We recently returned from Iceland, also got a diesel car from Blue Car Rental, got extremely good mileage so gas prices not a worry. Agree to get the insurance. Blue is extremely easily to deal with and best price I could find. Driving in Iceland was easier than expected. Speed limits are enforced, drivers are extremely orderly, roads where never crowded for us when out of town. Signage is a problem, no billboard advance warning of the road you need to turn onto to see a certain site, just a small sign at the turn. Our gps in the car was of limited use, we relied on phone gps service more. I felt we were able to see much more with a car than a bus. But do research what you want to see, and plan your itinerary for the golden circle. We identified our must sees and would like to see, then did what we could in a day. Spend time when you find a place that feels right, something you can’t do on a bus.