Iceland Driving Guide 2021

Driving in Iceland is the only way to fully experience this island nation’s stunning beauty. Check these essential tips, get your International Driving Permit and you’ll be ready to go.

Photos of Iceland


Driving in Iceland sounds a little like a voyage into the unknown. The nation is not only famous for its stunning scenery and natural beauty, but also for its harsh weather conditions. The prospect of driving in Iceland in winter is naturally one that might make you think twice and will undoubtedly raise several questions in your mind. These could include the sort of car you ought to rent, whether driving in Iceland with a US license is allowed, advice on driving the Golden Circle in Iceland, common driving distances and times in Iceland, whether driving in Iceland in March means you will still be negotiating arctic conditions, and a million other things.

Iceland tourism sites have all the ingredients as a vacation destination for those with a love for the great outdoors and a sense of adventure. There are more than 100,000 square kilometers (almost 40,000 square miles) to explore, and yet the population is only 360,000. This means it has the lowest population density of any nation in Europe. To put that into context, this is a country with a total area only slightly smaller than that of England, which has a population of 55 million.

In other words, this is the ideal destination to explore in your own terms, in your own time and according to your own rules. But to do that, you are, without a doubt, going to need to do it in your own car so driving in Iceland will be essential. Visit Iceland and make your driving easy and less hassle through the driving tips here!

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Renting a car will allow you to explore not just the big cities but also those all-important towns, villages and landmarks in Iceland.

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Do I need to get an International Driving Permit for driving in Iceland?

Driving in Iceland with a US license requires an International Driving Permit (IDP). This internationally recognized document provides exactly the same information as is on your US driver’s license, but is translated into 12 common languages, including Icelandic. If you intend to rent a car while visiting Iceland, an IDP is absolutely essential for anyone holding a license or driver’s permit that was issued outside the European Union.

As well as needing an IDP to rent a car,you will also be asked to produce it if you have any interaction with the traffic police,for example if you are involved in an accident or you are subject to a random stop or check.

Photo of Iceland

Iceland is outside the European Union but is within the European Economic Area. Conceptually, this means it is a nation that has close links with the EU, and driving in Iceland licence checks will generally accept an EU-issued license at face value. However, for those of us planning on driving in Iceland with a US license, an International Driving Permit (IDP) is necessary.

This is a document that can be issued online and provides all the key information from your driver’s license in a way that is instantly understandable. The IDP is translated into 12 different languages, and is recognized and understood in countries across Europe – Iceland included.

Why bother with an IDP?

You have probably already heard that practically all of Iceland’s 360,000 inhabitants speak English, and many do so fluently. You might wonder why in this case you need an IDP.

The issue here is not so much one of understanding what is written on the license but providing that information in an acceptable format and on a recognized document. Rental clerks and police officers deal with IDPs every day and if you have an overseas license they will expect to see one.

Surely, you might get lucky and be permitted to hire a car just by showing your license, but it is not a risk worth taking. In fact, it could lead to even more problems further down the line if you are involved in an accident or you get stopped by the police and are asked to produce your IDP.

The other important fact to remember is that your IDP complements your official US driver’s license, it does not replace it. So any time you are driving in Iceland, make sure you have both documents with you and in a safe place, as well as your vehicle documents.

Applying for an International Driving Permit in Iceland

So long as you are aged 18 or over and you’ve held your US driver’s license for six months or more, you are eligible to apply for an IDP. If you are a young or inexperienced driver, however, keep in mind that having an IDP is not a guarantee that the rental firm will be prepared to let you hire a car – but more on that in a moment.

A standard IDP is issued with a validity period of 12 months, so don’t order it till you are certain of your travel dates and have confirmed your tickets. It will typically be issued in a few days, and there’s even a premium fast track service that will turn one around in a matter of hours. Even if you like to be super-efficient and organized, sending off your application a couple of weeks before you go will leave you more than enough time.

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If you forget or make a last minute decision that you want to rent a car while you are in Iceland, it is possible to get an IDP through a premium fast track service, and it will be sent to you electronically in just a few hours.

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What is the car rental process like in Iceland?

As long as you have your driver’s license, IDP, and payment card, you will find that the mechanics of renting a car in Iceland are practically identical to renting in the US. You will even see the same Iceland car rental companies, especially if you rent a car from the airport. These include Avis, Hertz, Budget and all the rest.

Photo of Iceland Car Rental

By and large, the process for renting a car in Iceland is no different to other countries. Iceland has a choice of rental companies, including familiar big names like Hertz or Avis and dozens of local operators, too. Most are in Reykjavik, and this is where you are likely to collect yours.

