Proper Auto Insurance for our 7 day vacation in G.B.: can you help out?

Third party insurance (cover for any other vehicles you may damage, property and people) is a legal requirement in all European countries and is included in the insurance.
Cover for any damage to the hire car is between you and the rental company. They offer "Collision Damage Waiver" (CDW) which covers this. Without this, when you return the car, they will charge you for every little scratch which is not listed in the rental agreement. CDW can cost as much as the rental, but is usually worth it.
If you think you have some other insurance that covers damage to the car, and choose to decline CDW, that is up to you.

Allow me to pick up where Chris left off - not only do the rental agencies sell CDW , they usually sell " super CDW " or something to that effect , which buys down your excess ( deductible ) to zero . As far as the additional insurance costs over the rental , that is a smoke and mirrors game the rental agencies love to play ---- ALL the money goes in the same pocket , and this is a form of what I call " counting money twice " . You can rely on some form of third party insurance , i.e. credit card , independent underwriter , etc. , but you had better read the fine print closely , in so far as what documentation ( accident reports , and from who ) you will be required to obtain in order to file a claim if that becomes an issue . The advantage to the agency policy is , in general , if there is a problem , you are able to walk away . Lastly , so you can make a decision , I rented from Avis ( via AARP ) for six weeks this past fall in the UK with zero liability ( including glass , tires , personal injury and liability etc. ) for a rate of $70 / day . You might cut this cost down , but be wary of the multitudinous fine print . For me this provided a healthy dose of peace of mind . I would be curious to know what prices you find . Also , while driving on the left is the usual euphemism for UK driving , it is more involved than that . It takes some practice , and what with hedgerows , narrow roads , blind curves , and the like , you do run a pretty good chance of having a scrape . Don't let this put you off , A car in the UK is a joy , you will get to see things that are unattainable any other way .

okay, this is great info. i called my credit card company and they too gave me some great advice. i'm reading the fine print for a couple of major car rental companies. thanks!

Just to clarify , reading the agency's fine print is good ---- it's the fine print on the terms of the credit card coverage that's the big issue

As you read the fine print for the credit card company's insurance, pay close attention to what you need to do if you are in an accident and make notes. We had an accident and were pretty scatterbrained right after (no one spoke our language, we were dealing with police, etc). We had used a travel insurance policy we bought from CSA for our non-deductible collision insurance. Fortunately, we had printed a copy of the policy and we pulled it right out at the scene and followed the directions for what we needed to file a claim. (They included contacting the company immediately, a copy of the police report, and the certain documentation from the car rental. ) Failure to do any of the required things can invalidate your insurance. Most times when I hear people talk about not having their claim honored, it is because they did not do one of the requirements. ("We thought we could call when we got home, etc. ) We followed it step by step, and our claim was paid in full.

I'f you're USA-based and can get an American Express card, they've got an add-on rental car policy that goes for either $20 or $25 per rental (not per day) and covers pretty much everything the CDW the rental company offers for far more. Haven't had to file a claim with it myself fortunately, but it gets good reviews online. Valid in most European countries, but not in Ireland. (We used for UK, Germany, and Austria)