Our proper taking of refuge depends on whether we have within our mindstream the proper causes for taking refuge. These causes are discussed in [Lozang Choekyi Gyaeltsaen’s] Melodious Laughter of Lozang— Answers to “Questions on the Whitest Altruism of All,” which says: The true nature of taking refuge: Taking refuge because one is most afraid And because one knows the Three Jewels are able to protect. This is what you meant, omniscient one. In other words, we need both causes: personal fear of saṃsāra and the lower realms, and the belief that, if we are able to put our trust in them, the Three Jewels will have the ability to protect us from these terrors. If we do not have both these causes, we will not take refuge purely. If we do not fear suffering, we will not think of seeking a refuge. If we do not believe in the object of refuge, we will not remember our reliance on it as a refuge— or we might recall it, but only in words, because our heart will not be in the act of entrusting ourselves to that refuge. Each of the three scopes contains its own version of the [first] cause for taking refuge. For the small scope it is: fear of going to the lower realms ourselves. For the medium scope: fear of saṃsāra. For the great scope: such love and compassion that we cannot bear others suffering in saṃsāra. In this particular section of the lamrim, the cause for taking refuge is fear of the lower realms.

This has two parts: (1) the actual identification of the things to take refuge in; (2) the reasons why they are fitting refuges. 

The One Hundred and Fifty Verses of Praise says: Take refuge in whoever does not have, And never will have, any shortcomings And in whom resides Every aspect of all good qualities.   If one with such a mind exists, Take refuge in him, Praise him, and venerate him. It is right to abide by his teachings. In other words, when we think of how to distinguish between what should be a refuge and what should not, we will want to take refuge in the Buddha, the teacher of Buddhism, in his teachings, and in those who abide by his teachings. The average worldly person seeks refuge in worldly creatures— spirit kings, gods, nāgas, spirits, and so forth. Non-Buddhists seek refuge in Brahmā, Indra, etc., but these themselves are beings in saṃsāra, so they are not fitting refuges. Who then is a fitting refuge? From the Seventy Verses on Taking Refuge: Buddha, Dharma, and Saṅgha Are the refuge for those desirous of liberation. That is, the only refuge is the Three Jewels: Buddha, Dharma, and Saṅgha. But if we do not identify these three properly, we will not take refuge purely. We are not critical and so pretend to be Mahāyāna knowledge-bearers, yet when things go wrong, sickness comes and so forth, or when we have some important work to do, we seek refuge in worldly Dharma protectors, in spirit kings, local gods, etc.— we carry an armload of aromatic wood for a smoke purification and rush off to the shrine of any deity having a statue in the neighborhood. Inwardly we should entrust ourselves to the Three Jewels; instead we cling to spirit kings. The external reality indicates our inner state. We may have actually gained admittance to a monastery, but we do not even qualify to be Buddhists, let alone Mahāyāna knowledge-bearers. Nāgas, spirit kings, and others do not have these three qualities: omniscience, love, and ability. They don’t even know when they are going to die. Normally they are categorized as animals or hungry ghosts, and their rebirths are inferior to ours. No matter how badly off we are, we are still human. What plan could be worse than to seek refuge in them? Forget about protecting us from saṃsāra and the sufferings of the lower realms, or even giving us little temporary help— they may do us great harm instead. Here is a story to illustrate this. A man with a goiter once went to a place haunted by flesh-eating rock spirits. A tax in flesh that these rock spirits paid to other creatures was due, so the spirits removed the man’s goiter. Another man with a goiter heard of this and went to them and took refuge in them hoping for the same result, but the spirits did not destroy his goiter— they made it larger. Similarly, worldly gods and evil spirits are sometimes helpful, sometimes harmful, they can never be trusted. Non-Buddhists make Brahmā, Indra, Śhiva, Rudra, Gaṇeśha, and so forth, their refuge. This is an improvement on the above, yet these gods are still not liberated from saṃsāra and the lower realms so they cannot protect other beings. But Buddha, the Teacher of Buddhists, is not like these. Praise to the Praiseworthy says: You proclaimed, “I am friend To you who are without protection.” Your great compassion Embraces all beings.   Teacher, you have great compassion, You have love; you act by your love. You are diligent, you are not lazy. Who else could be like you?   You are the protector of all sentient beings; You are a kind relation to all. I will discuss the Buddha’s qualities individually in another section. According to that section he has three magnificent qualities: omniscience, love, and ability. Not only do spirit kings and so forth not have even a portion of these good qualities, but also the sum of the good qualities of worldly refuges, gods, nāgas, and the like, cannot rival even the good qualities of a single Buddhist śhrāvaka stream-enterer. Buddha is the ultimate refuge because he has taken the two benefits [benefit for self and for others] to their most developed state. Our Teacher has eliminated all faults and possesses all good qualities. Simply put, the ultimate jewel of Buddha is assumed to be the two dharmakāyas, or “truth bodies”; the relative jewel of Buddha, the two physical kāyas [the saṃbhogakāya, or “enjoyment body,” and nirmāṇakāya, or “emanation body”]. The jewel of Dharma is as follows. The ultimate jewel of Dharma is anything that comes under the truth of cessation or the truth of the path— these are the [two] purifying truths [in contrast to the two truths of suffering and the origin of suffering] in the mindstreams of āryas. As a guide, we take the truth of cessation partly to mean a freedom from [or the “cessation” of] some particular obscuration, this freedom being a function of a particular unhindered path. The truth of the path is taken to be the means for āryas to achieve these cessations [and realizations in their mindstreams]. For people who have not studied the classics and who think at a lower level, it is enough to identify the three scopes of the lamrim as a rough approximation for the ultimate jewel of Dharma. Such things as the twelve divisions of scripture are the generally accepted jewel of Dharma. The jewel of Saṅgha is as follows. The ultimate jewel of Saṅgha are ārya beings who have any of the eight good qualities of the liberated mind. A group of four ordinary beings holding the monk’s full ordination vows is the generally accepted jewel of Saṅgha. If we help or harm these beings, we will receive virtuous or nonvirtuous karmic results in relation to the Saṅgha. One doesn’t need all three of these refuges in order to be protected from some types of danger; each of the Three Jewels can protect one. Once a man in Dokham petitioned Avalokiteśhvara while he was being dragged off by a tiger. The tiger immediately put him down, and the man was freed from threat from the tiger. After Pūrṇa had become ordained and gained arhatship, some relatives and merchants went to sea to obtain choice sandalwood, but their defending deity began to destroy their boat. The relatives petitioned the arhat Pūrṇa [in their prayers] and were saved from the waters. The king of the nāgas caused a rain of weapons to fall on King Prasenajit; Maudgalyāyana turned it into a rain of flowers. However, all Three Jewels are needed to protect one completely from saṃsāra and the lower realms. To cure a patient of a severe illness, three things are needed: a doctor, medicine, and nurses. Similarly, in order to be freed from the serious illnesses of the sufferings of saṃsāra and the lower realms, the danger of the peace [of Hīnayāna arhats], or [saṃsāric] existence, one definitely needs all of these: the Buddha, the teacher of the liberating path, who is like the doctor; the Dharma, the liberating path of the three scopes, which is like the medicine; and the Saṅgha, the friends of the Dharma practitioners, who are like the nurses. So, these three are the objects to take refuge in.