If Jerome was awarded $400,000 for his injuries, what is the maximum amount that ABC Imports’ insurer will pay?

In many states, including Florida, personal injury protection (PIP) insurance has specific limits on the amounts payable for medical costs, lost wages, and other related expenses, regardless of the total award from a lawsuit or settlement. In this case, the correct answer of $250,000 aligns with the typical coverage limits set under certain insurance policies, particularly in the context of bodily injury liability coverage.

Insurers often have maximum payout limits established in their policy agreements, which protect the insurer from excessive payouts in case of large awards stemming from legal judgments. Therefore, if Jerome was awarded $400,000 but ABC Imports’ insurance policy specifies a limit of $250,000, that is the maximum amount the insurer is required to pay under the terms of the policy. This scenario highlights the importance of understanding the specifics of insurance limits and how they interact with court awards.