“You don’t want the gravel insurance?” the man asked from the rental-car company.

Gravel insurance? Yes, I understand, gravel happens. It flies. It pings. Once in a while it dings. But an entire insurance category? So, like, how much gravel were we talking about, out there on the roads of Iceland?

I also learnt volcanic “smoke and ash” is another insurance option, though I wasn’t offered it.

Well, these were certainly new driving considerations.

Then again, this was Iceland – the land of fire and ice and, of course, Bjork. A place where you can hike on a lava flow in the morning, ascend a glacier in the afternoon, and after a night of club-hopping enjoy a northern lights spectacle.

A place where even the horses, I discovered, march to a different gait.

My first stop was at the edge of the downtown bustle: the decidedly otherworldly Hallgrimskirkja, the tallest church in Iceland, and the tallest building in Reykjavk.

But the experts say the Icelandic architect designed it to resemble the ubiquitous basalt lava flows here. It was built from 1945 to 1986 and blends modern – or maybe it’s just Nordic – with religious traditional within.

All white, clean lines swept into Gothic formation. No stained glass, no Jesus on the cross – in fact, even Jesus is sculpted in a simple white, flat plane, Ikea style. The most ostentatious feature is the 25-tonne pipe organ, with 5275 shiny silver pipes.

The architecture leaves many underwhelmed. It’s true. Driving through most neighbourhoods, including the business district, you’re subjected to a litany of blandness. Homes, shops, all kind of a sickly white, no adornment. The stores, no matter what they were selling, looked like places you’d bring your car to be fixed.

But Reykjavk Center, the oldest part of the city, is full of atmosphere. With its narrow roads and lack of traffic, it’s wonderfully walkable, and character comes spilling from windows, little backyards, stoops. The inhabitants make up for dreary winter days in brushstrokes of colour, literally. The exteriors are painted in jewel tones, and windows, if not underlined with window boxes with dried grasses, are simply painted with flowers.

Amble down the path from the church, past the statue of Leifur Eiriksson and you’ll hit Skolavoroustigur, which along with Laugavegur is one of the city’s main shopping streets. Between the two, you’ll find a nice mix of local-designer boutiques, galleries, restaurants and cafes.

The area runs the gamut of the cuisine scene, from sleek, high-end Kols to Eldgur Og Is, selling homemade ice-cream. I didn’t run into any place selling Rugbrauo, the Icelandic bread baked geothermally – that is, buried in the ground near a hot spring for about 12 hours. The bread is dense, slightly sweet and doesn’t taste a thing like dirt or sulfur. It’s a specialty in nearby Hvargriehg, the geothermal spring capital of the country.

One of the top strange and wonderful aspects of Iceland is how much you can see – how many contrasting and extreme landscapes – in a short amount of time. The Golden Circle is the most popular getaway itinerary. In a loop of about 300km from Reykjavik into central Iceland, you hit Thingvellir National Park, the waterfall Gullfoss and the geothermally active valley of Haukadalur, with faithfully spurting geysers.

You can do it all in one day, even if you add in a stop at the Blue Lagoon, Iceland’s best-known hot springs.

Iceland has 100 volcanoes – 30 considered active, meaning they’ve erupted in the past 200 years or so. And yes, the most famous is Hekla, which has erupted 18 times since 1104 – the last time in 2000. On average, a volcano erupts every five or so years in Iceland.

I walked along the hard, black ground, a little like asphalt, a strange illusion of something once fluid, stopped and frozen mid-ooze. I climbed down the crumbling cliff to a crunchy black beach that met the calm bay. Scruffy plants were beginning to take hold. Hole-ridden basalt rocks nestled side-by-side with snail shells in soft cushions of moss. Lichen spattered over stones.

As I rose from a long crouch of inspection, my eyes swept the ground in front of me, and I actually blinked to clear my vision. The earth was not really dirt-colored, not even lava-black, but a shining, iridescent blue.

At the top of the road, surrounded by stark mountains striated in zigzag layers of olive green, was a lava flow landscape stretching as far as the horizon, and beyond it the setting sun. That smudge of pink reminded me, this might be the perfect place to witness the Northern Lights, another popular natural phenomenon here.

But what I really wanted to see while in Iceland was the horses.

Icelandic horses, I quickly learnt, are different: smaller, cuter, unique in their gaits, not to mention being an ancient equine breed.

When I noticed the ad for “Icelandic Horse Theater”, I did a bit of a “Whoa, nelly”. I didn’t want to go to something tacky and exploitive, but after being assured it was a pretty good show, and humane, off I headed.

In the late-day sun, there it was: Fakasel Horse Park. And there, past a rusty tractor, was a corral full of big-maned, doe-eyed Icelandic horses.

The show was indeed a spectacle.

The theatre is a recent project, built specifically to draw tourists, I learnt after the show. It’s got some very high-tech aspects, mainly the huge screen that serves as a backdrop for the stage, which is really an indoor riding ring but nicer.

The audience sits in the sturdy, gas-lit stands. The screen changes for each scene and has the premise for each story in English. A couple recount Icelandic myths, one about Odin and his eight-legged horse, another about a man who dies and turns into a horse and returns to visit his lover. In one scene, a horse curls up on the ground and puts its head in the woman’s lap.

Icelandic horses are historic. They are one of the oldest breeds in the world, brought to Iceland by the Vikings from 874 to 930, after which the importing of any other breed of horse was banned. The sturdy little horse was once the only means of transportation in the rugged country for centuries. Today, they are mainly used for pleasure riding.

And horse theatre, of course.

Where else, but Iceland?