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Collateral Source Rule

Collateral Source Rule

What Is the Collateral Source Rule in Personal Injury Law?

The collateral source rule prevents a defendant from reducing the amount of damages they owe a plaintiff by introducing evidence that the plaintiff received compensation from other sources. These sources can include insurance payments, benefits from government programs, or help from family or friends. The rule ensures that the defendant is fully responsible for the harm they caused, regardless of other compensation the plaintiff may have received.

Key Points of the Collateral Source Rule:

Why Is the Collateral Source Rule Important in Personal Injury Cases?

The collateral source rule is important because:

  1. Encourages Accountability: Defendants are held fully responsible for their actions, without benefiting from the plaintiff’s other compensation.
  2. Ensures Full Recovery: Plaintiffs can receive the total damages needed to address their injuries, regardless of outside help.
  3. Prevents Jury Bias: By excluding evidence of collateral payments, jurors focus only on the defendant’s actions and the harm caused.

Example:

If a plaintiff’s medical bills are $50,000, and their health insurance pays $40,000 of that amount, the defendant still owes the full $50,000. The fact that insurance covered part of the cost cannot reduce the defendant’s liability.

Exceptions:

Some states limit or modify the collateral source rule, allowing certain types of collateral payments to be considered. An attorney familiar with the specific laws in your jurisdiction can help explain how this rule applies to your case.

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