Rental car agencies typically break out extra rental car insurance offerings into four sections, according to the III.

Liability coverage
Collision/loss damage waiver
Personal effects coverage
Personal accident coverage

Liability coverage

Liability coverage is intended to help protect you if you injure someone or damage their property while driving. If you have sufficient liability coverage through your own auto insurance, you may not need to buy extra rental car liability insurance coverage from the agency. Your insurance provider can help you review your coverage, so you can set the liability limit that's right for you.

Collision/loss damage waiver

A collision/loss damage waiver (also known as an LDW or CDW) isn't technically insurance. If you damage the rental car, this waiver may help cover the cost of repairing it. The waiver typically does not cover damage from speeding or driving on unpaved roads.

A collision damage waiver may duplicate your existing coverage if you have collision and comprehensive coverage on your own car. However, if you've dropped collision or comprehensive coverage from your policy, and you don't purchase the waiver, you would likely have to pay out of pocket for damage you cause to the rental car.

Additionally, a rental agency could charge you for "loss of use" of the car (lost rental income) while the car is in the shop being repaired. Your own auto policy typically won't reimburse you for that. Be sure to read your car rental agreement carefully to clarify what kinds of charges you could incur if you were to damage the vehicle.

Personal effects coverage

Personal effects coverage may help cover your personal belongings, such as your laptop or clothing, if they're stolen from the rental car. If you have renters or homeowners insurance, the personal property coverage on that policy typically helps cover your personal items through what's known as "off-premises coverage."

Off-premise items are usually only covered up to a certain percentage of your personal property coverage. The deductible on your homeowners insurance or renters insurance will apply. Check with your insurance provider about the limits of your coverage.

Personal accident insurance

Personal accident insurance helps pay your and your passengers' medical bills, if you're injured in a rental car accident. The III says if you have health insurance, medical payments coverage or personal injury protection on your car insurance policy, you may already have coverage comparable to what the rental company offers.

Medical payments coverage and personal injury protection (not available in all states) may help pay for medical bills due to a covered car accident.

Supplemental liability protection (SLP)

Additionally, SLP is offered by rental vehicle companies and covers you for property damage or injuries you cause behind the wheel, according to Forbes. If, for example, you hit someone else's vehicle, SLP may help cover damages to that vehicle. While SLP is designed to offer an extra layer of protection beyond what your personal auto policy might offer, you may already have enough liability protection from your personal policy. Again, it's worth checking with your insurer.