Under PAP, the loss payment is the lesser of which amounts?

Under PAP, the loss payment is the lesser of which amounts?

• A. Actual cash value or the amount to repair or replace with like kind and quality
• B. Policy limit for liability
• C. Replacement cost without depreciation
• D. The deductible amount of the liability coverage

Answer: (A)

In a Personal Auto Policy, when settling a claim for physical damage, the payment is limited to the lesser of the actual cash value (the car’s value today after depreciation) or the cost to repair or replace the damaged parts with like kind and quality. This means you won’t receive more than the car is worth or more than it would cost to fix or replace, whichever amount is smaller. After selecting that amount, the deductible is subtracted to determine the final payment. The other options aren’t used in this calculation: liability limits don’t apply to physical-damage settlements, replacement cost without depreciation isn’t the standard method (depreciation is considered), and the deductible is not the figure used in the “lesser of” comparison, though it does reduce the final payout.

In a Personal Auto Policy, when settling a claim for physical damage, the payment is limited to the lesser of the actual cash value (the car’s value today after depreciation) or the cost to repair or replace the damaged parts with like kind and quality. This means you won’t receive more than the car is worth or more than it would cost to fix or replace, whichever amount is smaller. After selecting that amount, the deductible is subtracted to determine the final payment. The other options aren’t used in this calculation: liability limits don’t apply to physical-damage settlements, replacement cost without depreciation isn’t the standard method (depreciation is considered), and the deductible is not the figure used in the “lesser of” comparison, though it does reduce the final payout.