A liability policy pays for the repair or replacement of the other driver's car and pays for other people's medical expenses if you are at fault for an accident. Liability coverage also covers your legal defense expenses if you are sued as a result of a covered accident. For example, if your car is 10 years old, the company will pay you the value of a 10-year-old used car. It won't be worth replacing your car with a new one that's the same make and model as your wrecked car.
You can keep the rented car for as long as the company deems reasonable for repair. Some car insurance qualifying factors, such as your driving history, can significantly affect your insurance costs. In no-fault states, an injured person must meet certain minimum requirements to be able to exit the car insurance system through no fault and file a claim against the at-fault driver. Your insurance company will pay for a car rental only for as long as it deems reasonable to repair or replace your car.
If you don't own a car, but you borrow it frequently, you can purchase a third-party liability policy that pays for damages and injuries you cause to others while driving a borrowed car. If your accident was caused by another driver, the other driver's insurance company will pay for you to rent a car. Knowing the different types of coverage can help you decide what insurance to buy and to navigate the insurance system in the event of an accident. It protects you in the event of an accident in which the other party is at fault and has no insurance or whose insurance limits are not sufficient to reimburse you for the damage they caused.
For example, in Texas, auto insurance companies are required to offer personal injury protection (PIP) to policy buyers. Not having insurance or presenting proof of insurance when requested can result in fines and other penalties, especially if you are involved in an accident. Not having car insurance in many states can make you a high-risk driver when buying car insurance. Car insurance protects you financially by paying the medical and repair bills for the other driver's car if you cause an accident.
If you can't drive your car because of a covered loss, this coverage helps pay for a car rental or other transportation expenses so you can get back on the road. In some states, your vehicle can be towed and you can't claim it until you present proof of insurance.