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While many tourists opt to rent cars and drive themselves around Reykjavik, travelers who frequently visit the area find renting is not necessary. That's because renting a car in the area is relatively expensive in comparison with car rental costs in other parts of the world. However, many people don’t mind the cost and driving in the city is relatively easy, so renting a car might be an option to consider. Keep in mind that aside from the cost of renting a car at nearly $100 USD/day, gas prices are about $6-8 a gallon (200 kronur/ 1 pound per liter).
If you want to drive to any destinations that are off the main Ring Road, you may need a 4 wheel drive car, as many of the routes are unpaved, and ice and snow are frequently an issue. Particularly of note is the main road to the popular attraction of Dettifoss, which as of summer 2012 was extremely rutted and while passable by 2WD would be hours worth of bumping along at under 30km/h - one way. A bigger 4WD, while notably more expensive to both rent and run, gives access to many of the best parts of the island, and the freedom to get away from the more popular areas on the ring road.
If you do rent a car, definitely consider renting a GPS unit with it (offered at all the major rental car agencies); currently about 1000 Kronur extra a day, it makes driving a lot easier, unless you are particularly fluent in Icelandic and can easily deferentiate between street names like Bergstradastraeti, Braedraborgarstigur, and Bergporugata. Note that Garmin is one of the few GPS companies to make maps for Iceland, so if you're bringing a GPS from home make sure it will work on the island.
Car rental is generally done at the airport, and both local and international companies are present. Large chains at the airport are Avis Car Rental , Budget, Europcar and Hertz Car Rental though all the major companies also have offices downtown or at the central bus terminal (where the Flybus airport shuttle drops you off) such as Sixt Car Hire in Iceland.
There is generally an extra fee associated with renting at the airport of 2500 kronur. Route 1, Icerental 4x4 and Lotus car rental deliver cars at hotels in Reykjavík area for no charge but customer needs to be present to sign his rental contract. Hertz offers free pick up service in Reykjavik. Car insurance should definitely be purchased, if you are not covered already, even though driving in the area is easy and car accidents are rare.
Taxis are an option for those visitors who do not wish to rent a car. While taxis are also expensive, but tourists frequently find them convenient for short trips and sometimes even use them for day tours around the area. Taxis can be hailed on the street or visitors can ask local hotel or restaurant staff to call taxis to come pick them up. An easy way to get a taxi in Reykjavik is to call Taxi Reykjavik (+354 56 10000) - the operators speak excellent English. Visitors should note that taxi fares are standardized throughout Reykjavik and fares should be posted in every cab. Tipping is not required although taxi drivers always appreciate it, especially those drivers hired to give city tours.
Taxi: There are two main taxi stations that service people traveling from the airport to Reykjavík. The taxis are parked outside the terminal but ordering beforehand is never a bad idea. Rates Monday-Friday 8 am - 5 pm are approx 14000 ISK for 1-4 passengers and 19.500 ISK for 5-8 passengers. They count children as a passenger, and some may require car seats, and will include the car seat for free if you book the taxi in advance. The Taxi from KEF to Blue Lagoon was 8100 ISK and took about 20 minutes for 5 passengers.
Aðalstöðin-BSH Taxi: website: http://www.airporttaxi.is/ email: email@example.com Phone number: (+354) 420-1212 or 520-1212
Aðalstöðin Taxi: email firstname.lastname@example.org Phone number: (+354) 421-1515
Ökuleiðir/Hreyfill Taxi: Email: email@example.com . Phone number: (+354) 421-4141 or 588-5522
Enjoy Iceland in your chauffeur-driven late model.They provide options of all size of groups ranging from Luxury sedans, Luxury SUVs, Luxury MPVs and Luxury Buses.
Email: firstname.lastname@example.org Phone number: (+354) 554-4000 or view options here http://www.airportshuttle.is
Stretch Limousine service: Experience amazing custom-made-for-Iceland limousines. They provide a large selection from their Extreme Hummer H2 stretch limo, limo bus, to their standard classy Lincoln town car limo. They offer fixed rates from Keflavik airport to Reykjavík city with 24-hour service at your service. And also options of night out in town hourly services.
To book their stretch limousine visit their website: http://www.limmo.is/ or send them a message to: email@example.com
VIP and high-profile customers serves descriminatating visitors that expect only the best in Iceland.
Icelimo Luxury Travel: website: www.luxurytravel.is Email: firstname.lastname@example.org Phone number: (+354) 554-4000