rental car size

Even a midsize is going to be tight
I wouldn’t go any smaller

The two of us rent the smallest (cheapest) we can get, so that’s a Mini/Economy or compact. Even with nobody riding in the back seat, the trunk only holds 2 carry-on suitcases, with a little extra space for a backpack and a couple odds and ends.

If the four of you need to transport your luggage very far, the luggage space will be your biggest deciding factor, more than squeezing your bodies into the seating area.

SUV? Van? Parking space restrictions are another reason to get the smallest vehicle that works for you and your luggage.

We just traveled through Tuscany with another couple, 4 adults with carryons plus a few backpacks, purses, and souvenir purchases. We booked our cars through Gemut.com and I took their suggestion as to the size of car we would need. It was booked as a Peugeot 2008 or similar, intermediate 4 door car. We picked up the car at the Avis rental counter in Salerno. The young man who was preparing our car and paperwork might have upgraded us a bit after looking at our bags and extra items. The car ended up being a Fiat 500L. The hatchback held all our luggage if we packed it in carefully. We were very comfortable driving around in this vehicle for a week. One passenger is 6'3" and he had plenty of head and leg room. We never had trouble driving through or parking in any of the small towns of Tuscany. I would say it ended up being perfect for us . . . not too large, not too small.

We are a family of 4 and we’ve rented an estate car (station wagon) and a small SUV. These are the smallest I would choose. We recently rented a Mitsubishi ASX for reference. Four carry ons fit perfectly in the back. But once we added in 4 backpacks on top, it was full. By the end of the trip we had more bags with souvenirs and we had bags stuffed everywhere. You won’t want to make any stops where you leave the car unattended, because your luggage will be visible.

I think an intermediate would be the smallest you could make work, but you really want a hatchback. Otherwise your luggage will be on your lap.

We had a small van (guess comparable to a mini-van) and was quite comfortable. Even the mid-size cars we have had in the past were a bit of a squeeze. Would not even suggest anything smaller than a midsize, and that you will probably find doable but tight. When renting cars in Italy, we always get the best insurance even though our credit card covers a lot. We want no problems when we turn a car in.

With 4 adults and carryons you’ll probably need an intermediate sized vehicle at a minimum, especially since there may also be miscellaneous bags or backpacks too. Suggest you look at a couple different rental agencies, write down vehicle types offered, and either look up luggage capacity dimensions or photos showing the luggage area. If a vehicle is sold in the U.S., maybe go look at it in person. When we travelled with another couple we had a mini-van sized vehicle and luggage storage was at a premium as our travel companions kept accumulating more stuff along the way.

You could also take the train to a central point like Siena, collect your car there, and then using that as your base set out on day trips to explore both Chianti to the north and the Tuscan countryside to the south. That would simplify your logistics I think.
There's cheap daily parking (2 Euros per day) at the underground lot at the Siena train station, and we never had a problem finding a spot. It's right on the road heading south out of town as well, ie it's well clear of the ZTL's.
I'd recommend springing for the zero deductible coverage, if only for the peace of mind.

Don’t get too attached to any specific make or model
When you book you are simply guaranteed a car “of similar make or model”
I can’t say that we have ever received the exact car that was shown at booking

Go to www.AutoEurope.com and select a vehicle in the “Family Size” category. It will likely be a VW Passat Wagon or a Volvo V60 wagon and it will be enough. An intermediate may be too tight, depending on the model they give you.
Pick up in a major city like Rome or Florence, as smaller offices, like Siena or Chiusi, may not have many choices in that category, even though you may be able to book it.

you are wise to consider luggage in addition to persons, that is where the trouble lies

Car insurance is complicated and is a pretty personal decision, which in Italy may already have been made for you by the rental agencies. You could ask some of your credit cards if they offer coverage, and if they do if Italy is included.

Always, always go for the zero deductible insurance. It will cost more at time of rental but save you much time and money in the event of a problem. (And, these problems are not always caused by poor driving.) All it takes is a rock chip, someone else bumping into your car while it’s parked, etc. to cause a lot of complicated paperwork and expense. If you have zero deductible, you just turn the car in and leave. Very simple.