Insurance and Excess
Most car hire fees include basic insurance as part of the cost however many companies will try and sell you extra 'excess insurance' which reduces the cost you will have to pay up if you have an accident. This is usually charged at a daily rate and can be as high as £25 per day which really adds up. The excess due if you have an incident can be frightening so it's temping to pay up and feel safer knowing that if something goes wrong you'll be covered. Many extra insurance policies also cover tyre, roof and windscreen damage which also isn't usually insured with basic cover so do check out exactly what and what isn't insured before you agree to anything.
Whatever insurance option you choose make sure you check the vehicle over carefully when you collect it and make the company aware of any damage or problems before you leave the depot. Remember to check for dents and scratches as well as making sure the lights, tyres and windscreen are in good order. Similarly, on return check the vehicle over with the rep present if possible and if not take photos. If you leave the vehicle unattended out of hours you will be responsible for any damaged caused to it during this time.
You have 3 choices when faced with whether to buy excess or extra hire insurance:
Buy it from the car hire company when you hire
This is the easiest, but most expensive, option. The hire company should not insist on any up front payments to cover the excess and they will manage any claim if an incident occurs. If you take this option make sure you are aware of exactly what and what isn't covered.
Buy it from an independent insurance company
This is a much cheaper option and you can purchase insurance for a one-off trip or annual cover. Check out Moneymaxim for lots of information about different types of extra cover. The downsides to taking this route is that you may have to leave a larger Credit Card deposit and if there is an incident you will have to liaise between the insurance and car hire company. You may even have to pay for damage up front and reclaim it later. Money Saving Expert has more information about this and discounts for excess insurance policies.
Don't buy it and take the risk
It's your choice and if you think that you are a good driver, even abroad, and you've got the funds to cover the excess if anything should happen then go for it! Do make yourself aware of the excess amount on the car hire policy and if you are involved in an incident, especially if it wasn't your fault then be meticulous in taking down details, taking photos and getting witnesses if possible.