The real cost
Insurance is not optional
Iceland's roads throw gravel at your car constantly — the wind blows volcanic grit onto the highway. A single chip on the windshield from a passing car can cost ISK 30,000 to replace. Without the gravel/sand damage waiver (GP), that's on you. Without premium coverage, even tyre damage from potholes can hit you for ISK 25,000+.
The basic CDW has a deductible of typically ISK 250,000. Premium insurance brings that to zero. If your credit card offers car rental coverage, confirm it covers Iceland and that it includes tyres, glass, and undercarriage — many don't.
FAQ
Are 2WD rentals really enough?
For Route 1 + summer + sticking to paved roads, yes. The cost saving over a 4WD can be ISK 4,000–8,000/day. Winter adds studded tires (often ISK 1,500–3,000/day).
Do I need a credit card to rent?
Yes. The rental company puts a hold of ISK 250,000–500,000 on the card. Debit cards are usually refused. Make sure your card has enough headroom — the hold is separate from your billing balance.
Can I share one rental between two drivers?
Yes, but the second driver must be added at the desk (~ISK 1,500/day). If only the listed driver drives and has an accident, insurance is void.