You are picking up your vehicle at the car rental counter and you are invited—perhaps exhorted—to sign up for extra insurance coverages. Do you stand tough and decline the offer—then wonder later whether you have done the right thing? Or do you play it safe and take the protection?

These extra coverages sometimes more than double your rental cost. For example, for a compact car we recently priced with Budget in Portland, Oregon, the rate for a day for the car with unlimited mileage was $27.54; to add Loss Damage Waiver coverage (LDW) and Supplemental Liability Insurance coverage (SLI) would have increased the daily rate by $34.68—to $62.22 per day.

To decide whether to bite when these expensive options are offered, you need to do some advance research. Very likely you have or can get all the coverage you need without spending a penny for the extras offered by the car rental company. But there are important exceptions. You will need to check (1) coverage for damage to, or loss of, the rental car (referred to as “physical damage” coverage) and (2) coverage for personal injury or property damage you cause to someone else for which you are liable (referred to as “liability” coverage).

There are four possible sources of insurance protection— 

• The rental car company may automatically give you some coverage as part of the price of the car rental. Most companies have such automatic coverage in most states and foreign countries, but only liability coverage. 
• If you have a personal auto insurance policy, the coverage under that policy might also apply to loss or damage that occurs when you or a relative who lives with you is driving a rental car. 
• If you rent a vehicle using a credit card, as most renters do, that card probably gives you physical damage coverage, but not liability coverage, on the rental car. 
• The rental car company may allow you to pay extra to buy—and may aggressively try to sell you—physical damage and/or liability coverage above the limits that come automatically. 

Here are some of the caveats to consider—and to research—before declining a rental car company’s offers: 

Automatic with the Vehicle 

• You generally don’t get any physical damage coverage automatically with the vehicle. 
• The liability coverage you get automatically with the rental vehicle is likely to be at low limits. For rentals in the U.S., the automatic coverage is often only up to the minimum state law requires for a car to be registered—less than $50,000 in most states. In foreign countries, the limits may be even lower. For example, $2,000 per injured person with Hertz cars in Thailand and $7,500 per accident with Budget cars in Nicaragua. (On the other hand, the automatic coverage in some countries is very high—more than $2.3 million on Hertz rentals in Italy, for example.) 

Under Your Personal Insurance 

• You will have rental car insurance coverage through a personal auto insurance policy only if you or a relative you live with has such a policy. If you have insurance on your own car but don’t have collision or comprehensive coverage under that policy—possibly because your car is so old that it is not worth insuring—your policy won’t give you physical damage coverage on a rental car. 
• If you are an employee driving a rental car on company business, you might have coverage under a company auto insurance policy, but only if your company has paid extra for such coverage and usually just liability, not physical damage, coverage. 
• Your personal auto insurance policy probably won’t give you any protection for car rentals outside of the U.S. and Canada and a few miles into Mexico—or might even be limited to just the U.S. It will be useless in other countries. There are, however, a few companies that extend their coverages to foreign countries. This is true of Encompass (formerly CNA) and of Chubb. (We think all personal auto insurance companies should at least give you the option to buy the coverage.) 
• Even if your personal auto insurance policy includes physical damage coverage on rental cars, you will still be responsible for the deductible as you would be on your own car, and the policy might pay only up to the value of your own car—possibly leaving you short if you have an inexpensive car at home. 
• Your personal policy probably will not cover any rental car that you rent for more than 30 days. 

Through Your Credit Card 

• Although most credit cards give you automatic physical damage coverage—it is standard on all American Express and Visa cards and most MasterCards, but not on the standard MasterCard nor Discover’s Classic card. 
• You will get physical damage protection through your credit card only if you use the card for the full transaction—to pay and for any deposit, and with some credit cards even to reserve. 
• The cardholder must rent the car in his or her own name, not just use the card to pay for someone else’s rental. 
• The cardholder must decline the rental company’s physical damage (usually called either CDW or LDW) coverage. 
• Coverage does not apply in certain countries—for example, Australia, Ireland, Israel, Italy, Jamaica, and New Zealand, in the case of MasterCard. 
• Coverage does not apply to certain types of vehicles. It usually excludes RVs, trucks, vehicles designed to carry more than eight or nine passengers, vehicles with fewer than four wheels, and pickup trucks (even small pickup trucks with extended cabs designed to carry four or five passengers). 
• Losses involving drivers who are not authorized under the rental agreement are not covered. 
• Any loss that occurs while the vehicle is being used in a way that violates the rental agreement is not covered. 
• Coverage is typically limited to rentals within your country of residence for no more than 15 consecutive days, or in other countries for no more than 31 consecutive days. You can’t avoid this limitation by simply renting again and again from the same agency in 15-day intervals. 
• Losses due to off-road use of the vehicle are not covered. MasterCard even excludes from coverage losses sustained on any surface other than a bound surface such as concrete or tarmac—a possible problem if you are renting that SUV to go over some dirt roads to get to your campsite. 
• Coverage may be limited to a maximum amount—$50,000 for MasterCard, for example, and $25,000 for Discover. 
• Certain kinds of losses may be excluded. For example, Discover excludes theft from coverage, and MasterCard excludes from coverage theft of, or damage to, unlocked or “unsecured” vehicles. 

If these limitations make you inclined to purchase either physical damage or liability coverage from your car rental company, be sure to check what you get for that coverage. In Nicaragua with Hertz, for example, paying $8 per day for extra liability coverage raises the liability limit only $5,000—to $45,000 versus the $40,000 Hertz would give you automatically with the vehicle. It is, unfortunately, difficult to check in advance what you get automatically from a rental company and what you get if you pay extra. Hertz, on the one hand, gives you a lot of information on its website, though you have to dig for it; Budget, in contrast, gives you few of the details. 

You can get key terms of credit card coverage fairly easily on the the cards’ websites—www.americanexpress.com, www.discovercard.com, www.mastercard.com, and www.visa.com. Click on the link to “benefits.”