Millions of people rent cars every year, but if you’re not familiar with renting in Europe there are a few things that will smooth the path of your vacation.
In many European capitals and major cities, it is often advantageous not to have a car – parking is difficult to find and expensive, and moving around by car can be slower than public transport at busy times. Unlike the US, many hotels do not have their own parking. So when in Rome, Paris, London, Florence etc. don’t rent a car if you intend to just sightsee in the city itself. If you need to get out to visit another town or city, consider taking the train or even a bus. Services in Europe can be fast, frequent and reasonably priced.
When it comes to a larger geographical area like Tuscany or the Dordogne, then you are going to need transport to get about, and a car is the most efficient way to do so. I say this as someone who really likes to take good public transport, and often takes not-so-good public transport. It is possible to get around by bus in areas like Tuscany, but boy is it a logistical challenge and fundamentally you will get to spend far less time enjoying the area. When you have limited time to vacation, spending it on a bus is false economy. Buy carbon offset to cover the CO2 emissions of the car (and your plane ride, while you are at it) if you feel bad about that aspect.
Resist the urge to rent a large car or van, even if it is appealing because you have a large family or group on the trip. Get a couple of smaller cars instead. Larger cars are rarer in Europe because running them is more expensive, and also European towns and cities were not designed for cars at all. As well as being expensive to fuel, large cars are hard to maneuver in narrow streets designed for nothing wider than a horse and cart.
On one trip, we were staying a few nights in Florence and then heading out to Villa Vignamaggio. We were to stay at Hotel Brunelleschi, squeezed into the centre of the ancient city of Florence. The area is so old, the hotel is built around a Byzantine tower with Roman remains in the basement - it even has its own museum. The streets leading to it are really, really narrow: even the taxi driver had a hard time getting his small Fiat around the final bend. Some kindly Italians stopped to guide him back-and-forth as he edged the car around the corner. With even a small SUV or Minivan you'd be wedged between two buildings several turns back.
Incidentally, we'll probably never stay at the Brunelleschi again. Not because it was bad - quite the reverse: it is a truly historic hotel with charm, good rooms, friendly staff and a fantastic location. Dan Brown is to blame: it's where his characters Langdon and Sophie agree to rendezvous at the end of The Da Vinci Code for a night of passion. I could be wrong about the last bit, but it doesn't seem like they're planning to discuss iconography. At any rate, ever since then prices have gone up, up, up and you practically have to be Dan Brown to get in.
Many credit cards offer extensions to basic rental car insurance to cover accidental damage and/or theft - far more cheaply than the rental car company. You are already paying for this in your annual card fee and/or interest, so make use of it. Check the website of your card supplier to find out what they offer, and read all the small print so you know what is covered, and what isn't. We recently discovered that Amex no longer insures larger cars and SUVs, for example.
We've been unfortunate enough to claim on American Express insurance a couple of times. Our rental car was vandalized in Toulouse, France -- not badly, but bad enough for a hefty charge from the rental company. After sending in the paper work Amex did their investigation and paid up some months later. Insurance is getting simpler in places like Italy where there are a lot of claims - all rental car companies now mandate you buy comprehensive cover.
The insurance cover you probably don't need is for personal possessions. Most people's belongings are covered by their household insurance policy, but there are exceptions for expensive stuff like cameras and lenses and jewelry. Read your policy to see what is covered and don't buy coverage twice. In general, the best policy is to take anything remotely valuable out of the car as any kind of car trouble tends to ruin your day.