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Italy car rental, extra costs for CDW? and LTZ's?

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We're doing a 25th anniversary trip, two adults, 3 weeks May-early June ... starting with two days in MIlan and then driving to Bellagio, Parma, Florence and then train for the rest.
1) Any advice on whether to take the extra CDW insurance for car rental? Kemwell and AutoEurope both recommend it. So does Maggiore, a local firm. Avis is silent on it.
2) Suggestions on avoiding LTZ fines for pick-up in MIlan and drop-off in Florence? Our hotel in Milan is a few blocks from the central train station. In Florence, the hotel is 4 blocks from the Duomo. I'm guessing drop-off at the Florence airport and taxi to hotel.
3) Do smaller cities like Bellagio and Parma also have LTZ's to avoid?
Thanks for any suggestions, fellow travelers!

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