will process the transaction in either currency, and you will pay through the nose for the non-convenience.

Keep your eye on the fuel gauge.

It’s possible to drive hundreds of miles in Iceland without seeing a gas station, so make a point of topping up the tank more often than you might at home. Most gas stations are self-service and open 24 hours a day. One more tip: Most Icelandic gas stations have a free self-service car wash, which is handy if you’re driving through areas with a lot of sand and volcanic ash.

Keep an eye out for speed traps.

Iceland has many fixed-camera speed traps as well as police cars equipped with radar guns. You won’t always know you’ve been caught speeding until after you’ve returned home, so keep an eye on the speedometer.

Inspect the car carefully before you drive away.

While it’s tempting to head straight for the Blue Lagoon upon picking up your vehicle, make sure to inspect the car extra carefully for any dings, dents or scratches on the surface. Take photos of every inch of the car. Otherwise, you could end up paying for those imperfections if you don’t document them before you leave.