I do not ever buy the Collision Damage Waiver when renting a car. That is not to say that one should run around uninsured. That would be irresponsible and illegal in some states.
There are cheaper alternatives to rental car company insurance, some of which is even free.
One of the cheapest insurance coverages is offered through Orbitz.com. A week’s car rental can get you full collision and liability coverage for under $50. That same level of coverage at most rental car companies can cost you that each day!
Rental Companies make a huge portion of their profits from insurance sales.
There are other insurance options that you may already have. Your regular car insurance may already cover rentals. Check your policy to be certain. If it was not included in your policy, contact your insurance company. They may offer rental insurance coverage at a substantially cheaper rate than the rental companies offer.
Many credit cards also automatically provide insurance coverage when you use their card to rent a vehicle. Make certain to check what kind of damages it covers.
If you do purchase a rental company CDW, be aware that the basic package usually only protects the car you are driving. Many do you cover the car you hit (if it was your fault) and also do not cover medical.
When using your own insurance rather than the rental company, be aware that many companies will use varying tactics to get you to buy their insurance. Some will say you must have their insurance, claiming that your independent policy is not accepted by their company. Others will say you still would have to pay their deductable (usually $500). And many will place a $500 temporary charge on your card to the amount of the deducable which is credited back to your card when the car is brought back in one piece. Many independent insurers will cover the cost of that deductable if you are charged. Remember, the rental car companies make a profit from selling insurance. They are not going to let you out of the room without at least trying some high pressure sales tactics.
Bottom line: Shop around. Do not get forced into buying insurance at rip-off rates from car companies. There are much, much better deals available.