Well, all the car hire companies in Iceland have a lot of very bad reviews, among the "least worst" reviews I have hand picked Sixt.
Based on other people experiences we decided to grab the full insurance coverage and refuel the car by ourselves before return it a week later.
As per reviews suggestions on the collection day we checked every single part of the car looking for dents, scratches and any faulty thing. I took loads of photos and my wife had some videos as evidence thinking ahead on the return date, actually the agent recommended us to do that as well. Even after perform all these visual checks I called the agent to personally show him some small scratches, as per other people reviews recommendation.
The only unexpected expense was he offered us a "sand & ash protection" policy which pays any damage excess OVER 2000 EUR. In case of a strong storm or a volcanic eruption car painting can get damaged and it is supposed that the full protection policy doesn't cover it. Despite we additionally had our personal full car coverage policy from UK we decided to grab it just in case.
We asked him if they had free WiFi in their office and he offered us a WiFi mobile spot instead to take with us for 10 EUR a day. Neither O2 nor Vodafone roaming data services worked and based on previous bad experiences buying local SIMs abroad we decided to take it. We all four were using it on our trip through SW Iceland and it was pretty useful, I recommend it mainly for families or groups.
I drove 1.300+ km with no issues, just one day last strong blizzard.
Return date came over and we refueled on the service station next to Sixt office located turning the corner.
All the return process was OK, no issues, I have had no extra charges since February when I hired the car.
I know it can sound as lot of work to hire a car in Iceland, but it is worth to do it, you are free to go wherever you want, just try to use paved roads in order to avoid any inconvenience.
Tip, next to the main office entrance door there is a kind of umbrella stand containing an angled mirror, it is intended to check the car bottom body so you don't have to kneel looking for any hidden damage.