Step 1: Understanding the Concept
Bilirubin is a yellow pigment formed when the haem of old red blood cells is broken down.
Step 2: Why it matters
Before conjugation in the liver, bilirubin is fat soluble. It can cross the blood-brain barrier and damage brain tissue, especially in newborns.
Step 3: Conclusion
Serum bilirubin tells how severe the jaundice is and whether it is near the toxic level.
Final Answer:
Serum bilirubin is important because fat soluble bilirubin is toxic to the brain.
\[ \boxed{\text{(C) }\text{fat soluble bilirubin is toxic to brain.}} \]