Most Platinum MasterCards with the MasterRental insurance at least used to cover rentals in Israel, but it appears that this is not the case anymore:

" In general, coverage is accepted worldwide, but there are exceptions.
· You may be unable to use this service in Australia, Ireland, Israel, Italy, Jamaica, or New Zealand. Please contact your car rental company before you travel.
· Coverage is not available where prohibited by law."

text from Web site

If you have a Platinum MasterCard, it might be worth a try calling 1-800-MC-ASSIST to inquire about rental collision insurance in Israel. I doubt that the car rental agencies would tell you the correct information, as of course they want to sell you their own CDW.

Household Bank (HSBC) issues MasterCards that still charge only 1% for foreign transactions.