Question

Under the limits of insurance provision found in the Physical Damage Coverage Form in a Commercial Auto policy, how much will an insurer pay to repair or replace a covered auto?

1) The lesser of the replacement cost value of the cost to repair or replace a covered auto
2) The greater of the replacement cost value or the cost to repair or replace a covered auto
3) The lesser of the actual cash value or the cost to repair or replace a covered auto
4) The greater of the actual cash value or the cost to repair or replace a covered auto

Answer 1

In a Commercial Auto policy, the insurer will pay the lesser of the actual cash value or the cost to repair or replace a covered auto.

Step-by-step explanation:

In a Commercial Auto policy, under the limits of insurance provision found in the Physical Damage Coverage Form, the insurer will pay the lesser of the actual cash value or the cost to repair or replace a covered auto. This means that if the actual cash value of the covered auto is lower than the cost to repair or replace it, the insurer will pay the actual cash value. If the cost to repair or replace the covered auto is lower than the actual cash value, the insurer will pay the cost to repair or replace it.