Renting a car in Italy

I understand that this is a pretty standard practice for car rental companies in the USA, as well. Your insurance covers you - it doesn't cover them - so they protect themselves by placing that money on hold, in case it is needed later. If you did have damage, you would pay the car company yourself and be reimbursed later by your insurance. This is one reason to carry more than one credit and/or debit card when traveling. That hold amount does not seem particularly high, so maybe your card can handle it. See also https://www.ricksteves.com/travel-tips/transportation/car-rental-cdw.

I suggest you use the following RENTAL CAR CONSOLIDATORS:
www.autoeurope.com
and their sister company
www.kemwel.com
They are part of the same group, but check prices with both since the sometimes prices differ a bit and therefore I pick the better deal in either site.
They work with the largest rental companies in Europe, such as Avis, Budget, Europcar, Hertz, etc.

In both websites (which I suggest you read carefully) you will find all the info you need. Below the section related to Insurance. Note the peculiar exception of Italy which is spelled out in the websites (With the exception of Italy, CDW is optional and you always have the right to refuse it.),

http://www.autoeurope.com/insurancedetail.cfm
http://www.kemwel.com/go/europe-car-rental-insurance/

FYI. I just rented a car for our Italy trip from AutoEurope for what I thought was a very reasonable amount. The CDW was already figured into the rate.