Which statement about physical damage coverage is incorrect?

The assertion regarding the limit of liability being the lesser of repair cost or cash value is not accurate in the context of physical damage coverage. Coverage for physical damage under an auto insurance policy generally pertains to two main types: collision and comprehensive coverage.

Collision coverage will cover damages to the insured vehicle resulting from a collision with another vehicle or object. The limit of liability for this coverage is based on the actual cash value of the vehicle, not necessarily the repair costs, which means that if the vehicle is deemed a total loss, the insurance will pay out the market value of the vehicle at the time it was damaged, minus any deductibles.

Comprehensive coverage, on the other hand, addresses non-collision-related damages, such as theft, vandalism, and natural disasters, also paying out based on actual cash value.

Understanding the nuances of these coverage types and their respective liability limits is essential in determining what an insured can expect during the claims process. Hence, the limit of liability being referenced as based on the lesser of repair cost or cash value introduces a misunderstanding of standard practice in Nevada and beyond in auto insurance policies.