The parties to this agreement are Lava Auto, ehf. -- Icelandic Company Registration 540316-0740 (Lava) -- and the person(s) whose name is written on this agreement and identified as either renter or driver of the rented car.

Age requirements and permits
Renter must be a holder of a valid drivers license that must be presented upon the start of rental of the vehicle. Renter must be at least 20 years old for the economy, compact and mid-sized vehicles, and 23 years old for mid-size 4x4 and large 4x4 vehicles.

Credit card policy
Renter must present a valid credit card upon the start of the rental. Lava Auto will put a security deposit on the credit card. This security deposit is taken to cover all extra expenses like fines, extra insurance, damages or any extra cost during the usage of the rented car. The security deposit will be returned to the renter when the car is returned, as long as the car is returned in the same state as it was when the rental started.

The Icelandic Value Added Tax (VAT) is 24%

Pick-up and drop-off
We offer pick-up from the arrivals hall at Keflavik Airport to our offices, and after the rental has ended, we offer drop-off from our offices to the departure hall at Keflavik Airport.

Cancellation and reservation policy
Cancellations made more than one week before the rental starts are 100% fully refundable.
Cancellations made less than one week before the rental starts are 90% refundable. There will be a service charge which is 10% of the total price.
No-show or cancellations made within 24 hours before rental starts are not refundable in any way.
To guarantee a reservation, Lava Auto requires a valid credit card which will be charged at the time of your booking.

Fuel policy
All cars will be rented out with a full tank of gas.
Renters must return the car with a full tank of gas unless they have prepaid for fuel.
If, in any case, the renter does not return the car with a full tank and without having prepaid the fuel, the renter will be charged for the missing fuel and an additional service fee of ISK 5500 for refuelling.

Insurance policy
Third-party liability is equivalent to the amount stipulated by Icelandic law at the time of the rental date. This also applies to the amount of individual driver liability. Third-party coverage and personal accident insurance are 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

Collision Damage Waiver (CDW)
A collision damage waiver is included in all prices. Self-excess for CDW is ISK 360.000

Super Collision Damage Waiver (SCDW)
A super collision damage waiver can be purchased for ISK 1900 per day. Self-excess for SCDW is ISK 90.000
Damages not covered by SCDW or CDW:

  • Negligence
  • Driving while intoxicated
  • Damage to tires, headlights, windscreen and undercarriage
  • Damages caused by nature (wind)
  • Damages caused by nature (sand and ash storms)
  • Damages caused by driving into water

Windscreen and Gravel Protection (WP/GP)
Windscreen and gravel protection covers the vehicle against damages to the windscreen and paint on the bumpers, hood and doors caused by a passing vehicle.
Self-excess for a broken windscreen is ISK 20.000 with WP/GP but ISK 50.000 without WP/GP. Self-excess for gravel damage to the hood, bumpers or doors is 90.000 ISK with WP/GP. 

Theft protection (TP)
Theft protection covers vehicle theft and is included in all rentals.

Sand and Ash Protection (SAAP)
Sand and ash protection covers the vehicle against damage caused by volcanic ash and sand storms. Self-excess for SAAP is ISK 90.000 if purchased with SCDW but ISK 360.000 if only purchased with CDW.

Tire Protection (TIP)
Tire protection covers the vehicle for flat tires.

Complete Protection Package (CPP)
The Complete Protection Package includes all insurances in one bundle and the self-excess is ISK 90.000 and windscreen self-excess is 20.000 ISK.

Service fees and penalties
Handling fee for fines and other charges incurred by the renter is ISK 5500.
The penalty fee for smoking in our vehicles is ISK 20.000
If a car is damaged and needs to be towed, we will charge ISK 400 per km driven within a 250 km radius of our offices. The minimum charge is ISK 40.000

All vehicles are equipped with a tachograph for normal provision of usage of the vehicle during the rental. If a car is damaged, the tachograph will be used to download data from the accident or any other occurrence during the rental.

