All of the following are true regarding physical damage coverage EXCEPT...

The limit of liability in a physical damage coverage context typically refers to the maximum amount the insurance company will pay for a covered loss. The correct answer indicates that the insured cannot choose the limit of liability; rather, it is determined by the terms of the insurance policy and is usually linked to the actual cash value of the vehicle at the time of loss, or the cost to repair, depending on the specific policy provisions.

The first statement highlights that the limit of liability is the actual cash value at the time of loss, which is a true reflection of how physical damage coverage generally functions. The second statement references the limit being less than the cost to repair the vehicle, which can occur in scenarios where the vehicle is deemed a total loss and its actual cash value is lower than repair costs. The fourth statement accurately states that the limit of liability is the greater of actual cash value or the necessary repair amount, which is indeed how certain policies are structured to ensure that the insured gets adequate coverage in the event of a loss.

In essence, the ability to choose the limit of liability does not align with standard policies for physical damage coverage, as this limit is more so defined by the valuation of the vehicle rather than a customizable feature of the policy.