Here are a few specific tips to keep in mind to ensure you enjoy driving in Iceland in the rental vehicle you wanted – and that you get it for the best possible price.

Book an Iceland rental car early

If your experience of renting a car is jumping off a plane at a US airport and seeing which rental firm is offering the best last minute deals, you need to adjust your mindset for driving in Iceland. This is a country that is growing in tourist popularity year on year, and practically everyone wants a rental car. Last minute bargains do not exist here, and while you will probably be able to rent something without a reservation, it will be a case of take what you are given and pay a premium for it. Book as far in advance as possible and use an online comparison site to get the best rate.

Young drivers beware

The minimum driving age in Iceland is 17. However, most rental agencies have specific rules relating to young or inexperienced drivers. These vary from one company to another, and the local ones are likely to be a little more flexible, As a rule of thumb, the most common stipulation is that the driver needs to be 20 years old or more, and to have held a license for at least a year. In addition, those aged under 25 might face some restrictions or be asked to pay a higher rental rate.

Make sure you are properly insured

The question of whether to go with the basic insurance and hope for the best or pay more for full collision and damage waiver is always a tricky one. In general, it’s a decision that comes down to personal preference and whether you are prepared to risk a significant excess liability if something goes wrong. Driving the Iceland ring road, however, is very different to heading down the interstate at home, or even driving on the autoroute in France. You will inevitably spend some time on gravel roads, and it is all too common for stones to be flicked up by other cars straight into your bodywork or windshield. Full insurance is a good investment, but that doesn’t necessarily mean buying it at the rental desk. Your credit card company or even your own insurance broker at home might be able to offer you a much more cost-effective deal. One of the most important things you should do before you leave the lot with a rental car is to check everything that involves your car rental.

Fuel policy – this is always a thorny issue, as different agencies have different policies in terms of whether you need to return the vehicle with a full tank. If you are given the option to prepay for your fuel, which means taking the car full and returning it empty, that is usually the most cost-effective thing to do. It also saves you the trouble of filling up before you drop the car off. The most important thing is to read and understand the policy so that you know what to do and are not presented with a penalty refueling charge for getting it wrong.

Mileage policy – there are so many wonders to see in Iceland, you can end up covering a significant mileage to check off even a handful of them. Some agencies impose mileage limits, or offer a choice of either limited or unrestricted mileage. Of course it depends on how far you intend to be driving in Iceland, but if you think you might be close to the limit, it’s best to pay a little extra and know you have no restrictions..

Assemble the necessary documents

The documentation requirements of a rental company in Iceland are the same as you will find elsewhere. The clerk will need to check your license and IDP, along with your passport and booking confirmation. If you have taken out your own insurance, make sure you have that documentation with you, too. Finally, don’t forget your credit card. Iceland is almost entirely cashless, and card payments are the default option, so ensure you have a choice of plastic in your wallet and that it works using chip and PIN.

What is the most suitable sort of vehicle for driving in Iceland?

If you have driven in other European countries, you will know there are certain rules that are usually recommended, such as making sure you ask for automatic transmission as a special option and getting as small a car as you can fit everyone into in order to avoid bankruptcy at the gas station.

However, an American driving in Iceland has different things to think about. Sure, fuel prices in Iceland are as obscene as they are in most European countries – in fact, gas and diesel are even more expensive here than in mainland Europe, so brace yourself for prices of around ISK 230 to 240 per liter. That works out at well over $7 per gallon. Still, while a small economical diesel is fine for zipping around the capital and even for driving the Golden Circle in Iceland during the summer, for a more adventurous voyage, you really need to make sure you have a vehicle that’s up to the job.

When only a 4WD will do

Planning on hitting Iceland’s notorious F-roads? Off road driving in Iceland is strictly prohibited, but these F-roads are gravel tracks that go through, and sometimes almost straight up, the mountains. Only 4WD vehicles are permitted on F-roads, but before you take out a second mortgage to cover the fuel costs, here’s something to keep in mind: Most rental firms will offer small 4x4s that are just as capable as their larger brethren and cover about twice the distance on the same amount of fuel.

A great rule of thumb is to watch what the locals drive, and in Iceland you’ll see small Suzuki and Daihatsu 4x4s tackling the toughest conditions. They are also far less daunting to drive if you are new to getting behind the wheel, but of course if that is the case, it makes sense to get some practice of 4WD driving back home before you head out into the Icelandic wilderness.