Obligations of the Renter:
1. The Renter agrees to the provisions of this Rental Agreement and has received a copy hereof.
2. The Renter shall return the vehicle:
a. together with all parts and accessories (including tires, tools and GPS) in the same condition as they were received by Lava Auto, except for standard wear and tear owing to use; the Renter is liable for the cost of replacing any missing parts or accessories according to the Lava Auto‘s price list.
b. on the date specified under the terms of this Agreement, unless otherwise agreed at a later time.
c. to the premises of Lava Auto, unless otherwise agreed;
d. with a full tank of fuel. If the vehicle is not returned with a full tank of fuel, Lava Auto may charge the Renter for the amount of fuel needed to fill the fuel tank as well as a service fee under the terms of the tariff of Lava Auto.
3. The Renter shall pay for fuel and other costs needed to operate the vehicle during the period that the Renter is responsible for the vehicle, including any new damage found. Within the meaning of this Agreement, this period does not expire until Lava Auto has registered the vehicle as received in his system, which registration can only be performed during the office hours of Lava Auto.
4. If the Renter fails to return the vehicle at the time agreed in this Agreement, or fails to declare his intention to extend the rental period, Lava Auto or the police may repossess the vehicle without further notice and at the cost of the Renter. Extended rental is subject to the approval of Lava Auto. If the Renter returns the vehicle 29 minutes or more after the expiry of the Agreement, Lava Auto may demand up to a full day's rental charge under the terms hereof. For each day begun thereafter, Lava Auto may levy charges pursuant to his tariff.
5. The vehicle shall be handled and driven carefully. Only those registered as authorized drivers on the front page of this Agreement are permitted to drive the vehicle. The Renter is liable for all damages to a third party or their property that will not be compensated for by Lava Auto‘s insurance company
6. The Renter may not engage in the following activities:
a. Driving on roads marked F on official maps as well as Kjalavegur Road and through Kaldidalur Valley, except for 4WD (four-wheel drive) vehicles which Lava Auto agrees are suitable for driving on such roads. In the event of a violation of the provisions of this subparagraph, Lava Auto may impose a fine to the amount of ISK 150.000. The above provision on fines does not affect the liability of the Renter to pay for damages.
b. Driving in or across rivers or any kind of watercourse. This prohibition does not apply to vehicles which Lava Auto agrees are suitable for such driving, but such driving is always the responsibility of the Renter, cf. insurance terms and conditions.
c. Use of the vehicle that contravenes Icelandic law and/or the provisions hereof.
d. The renter can not take the car anywhere outside of Iceland without written and signed permission from Lava Auto.
7. In the event of a collision or accident, the Renter shall immediately notify the appropriate police authorities as well as Lava Auto of the incident, and the Renter shall not leave the scene before the police have arrived. The Renter shall immediately fill out a damage report if damage occurs. If the Renter fails to report damage, he shall be fully liable for it. A replacement vehicle is at the discretion of Lava Auto and cannot be guaranteed.
8. If Lava Auto needs to collect the vehicle or have it collected, owing to a collision or an accident, the Renter shall bear all costs thereof pursuant to the tariff of the Lava Auto at each time according to the lessor's price list.
9. The number of kilometres (km) that the vehicle is driven during the term hereof is determined by reading a normal odometer supplied with this vehicle by the manufacturer. The Renter shall notify Lava Auto as soon as possible if the odometer is out of order or stops functioning during the rental period.
10. The Renter agrees to pay the Lava Auto upon request:
a. a deposit amounting to the estimated cost of renting the vehicle plus a moderate amount towards possible costs related to refuelling and fines for traffic rule violations.
b. all costs sustained by Lava Auto from having to bring the vehicle back to his premises owing to it being left unattended without regard to the condition of the vehicle, roads or weather.
11. The Renter may not have repairs performed or modify the vehicle or its accessories, or permit any pledge of the vehicle as security unless the Renter has contacted Lava Auto and been given permission to do so from Lava Auto.
12. The Renter is liable for all parking meter fines. An administration fee according to Lava Auto's price list will be charged for processing traffic fines and providing information as a result of violations of traffic law.
13. The Renter may not use the vehicle to transport passengers against payment, lend it or sublease it.

Obligations of Lava Auto:
14. Lava Auto will make every effort to deliver the vehicle at the agreed time and to ensure that it meets the requirements made upon it.
15. In the event that the vehicle malfunctions owing to wear or other reasons for which the Renter is not responsible, Lava Auto shall supply the Renter with another vehicle as soon as possible or ensure that a repair is completed as soon as possible, at the location specified by the Renter. The above does not affect the payment of the rental fee or any other charges payable by the Renter hereunder. Lava Auto pays no damages in cases such as described above, neither for accommodation nor other reasons.
16. Lava Auto shall acquaint the Renter with the subject matter of this Agreement; in particular, the obligations undertaken by the Renter upon signature hereof.
17. Lava Auto shall make every effort to inform foreign Renters about Icelandic traffic rules, traffic signs and rules regarding the prohibition of off-road driving. In addition, Lava Auto shall draw particular attention to the dangers posed by animals on roads.
18. If Lava Auto wishes to limit the use of the vehicle with regard to its equipment and/or condition, such limits shall be established in writing upon signature hereof.
19. Lava Auto undertakes to hold professional indemnity insurance at all times.
20. Lava Auto shall not be responsible for the disappearance of or damage to items that the Renter or any other party stores or transports in the vehicle.
General Provisions:
21. This Rental Agreement shall be kept in the vehicle at all times during the rental period.
22. Annexes and amendments to the terms and conditions thereof shall be made in writing.
23. Smoking is forbidden and a fine may be imposed if there are smoke fumes in the rental car. Lava Auto may impose an additional cleaning charge due to excessive dirt or fumes inside the rental car.
24. Lava Auto may debit the bank card or credit card of the Renter for the rental charge and other costs payable by the Renter hereunder, such as payments in respect of damage to the vehicle while in the possession of the Renter. The time of payment and whether it is to be made in lump sum shall be the sole discretion of Lava Auto. This right shall remain unaffected for 6 months following the return of the vehicle to Lava Auto.
25. The Renter acknowledges by their signature on this agreement and on Rental Vehicle Condition report that they have received the vehicle and accessories in good condition.
26. Agreements concluded on the basis of the above terms and conditions, including possible claims for compensation that may be made, as applicable, shall be governed by Icelandic law. This applies both to the basis and calculation of compensation. The same applies to claims for compensation based on non-contractual liability. In the event of a dispute arising out of or in connection with this Agreement, the case shall be brought in the venue of Lava Auto.
27. Disputes between the parties to this Rental Agreement may be submitted to the Appellate Committee of the Consumers Association of Iceland, and the Icelandic Travel Industry Association.