Booking a car in Iceland looks simple until you compare two quotes and one is 40% cheaper. The difference is almost never the car — it's what the price includes. This guide from Aurora Car Rental Iceland breaks down exactly what you pay for, what's bundled in, and what the low-price advertisers quietly leave out.
What's always included in an Iceland car rental
Every legitimate rental in Iceland is required by law to carry basic third-party liability insurance and Collision Damage Waiver (CDW). Beyond the legal minimum, a fair rate should also cover unlimited mileage — critical in a country where a single Ring Road loop is over 1,300 km — and the 24% Icelandic VAT already baked into the displayed price. If a quote shows a suspiciously low number that jumps at checkout, VAT and mandatory insurance are usually the culprits.
At Aurora Car Rental Iceland the daily rate you see already contains CDW insurance, unlimited kilometres, all taxes, and free airport transfer between Keflavík Airport (KEF) and our base at Suðurbraut 890, 262 Keflavík — a 10-minute taxi ride away. There is no deposit and no card hold; you pay in cash (ISK or EUR) when you collect the keys.
What's included vs. what costs extra — at a glance
| Item | Usually included? | Notes |
|---|---|---|
| CDW / collision insurance | Yes (mandatory) | Reduces your liability; a deductible may still apply |
| Unlimited mileage | Yes (with reputable rentals) | Watch for "limited km" budget offers |
| VAT (24%) | Yes, if priced honestly | Some sites add it at checkout |
| Airport transfer | Included at Aurora Car Rental Iceland | Free KEF ↔ Suðurbraut 890 both ways |
| Fuel | No | Return with the same level you received |
| Gravel / Sand & Ash protection (GP/SAAP) | Optional | Recommended for F-roads and windy south coast |
| Extra driver | Depends on fleet | Ask before booking |
| Child seats | No | Usually a small add-on |
| Studded winter tyres | Seasonal, often included Nov–Apr | Essential for winter driving |
Insurance in Iceland — what the acronyms actually mean
Iceland's weather and roads create damage risks you won't meet in mainland Europe, so the insurance menu is longer. CDW is the base layer. On top of it, rental companies offer Gravel Protection (GP) for the loose-stone roads that chip paint and crack windshields, and Sand & Ash Protection (SAAP) for the volcanic grit that storms can sandblast across your bodywork on the south coast. Neither is legally required, but a single sandstorm can cost more than the entire rental, so many travellers add them for peace of mind.
The important number to check is the deductible (the amount you'd still owe after a claim). A low headline price with a very high deductible can be worse value than a slightly higher rate with fuller cover. Always ask what your maximum out-of-pocket liability is before you sign. Aurora Car Rental Iceland includes CDW in every rate and explains any optional protection clearly at pickup — no surprises.
Fuel policy — the detail that catches people out
Fuel is never included in the rental price anywhere in Iceland. The fair and standard policy is full-to-full: you receive the car with a full tank and return it full. Avoid "full-to-empty" prepaid-fuel schemes where you buy a tank up front and lose whatever you don't use. Iceland's fuel is among the most expensive in Europe, so budget roughly 300–320 ISK per litre and fill up before returning. Petrol stations near Keflavík make the return easy.
Deposits, payment and the "no card hold" difference
Most international rental chains place a large hold on your credit card as a deposit — sometimes several thousand euros — which ties up your funds for the whole trip. Aurora Car Rental Iceland works differently: no deposit, no card pre-authorisation. You simply pay the rental in cash (ISK or EUR) when you collect the car. That's a meaningful saving for travellers who don't want a huge hold sitting on their card while they explore.
Choosing the right vehicle for what's included
What you need included also depends on where you're driving. City and Ring Road trips in summer are comfortable in a compact SUV, while Highland F-roads legally require a 4x4 and benefit from extra protection. Here's how Aurora Car Rental Iceland's fleet lines up by starting price:
| Vehicle | From (ISK/day) | Best for |
|---|---|---|
| SsangYong Tivoli | 12,000 | Couples, city & Ring Road |
| Dacia Duster 2018 | 12,500 | Budget 4x4 |
| Dacia Duster 2022/23 | 13,000 | Newer 4x4, F-roads |
| Kia Sportage | 14,000 | Comfort SUV |
| SsangYong Korando | 14,000 | Family 4x4 |
| Korando + Roof Tent | 22,000 | Camping duo |
| Dacia + Roof Tent | 29,000 | Camping 4 people |
| Bus 9 seats | 30,000 | Groups |
| Camper Van (3 & 6 pers.) | 45,000 | Sleep-in road trips |
| Toyota Hilux / Musso 2026 | 65,000 | Expedition, river crossings |
Every vehicle includes CDW insurance, unlimited mileage and free airport transfer. Browse the full lineup on our our cars page and reserve on the booking page.
A note on August 2026 availability
Please plan around one important date: the entire Aurora Car Rental Iceland fleet is fully booked and unavailable from 10–15 August 2026. If your trip overlaps those dates, contact us early so we can help you find alternatives before or after that window.
How to compare two quotes fairly
When you hold two offers side by side, normalise them: add VAT to both, confirm both have unlimited mileage, note each deductible, and check whether airport transfer and roadside assistance are included. Once every line item matches, the "cheap" quote often turns out to cost the same or more than a transparent one. The goal isn't the lowest sticker — it's the lowest total with no unpleasant surprises at the counter.
Frequently asked questions
Is insurance included in car rental in Iceland?
Yes. Basic third-party liability and Collision Damage Waiver (CDW) are mandatory and included by law. Optional Gravel and Sand & Ash protection cost extra. Aurora Car Rental Iceland includes CDW in every daily rate.
Is fuel included when renting a car in Iceland?
No. Fuel is never included. The standard policy is full-to-full: you get a full tank and return it full. Budget around 300–320 ISK per litre.
Do I need to pay a deposit?
Not with Aurora Car Rental Iceland. We require no deposit and no card hold — you pay the rental in cash (ISK or EUR) at pickup.
Is unlimited mileage standard in Iceland?
With reputable companies, yes. Aurora Car Rental Iceland includes unlimited mileage in all rates, which matters given the Ring Road alone exceeds 1,300 km. Watch out for budget offers that cap kilometres.
Is airport transfer included?
At Aurora Car Rental Iceland, yes — free transfer both ways between Keflavík Airport and our base at Suðurbraut 890, a 10-minute ride away.
Are child seats and extra drivers included?
Child seats are normally a small add-on and extra-driver policies vary by fleet. Just ask us before booking and we'll confirm the details for your vehicle.
Transparent pricing, no deposit, insurance included
See exactly what you pay with Aurora Car Rental Iceland — CDW insurance, unlimited mileage, VAT and airport transfer all in the rate.
Aurora Car Rental Iceland — Suðurbraut 890, 262 Keflavík | WhatsApp: +48 729 854 633 | carrentalaurora@gmail.com