A 4WD vehicle is also a must-have if you are planning on driving around iceland in November or later. This is even the case if you are only driving the ring road in Iceland, as snowfalls can be heavy and sudden at any point from early November right through to April. We will go into a little more detail on winter driving in Iceland in just a moment.

A summer tour in a regular sedan

Driving in Iceland in August is a completely different proposition to driving in Iceland in March, of course. For a summer tour that follows the nation’s 1,332 kilometer (828 mile) ring road, a two wheel drive car will be up to the job. Keep in mind that while most of the ring road is on a regular paved surface there are some areas where the road is not in such good condition, and you’ll be challenged with steep hills and twisty corners.

For these reasons, the cheapest, smallest city car is not the best choice. You need something that is capable of absorbing a bump or two and that will not struggle with the sharp ascents. Also, keep in mind that manual transmission (stick shift) is the norm in Iceland. If that is something you are comfortable driving, it gives you better control over the car and will return better fuel economy. Of course, if you are not experienced in using a clutch and changing gears, it is just an extra worry, so better to pay a little extra and choose an automatic. Just remember the advice from earlier and book it well in advance, as there will not be many to choose from.

Exploring the city and Golden Circle

For a shorter excursion such as weekend break that takes in Reykjavik, and a drive around the Golden Circle, you can safely opt for the smallest car that will accommodate all passengers in comfort. At least, that is the case If you will be driving in Iceland in May or later.

Although it is the shorter and more tourist friendly route, even driving the Golden Circle Iceland in winter is something that should not be undertaken lightly, so don’t risk getting stuck in a snowdrift just for the sake of saving a handful of dollars.

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What are the most important driving rules and conventions in Iceland?

There are plenty of aspects to driving in Iceland that make it very different to the USA. However, if you ask, “what side of the road do they drive on in iceland?” a piece of positive news for Americans driving in Iceland is that they drive on the right, just like they do at home.

Basic rules of the road follow normal international conventions. Common sense and defensive driving will get you a long way and are the main things you need for a problem-free visit. Let’s run through some of the most important driving rules in Iceland, both written and unwritten, that will avoid tickets from the police or misunderstandings with the locals.

Keep your lights on

Visibility can be a challenge, particularly if you are driving in Iceland in December when the days are short. You are legally required to have your lights on at all times when driving in Iceland, day or night.

Don’t use your phone

Like the rest of Europe, Iceland has strict rules regarding distracted driving. As far as cell phones are concerned, that means you must not use or touch them while driving. Hands free kits are allowed, provided that they do not distract you from the road ahead. If a police officer judges that you are distracted, you could face a fine of around ISK 5,000 ($40).

Don’t drink and drive

The maximum legal blood alcohol level in Iceland is 0.5 mg/ml. That means even a glass of wine or a beer could put you over the limit. Iceland is currently considering reducing the limit still further, so the message should be loud and clear. If you are driving in Iceland, avoid any alcoholic drinks. Keep in mind that every pint of beer or glass of wine takes around two hours to leave your system – sometimes even longer. That’s worth thinking seriously about if you are considering some evening drinks and you intend to drive early in the morning. The minimum fine for DUI in Iceland is ISK 75,000 ($625). However, it all depends on the severity of the offence, and custodial sentences are also possible.

Seat belts

A report at the end of April 2019 confirmed that the first four months of the year had passed by with zero fatalities on Iceland’s roads. It was the first time this had happened since 1940, and represented a huge improvement on the average of 1.5 fatalities per month the previous year. Icelandic authorities say that the biggest contributing factor is the strict enforcement of seat belt laws. Everyone in the car is required to wear a seat belt, regardless of whether they are sitting in the front or back of the vehicle. Children under 12 need to have an age-appropriate child seat or booster. The police see enforcement of these rules as vital in saving lives, so expect to be handed a fine if you or your passengers do not buckle up.


You will see regular speed checks on Iceland’s roads, both in the form of police patrols and static cameras. The latter have warning signs before you reach them, showing a white camera on a blue background and the word Löggæslumyndavél, which means “law enforcement camera.” Automatic cameras send a ticket direct to the rental agency, which will automatically add the charge to your credit card. If you are stopped by a police officer and handed a ticket, you will be able to pay on the spot by credit or debit card. Failure to do so will most likely mean a visit to the police station for further discussions, so better to get it done with. Fines range from ISK 10,000 ($80) to ISK 115,000 ($920) depending on how fast you were going. The simple way to avoid a speeding fine when driving in Iceland is not to exceed the speed limit – and these limits are very easy to understand:

  • Urban areas – 50 km/h (30 mph)
  • Rural gravel roads – 80 km/h (50 mph)
  • Rural paved roads 90 km/h (55 mph)

Sometimes lower limits will be posted, in which case these take precedence over the standard limits mentioned above.

