By Crawford Frazer

Because you have auto insurance, it stands to reason that you'd be covered no matter which car you're driving … right?

Actually, major insurance companies will not always cover insurance on rental cars, whether you need one because of an accident or because you're in another city for work or vacation. Before a rental agent asks if you'd like to buy coverage at the counter, take a few minutes to understand the options.

The first two steps

According to the Insurance Information Institute, many people make a decision about rental car insurance right on the spot. And when they accept or deny all of a rental agency's coverage, they can end up with unnecessary extra coverage or big gaps they'll later regret. What renters should do instead is call their auto insurance company and credit card company in advance.

• Auto insurance company: Generally, the coverage on your car will extend to the car you rent, but you always should ask your insurer. Make sure you tell the insurance representative whether you'll be using the rental car for business or pleasure. If you dropped the comprehensive or collision coverage in your policy, the Insurance Information Institute suggests you consider buying a collision damage waiver when you rent.
  
• Credit card company: Sometimes, the card you use to rent a car will provide some sort of insurance, though you'll need to call and ask about specifics. Also, take note that your personal car insurance or any coverage you buy from the rental agency will usually supersede the credit card company's coverage.

Also, according to State Farm Insurance, purchasing insurance from the rental company can be useful if you're renting a car abroad -- and end up having to pay for damages before leaving the country.

The right coverage

Four basic coverage options available at the rental car counter, according to the Insurance Information Institute.

1. Loss damage waiver: This isn't actually insurance, but a waiver of any financial responsibility if the car is damaged in a collision or stolen. This waiver should include loss-of-use costs that the rental agency may charge while the car is being repaired.
   
2. Liability protection: Don't settle for the rental agency's liability coverage, which often is too small to adequately cover the expense of a major lawsuit. Make sure you have enough liability coverage in your own policy, or look into additional protection from your insurance agency.
3. Personal accident insurance: Because this coverage is for medical treatment -- for you and any passengers injured in your car -- you may be safe sticking with your existing personal injury policy or your health insurance policy. But always check first, and make sure passengers are covered if anyone will riding in the rental car with you.
   
4. Personal effects coverage: In the event of theft, for example, you can cover the possessions in the car for as little as $1 a day. However, home insurance and renter's insurance also generally cover you for thefts away from home (after the deductible).

Once you've reviewed these coverage options and spoken with your auto insurance provider, you'll be ready to step up to the counter and make an informed request -- and know that you're covered behind the wheel of that rental car.