When renting a car, I don't usually take the insurance to reduce the excess from $5,000 to $0. However, I wonder whether rental companies are then keener to take note of a little scratch, especially when it was preexisting but gone unnoticed at initial inspection.
AFAIK most credit cards (Costco AMEX) will insure your car rental and luggage during travel. Out here in California and probably at most popular airports, the only things they look for are large dents.
Not in my limited experience. I was surprised how little the guy seemed to check when I dropped the car off.
Depends on the area. Renting in midwest suburbs, they pointed out and wrote down every tiny scratch in a walkaround before I picked up the car. Renting in New Jersey, the car looked like it had been beaten with a baseball bat, they didn't mark anything down on the damage report.
You self insure when you can afford the max cost you could incur (e.g. You could buy a new car if you had to.) You buy insurance when you can't afford the rare but very costly catastrophic loss - life insurance, health insurance, car injury insurance.