Driving in Iceland can be tricky - but if you listen carefully to Elfis you should be fine "Take a look at the Video"
The speed limit in populated areas is usually 50 km/h. Speed limit signs are not posted unless other speed limits apply. The speed limit is often 60 km/h on throughways. In residential areas, it is usually only 30 km/h. The rule of thumb in rural areas is that gravel roads have a speed limit of 80 km/h, and paved roads 90 km/h.
Speed enforcement cameras are widely used in addition to strict police surveillance. Speeding fines can reach up to over a hundred thousand ISK. It is also important to note that even if a driver has left the country, he or she is still obligated to pay the fine.
In several places, there are traffic signs (white numbers on a blue square background) which indicate the recommended maximum speed, where drivers should realise that the recommended maximum speed can be less than the permitted speed limit due to driving conditions.
Top ten tips on driving in Iceland