Terms and conditions


A valid driver’s license must be supplied at the start of the rental and must have been held for at least 12 months. To rent a car from Lagoon Car Rental, the renter must be at least 20 years old. The renter must be 23 years old to hire a big SUV or a passenger vehicle. 


All rentals are subject to the terms and conditions of the rental agreement at the time of renting. Even if a voucher covers the cost of the rental, a credit/debit card imprint will be collected at the start of all rentals for security reasons. This credit card imprint could be used to pay for any additional expenses such as additional insurance, parking penalties, damages, or any other costs associated with the rental vehicle as a result of the renter’s use of the vehicle. 


Lagoon Car Rental’s minimum rental length is 48 hours. It is considered a full day when the drop-off time is one hour or more after the pick-up time. 


Our pick up and drop locations are, Keflavik Int. Airport and Reykjavik City.  


Taking the car outside of the country is strictly forbidden 


When the specified vehicle types are not available, we retain the right to substitute vehicles. We can’t always promise the brand, but we can always guarantee a similar car or an upgrade. 


In most cases, the rental vehicle will come with a full tank of gas. The vehicle must be returned full, otherwise a fee will be charged to have the tank refilled, even if only a few litres are missing. If the vehicle’s fuel tank was not full when it was rented, it should be returned with the same amount of gas. We will charge the cost of the missing fuel plus an extra ISK 2.000 if the vehicle is returned with less gas than when it was hired. 


Local value added tax (VAT) is 24% 


In Iceland, young children are required to travel in safety seats while in a vehicle. Child seats are available for a small fee if purchased in advance. These child seats are typically appropriate for children aged 6 months to 4 years.


We require a valid credit card number to ensure your reservation, and we charge your credit card at the time of booking. 

This is our policy in the event of a cancellation; 

  • Get a full refund if you cancel more than 24 hours before the rental (100%) 
  • The whole rental amount will be charged if you do not show up or cancel on the same day. 


It is always possible to return early. No refunds are available for unused or partially used vehicle rental vouchers unless revisions or cancellations are submitted prior to the pick-up date. 


Third part liability is equivalent to the amount stipulated by Icelandic law at each time. This also applies to the amount of individual driver liability. Third party coverage and personal accident insurance is automatically included in your rental and in the self-risk liability amount mentioned here below. If for some reason, the renter causes damages to a third-party vehicle, without causing damages to the rented vehicle, the third-party liability is a total of ISK 35.000. 


CDW cover the bodywork of the car. In a collision, the bodywork is usually the first thing that gets damaged. The liability (excess) is 350.000 ISK. 


SCDW cover the bodywork of the car. In a collision, the bodywork is usually the first thing that gets damaged. SCDW lowers the liability (excess), depending on the size of the car. For 2WD vehicles, the liability (excess) is lowered to 90.000 ISK and for 4WD vehicles and vans, it is lowered to 120.000 ISK 

Zero Excess: 

By choosing our Zero Excess, all of our customers can reduce their liability to zero. We introduced the Zero Excess because many of our customers wanted to have a worry-free experience while driving around Iceland. This allows our customers to enjoy our beautiful island while driving worry-free with Lagoon Car Rental. 

Keep in mind that the Zero Excess is an option for our renters to waive their liability in the event of any damage covered by our insurances. This includes CDW/SCDW, GP, TP, and SAAP, and is subject to the Rental Agreement’s terms and conditions. Any damages not covered by insurances as specified in Articles 29 and 32 of the Rental Agreement and terms and conditions are excluded. 


When renting a car in Iceland, the gravel protection is essential insurance. Gravel can be found all around the island. Small stones scratch the paint on the front of the bumper when driving on gravel roads. Chipped paint damages aren’t a big deal, and you won’t have to pay for them. 

The windscreen, headlights, and mirrors are all covered by the gravel protection. For a broken windscreen, headlights, or mirrors, the liability (extra) is 20.000 ISK. 


Fortunately, Iceland is a very safe country, and vehicle thefts are uncommon. Though it is not common, if an automobile is stolen, it is always covered by insurance. There is no liability when it comes to theft protection (excess). 

It’s important to note that TP does not cover goods stolen from the car. 


Our Roadside Assistance Waiver reduces the cost for any assistance to ZERO. I protects you from unexpected service costs resulting from many problems that may occur while on the road in Iceland.

The Following Damages are not Covered by Any Insurances: 

  • Damages caused by negligence or driving while intoxicated.
  • Damages to doors caused by wind blowing them up. 
  • Damages to the tires.
  • Damages to the underside of the car. 
  • Damages caused by driving into waters, rivers or off-roading. 
  • Damages caused to the clutch or other mechanical damages resulting from the renters negligence or misuse of the car. 
  • Damages caused to the interior of the car. 
  • Damage caused by sand and ash storm. (only applies if the renter has not opted for the SAAP or the LW insurance). 

The Following Charges are not Covered by Any Insurances: 

  • Charges or other cost for required assistance because of a breakdown or damage that is the driver´s responsibility. 
  • Charges when pumping the wrong fuel on the car 
  • Charges for losing accessories, such as the car key or a GPS unit. 
  • Service charges and handling fee related to the renters use of the car, such as fines for speeding, parking fee and tunnel fee. 
  • General charges for towing, resulting from the renters misuse or mistake such as getting stuck in snow, sand, water or river.
    (Please see full details listed on the backside of the rental agreement.) 


This fee does not apply when the damages incurred are not caused by the renter. There is a handling fee of 4.500 ISK for all fines or charges that result from renters use of the car and the renter does not pay himself. Lagoon Car Rental will charge the renter for fines and charges plus the previously mentioned handling fee. If the car is returned extra dirty there is a cleaning fee of 15.000 ISK. This is in case of an extremely dirty car, especially on the inside. Not from regular use of the car. Smoking is strictly forbidden in the car. If someone smokes inside the car, the renter will be liable for a cleaning fee and fine of 45.000 ISK. The retrieval fee for picking up the rental car because of damages or other reasons that can be related to the renters responsibility is 350 ISK per km or a minimum of 35.000 ISK. The 350 ISK per km charge is calculated from Keflavík Airport.