Which statement is NOT true regarding physical damage coverage?

Which statement is NOT true regarding physical damage coverage?

• A. The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle
• B. The coverage includes comprehensive and collision options
• C. A deductible applies to both comprehensive and collision coverage
• D. All vehicles are covered regardless of their use

Answer: (A)

The statement that is not true regarding physical damage coverage is characterized by its inaccurate portrayal of the limit of liability. The limit of liability for physical damage coverage generally refers to the lesser of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle. This means if the vehicle is damaged, the insurer will pay the smaller amount between its actual cash value (i.e., the vehicle's market value considering depreciation) and the repair or replacement costs. The other statements accurately reflect aspects of physical damage coverage. Physical damage coverage indeed includes both comprehensive and collision options, covering a range of incidents such as theft, vandalism, or accidents. It is also accurate that a deductible applies to both comprehensive and collision coverage, which means the insured must pay a specified amount out of their pocket before insurance kicks in for covered losses. Furthermore, the statement that all vehicles are covered regardless of their use is generally correct within the context of standard policies, as physical damage coverage is designed to protect vehicles used for personal purposes. By understanding these distinctions, it becomes clear why the limit of liability stated in the first option is misrepresented, making it the statement that is not true about physical damage coverage.

The statement that is not true regarding physical damage coverage is characterized by its inaccurate portrayal of the limit of liability. The limit of liability for physical damage coverage generally refers to the lesser of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle. This means if the vehicle is damaged, the insurer will pay the smaller amount between its actual cash value (i.e., the vehicle's market value considering depreciation) and the repair or replacement costs.

The other statements accurately reflect aspects of physical damage coverage. Physical damage coverage indeed includes both comprehensive and collision options, covering a range of incidents such as theft, vandalism, or accidents. It is also accurate that a deductible applies to both comprehensive and collision coverage, which means the insured must pay a specified amount out of their pocket before insurance kicks in for covered losses. Furthermore, the statement that all vehicles are covered regardless of their use is generally correct within the context of standard policies, as physical damage coverage is designed to protect vehicles used for personal purposes.

By understanding these distinctions, it becomes clear why the limit of liability stated in the first option is misrepresented, making it the statement that is not true about physical damage coverage.