What are Arnold's liability limits under his insurance policy?

The correct answer indicates that Arnold's liability limits under his insurance policy are $25,000 for injury to one person, $50,000 for injury to multiple people, and $10,000 for property damage. These figures reflect typical minimum limits required by many states for liability coverage in auto insurance policies.

Liability coverage is crucial as it helps pay for costs associated with injuries or damages that Arnold may cause to others while operating his vehicle. The first number represents the maximum amount the insurance will pay for bodily injury to a single person in an accident. The second number serves as the total maximum payout for bodily injury for all persons involved in the same incident. Lastly, the third number covers property damage resulting from Arnold's negligence.

When considering other options, it is important to note that different coverage amounts reflect varying levels of protection. The options represent common liability limit combinations, and while they might provide different levels of coverage, they all have specific implications on financial risk and legal requirements in the event of an accident.