Off roading

Those F-roads might look at first glance like a free-for-all, but they are real roads and are marked, even if it is not always obvious. Make sure you stick to them, as driving a motor vehicle off-road is strictly prohibited and will get you in a hot water with the authorities.

Yield to animals

This is not exactly a rule, but it is definitely one of the more important tips for driving in Iceland, as there is no guarantee that they will yield to you. Even on the main ring road, you will encounter sheep, Icelandic horses, and possibly even reindeers if you are in the far north east. An impact with any of these will ruin your day and your rental car, and could cause as much injury to you or your passengers as to the animal. Slow right down, give them a wide berth and remember, they were there long before our motor vehicles.

Be careful on roundabouts

Roundabouts are sometimes represented as the biggest nemesis to any American driving in Iceland, or indeed elsewhere in Europe. There’s really no great mystery involved, and the usual rule of traffic on the roundabout having priority over vehicles joining applies. One extra factor to keep in mind, though, is that roundabouts in Iceland have two lanes, and vehicles on the outside must yield to those on the inside.

Avoid night driving

This is not always possible, particularly when the days are shorter, but try to minimize the amount of driving you do after dark. For one thing, you and your passengers will be missing out on all that beautiful scenery, but for another, night driving in Iceland is a whole new challenge. The ring road has reflective strips every hundred yards or so on each side, and when you are driving along with no other vehicles they can become downright hypnotic. Also, there are few curbs and no rumble strips, so if you have a lapse in concentration and stray from the road, the likelihood is that you won’t realize you’ve done so till it is too late.

Buy a map

In this online age, we tend to assume the GPS on our cell phones will get us anywhere. When you are driving in Iceland, though, the signal can become patchy so a good old fashioned map is a great investment. Driving directions in Iceland are not complicated, so your passenger will be able to navigate easily. Also, there will be no temptation to start fiddling with your cell phone while driving.

Are Icelanders good drivers?

Photo of Iceland

It is dangerous to generalize, and we all know that there are good and bad drivers everywhere in the world. However, it is safe to say that Iceland has a reputation for safe, responsible and knowledgeable drivers. Undoubtedly, this is partially down to living here all year round and adjusting to the changing seasons and conditions.

Having said that, there are exceptions to every rule. You might encounter a minority of local drivers who are impatient and who do not always use their indicators. Despite the police crack down, there are a few serial offenders who still use their phones while driving.

If you should happen to encounter bad driving in Iceland, the same advice stands here as anywhere else in the world. Drive defensively, don’t get drawn into any retaliation or dispute, and most of all, avoid becoming a part of what is their problem, not yours.

Is it easy to understand traffic signs driving in Iceland?

Photo of Iceland Street Signs

Road signs in Iceland are a little different to those you might see in other parts of Europe. However, the important ones are all simple and intuitive to understand, so they should not present a problem if you are driving in Iceland for the first time.

Circular signs mean instructions, for example speed limits, while triangles give warnings, such as sharp bends or the risk of wild animals in the road. Square signs are informational. The signs are also color-coded, with red for danger, blue for information, and yellow for general warnings.

Here are a few specifics that you need to watch out for:

  • Bump in the road – the picture on the sign leaves you in no doubt as to what it means, but take the warning seriously. In Iceland, a bump in the road is not something to hit at high speed unless you want to face a bill for a rental car with wrecked suspension.
  • One way bridge – these are common across Iceland. Slow right down and make sure the way is clear before you proceed.
  • Passing place – on narrow roads, there are frequent wide areas where you can safely negotiate oncoming vehicles. These are blue with a while letter M.
  • Road closed – in the less hospitable months of the year, some of the more remote roads will be closed. You will see plenty of road closed signs if you are driving in Iceland in October or other winter months. They are there with good reason, so don’t ignore this important sign!

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What is the ring road in Iceland?

Photo of Iceland Ring Road

Officially known as Þjóðvegur 1, or Route One, the ring road runs for more than 800 miles around the entire perimeter of Iceland. It is the only practical way to see Iceland’s major towns, cities, and tourist hotspots. It can be easily  navigated and can take you close to the attractions as it runs through the main urban areas. Thus, you will have no difficulty on finding places to eat, refuel, and spend the night. No wonder the ring road is so popular with tourists driving in Iceland!

