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.