I am planning on spending a week in Costa Rica and want to rent a car. I went to the Hertz site and they had a car for $150 but then they wanted $120 for insurance! Yikes. Then reading other sites, it appears you have to buy insurance even if you already have auto insurance. Does anyone know how this work and if there is a 'cheap'rental company?

i have not being back to the Americas for the last 3 yrs but have family and visited every month practically for business before that for many years; this was a good reputable company

http://www.travelexcellence.com/car.htm

we used Avis for our last trip to Costa Rica, and used our credit card for insurance...no problem. I don't remember what we paid but I think it was around $300(for an automatic.) Car rental in Costa Rica isn't cheap.

A good local rental company which many recommend on the Fodor's boards is Tricolor. http://www.tricolorcarrental.com/ especially if you want a 4WD (not always necessary, depends on where you are going and when.) They have an excellent reputation, we didn't use them because they had no automatics except for large SUV/4wd, which we didn't need.

You might also try AutoEurope as they do rent in Costa Rica--but we found their price highest of all.

We use Tricolor as well. Like it very much. My personal recommendation based on the driving in San Jose and the roads everywhere else is, get full insurance coverage.