The size and quality of the road varies, although the vast majority of it is paved single carriageway and has a speed limit of 90 km/h (55 mph). There are some areas of dual carriageway, and a few sections in the north that are single track and unpaved, but these are few and far between.

There are no tolls to worry about in Iceland, so you can simply set off on the ring road and drive. Although service areas are reasonably frequent, there are some stretches, again in the more remote north, where you might travel for 100 km or more (65 miles) without seeing a gas station. Make sure you always top up if the tank drops below half full and you will have nothing to worry about.

Can I drive into the center of Reykjavik?

Photo of Iceland Bridge

Perhaps because of the low population density, Iceland’s capital city is refreshingly welcoming to motorists. You will not find a congestion, restricted zones, and aggressive drivers that are part and parcel of most major cities in Europe, and indeed the world.

Finding a parking spot

Even parking in Reykjavík is not too complicated. There are plenty of options, including regular parking lots, multi-storey car parks, and areas where you can simply park on the street. Where you are required to pay, you will need to key the vehicle license plate number into the machine and have your credit card ready.

Naturally, parking is a little more expensive right in the center of the city, but bear in mind that Reykjavik is not a large place. You can park on the edge of town and walk to the center in a matter of five minutes.

Parking zones are denoted P1, P2, P3, and P4. P1 is right in the center and is the most expensive, while P4 is cheapest. If you are outside all these zones, parking is free.

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What about driving in winter in Iceland?

Photo of Iceland Winter

As we have already mentioned, Iceland is subject to harsh winters, and most visitors would prefer to avoid driving in Iceland in February or March and time their visit for spring or summer. Still, Iceland driving in winter is neither as difficult nor as terrifying as some people like to think. Want to take an advantage of cheaper prices and try driving in Iceland in November? Keep the following points in mind:

Stick to the major roads

Main roads, including the paved sections of the ring road and streets in and around Reykjavik, and the major towns and cities remain open and are kept clear of snow to the extent possible. When it comes to northern areas, the highlands and the minor roads, it can be a different story, however. Keep to the main roads and if you see a sign saying a road is closed, don’t ignore it.

Travel prepared

Winter tires are a must-have when driving in Iceland between October and April. Ordinarily, the rental company will take care of this, but make doubly sure before you set out on the road, especially if you are renting from a smaller local agency. Carry basic safety equipment with you including a flashlight, fluorescent jacket, first aid kit and a fully-charged cell phone – just in case.

Check the weather forecast

There is an old saying in Iceland that if you don’t like the weather, all you have to do is wait for five minutes. In winter, conditions can change rapidly and snow is liable to fall heavily. When it happens, even Iceland’s well-drilled and experienced road clearing teams will struggle to keep up. Always check the forecast before you set out driving in Iceland, and if there is heavy weather on the way, delay your journey if you can.

Choose the right vehicle

In the height of summer, thousands of tourists travel all around the ring road in regular two-wheel-drive sedans without a second thought. In winter, that is a supremely bad idea. The areas to the north of Iceland are only suitable for 4WD when the winter months arrive.

A driving experience like no other

Photos of Iceland

There is no nation on the planet quite like Iceland, and using its roads is a similarly unique experience. Yet there is really no reason to worry about the prospect of driving in Iceland with a US license. Having your own vehicle is essential to get the most out of your visit.

Remember the above information and tips and you will soon be negotiating the roads and covering driving distances in Iceland as if you’d been doing it all your life. As a final reminder, the following important points are important to keep at the forefront of your mind every time you get behind the wheel and set off driving in Iceland:

  • Keep your driver’s license, International Driver’s Permit, and vehicle documentation in the car with you at all times.
  • Don’t be in a hurry. Those speed limits are low for a reason. Aside from the risks associated with narrow roads and wandering animals, driving slower gives you more chance to enjoy the spectacular landscape.
  • Never drink and drive. The police want you and everyone else driving in Iceland to stay alive, and they will deal severely with anyone driving under the influence.
  • Take extra care driving in Iceland in winter, and remember that weather conditions can deteriorate with incredible rapidity.
  • Driving the mountain passes is only suitable if both the vehicle and the driver are up to the task. Only use F-roads in summer months and if you are driving a 4WD.
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Don’t believe everything you see in the movies. Icelander drivers might have a few bad habits, but aggression is definitely not one of them, so drive with a smile on your face and enjoy the open road.

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