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It's a situation many of us have found ourselves in: you're at the rental car counter, checking in to pick up a vehicle you booked months ago. But before you can check out, you've got a question to answer: are you buying supplemental insurance coverage, or will you decline it and wonder if you should have taken it?

To be fair, it's not a question with an easy answer. There are many factors to consider before choosing whether to accept or decline additional rental car coverage. But looking into it ahead of time, learning about what to expect and having a good understanding of car insurance – as well as your own personal policy – can help make your decision easier.

Not sure if you should hand over the extra cash for coverage? Here are a few details to keep in mind, so you can help protect yourself without wasting money. 

Does My Current Car Insurance Cover a Rental?

The first factor that should influence your decision is your existing car insurance coverage. Take the time to review your coverage. What sort of comprehensive, collision and liability coverage do you have? Does it extend to rental cars you may drive? In many cases, your existing policy will cover rental vehicles — at least to some extent. If you aren’t sure if your car insurance policy covers rentals, check with your agent or insurance representative.

Do I Need the Auto Coverage Offered by the Rental Agency?

You'll need to look at the types of coverage the rental car company is offering and requires. Is it coverage that your existing policy doesn't provide, or does it overlap with your personal insurance in most areas?

Rental car agencies typically offer extra coverage for the following options:

1. Liability coverage to help protect you if someone is injured or there is property damage as a result of an accident that’s your fault. There's a good chance your existing policy covers this already. Check your policy to determine if you could benefit from supplemental liability protection from the rental car company.
2. Personal accident insurance to help pay you and your passengers’ medical bills if you’re injured in a rental car accident. Your existing policy and personal health insurance may provide coverage comparable to what the rental company is offering.
3. Personal effects coverage may help cover your personal belongings, such as a cellphone or clothing, if they’re stolen from your rental car. If you have renters or homeowners insurance, these items may already be protected.

Car rental companies also offer non-insurance products called waivers. Collision damage and loss damage waivers aim to waive certain fees and expenses if the rental car is stolen or in a collision. These waivers are only effective if you're not violating any laws (such as speeding, driving while intoxicated, etc.) when the incident occurs.

Does the Type of Car I Rent Matter for Insurance Coverage?

It's also important to consider the type of vehicle you're renting and, perhaps more importantly, how similar it is to the cars you already have insured on your personal policy. If you're renting a car that's around the same in size, price and general safety features, there's a good chance your existing policy will provide adequate coverage on the rental. If, on the other hand, you're opting for a more expensive or atypical ride (say a speedy sports car or pricey luxury convertible), then your personal policy may not be sufficient.

If you’re renting a car through a membership-based car sharing service, the insurance costs are typically included in the fee. However, if the car is involved in a collision or is stolen, the renter may be billed for a specific dollar amount that is stated in the membership agreement. For an additional cost, customers can purchase a 'waiver' to avoid paying the accident fee.

Credit Card Rental Car Insurance

Have a credit card or two? Pull up your agreements and look for any rental car benefits your credit card may include. Many credit cards offer rental car insurance as an added benefit to cardholders. These can either replace your primary insurance coverage or offer supplementary coverage depending on the card and provider.

To leverage these benefits, you'll need to book and pay for the car rental with the credit card in question.

How Much Is Rental Car Insurance?

Your finances should also play a role in your decision. Because additional rental car insurance adds to your expense, it can impact your budget — especially if you'll have the car for some time. Loss waivers can add even more costs to your bottom line.

Before deciding whether to purchase extra coverage or not, determine your rental car budget. If you're on vacation or are in the process of repairing your personal vehicle, you might also have other budgetary concerns to factor in. Remember to consider the cost of possible damage to the rental (or a full-on wreck), and how it could impact your finances.

Do I Really Need Extra Rental Car Insurance?

Another big consideration should be how long you'll have the car for and where you'll be taking it. Just need the vehicle for a few hours' trip to and from the airport? Driving it cross-country for a two-week trip?  Consider the situation for which you’re renting the car and weigh the circumstances to come to a decision on buying rental car insurance.

You also may want to check the limits on your personal insurance policy. Some only extend to rental vehicles for a certain amount of time. If you'll have the car longer than that, supplemental coverage may be necessary.

Get Your Insurance Agent's Recommendations

In the end, consider making a quick call to your insurance agent. They can give you a run-through of your existing coverage, as well as recommend any additional rental coverages you might want to consider. They also may be able to add an endorsement to your policy that expands your rental car coverage for a small fee.