The liability coverage insuring agreement on the standard personal auto policy is for bodily injury or property damage for which the insured becomes legally responsible because of an auto accident. Property damage is defined as physical injury to or loss of use of tangible property. In this situation, your insured had a loss of use of his tangible property for which the other driver was responsible. That loss of use was remedied by the rental car and part of the cost of the rental was the physical damage insurance required by the rental company. Your insured would not have had his loss of use remedied if he had not bought the physical damage insurance because the rental company would not have rented the car to him. So, the other driver does owe the cost of renting the car for the insured and that cost includes the insurance.

My question is this: What if the not-at fault insured party referenced in the situation above did have physical damage coverage on his personal vehicle, but decided to purchase the physical damage insurance provided by the rental company because he did not want to pay a deductible if he damaged the rental vehicle? Would the answer be the same? We have considered this a voluntary expense by the claimants in the past.  

Michigan Subscriber

It is our opinion that although it is true that the insured would not be in the rental car in the first place but for the original accident, if he were to then suffer a loss in the rental this is separate incident for which the original at-fault party is not responsible and should not even be involved. Therefore, we agree that the decision to purchase the rental insurance on the vehicle should be viewed as voluntary and the insured would be solely responsible for this cost, just as he would the deductible on the vehicle should he have a loss.