Will this be a great risk to my small 2WD rental car? If the roads are blue/yellow should I be driving on them?
2WD is not a great risk in end of March if you stick just to ring road. Mountain roads without 4WD is pretty high risk. Some rental companies explicitly mention NOT to drive in mountain roads with their 2WD. You can still do it but if something bad happens, their insurance will NOT cover it (from one of my past experience).
Will there be any risk that snow will completely shut off the roads? What would you recommend in terms of booking tours/hotels early in light of that risk?
If you stick to ring road, there’s very less chance that snow will completely shut off roads. It’s relatively safe to book hotels early (and save!) if you are staying near ring road.
PS: I’m going to Iceland in late March too 🙂
1) 2WD rental car with “proper” tires (which you will definitely get) should be perfectly fine. I personally drove the whole ringroad few times in this part of the year, with lots of snow, ice, wind and other catastrophes with no problems at all. However, always be prepared for the worst!!! Weather here is extremely tricky and very difficult to predict. I would definitely recommend you to take a small shovel just in case you stuck in some snow 🙂 Also, mountain roads (those one marked with “F” before the number) are in this part of a year with a car like that a strict NO-NO!
Some websites which you could find helpful are: official iclenadic meteorological office and safetravel website.
2) Biggest risk of shutting the roads (at least the ringroad) are massive floods which don’t happen during this time of year, so if you stick to ringroad, you should be fine.
However, for your own safety, I would suggest you to be aware of all the phone numbers you will need on your journey. If you intend to hike around highlands by yourself, inform someone about your plan and let people aware that you are going to a specific location.
Drive safely and responsible and enjoy the Iceland’s beauties 😉
You should be fine with snow tires (as long as you are not going too fast), also on the roads marked with “spots of ice” and “slippery”. Be careful when entering one-way bridges and drive according to the road conditions and the risk should be minimal.
It’s very unlikely that snow would completely shut off the main roads, so I wouldn’t worry about booking tours/hotels early because of that.
If you rent a car in March, the car will be fine for driving on the ring road in March. The question is, will you be?
I used to live in northern Scandinavia, and have driven rental cars in winter in both Sweden and Norway. With good tyres and wide roads, driving is not really a problem, but you will have to be careful. Expect longer braking distances, brake extra early going into a curve, etc. In one curve where I know a group of friends crashed their rental car, the bus slowed down to a speed of well below 20 km/h (recommended speed in summer maybe 50–60 km/h). Also, be wary of driving long distances in the dark. Roads may be empty and you might lose attention.
Unless the weather is very bad, the ring road in southern Iceland will not be completely closed. There are towns and villages along the road, and closing the road would cut those off. Therefore, this will only happen in extreme circumstances such that you shouldn’t and wouldn’t be doing any outdoor sightseeing anyway. When the weather is bad enough to close the road, it’s bad enough to cancel tours. The only exception would be that the weather is very bad where you are, but OK where the tour is. Such is a risk you will simply have to accept in winter in Iceland.
If you do feel insecure driving but you still want to be solo, you could consider taking regular buses. Those are not very frequent, so in that case you should be sure you can stay warm while waiting for the bus back. I don’t recall seeing any shelter at Jökulsárlón, for example.
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