Collateral Source Rule

DEFINITION of 'Collateral Source Rule'

A common law rule of evidence pertaining to punitive or other damages awarded to a plaintiff for injury, illness or disability. The Collateral Source rule mandates that damages awarded in court cannot be reduced by any amount of other sources of income used to cover the damages suffered by the victim.

BREAKING DOWN 'Collateral Source Rule'

The Collateral Source rule is a legal edict that prevents evidence from being admitted in court that proves the plaintiff (or victim) is receiving compensation for injuries from other sources, such as insurance. This doctrine has been contested in court in recent years by those who feel that victims should not be able to sue tortfeasors again for damages that were already paid from another source.

RELATED TERMS
  1. Punitive Damages

    Legal recompense that is levied as punishment for a wrong or ...
  2. Civil Damages

    Civil damages are usually monetary awards due to a winning plaintiff ...
  3. Compensatory Damages

    Money awarded to a plaintiff to compensate for damages, injury, ...
  4. Treble Damages

    A law that permits a court to triple the amount of damages awarded ...
  5. Wrap-Around Insurance Program

    Provides punitive damages insurance for employment practices ...
  6. Tortfeasor

    The individual, company, or entity that is found to have committed ...
Related Articles
  1. Personal Finance

    Tax Court: Your Last Resort

    Appealing an unfavorable or unfair tax ruling may be your last chance to save your finances.
  2. Investing

    Stop Scams In Their Tracks

    Find out how to protect yourself and your loved ones from financial fraudsters.
  3. Investing

    Supreme Court Won't Hear Altria's Damages Appeal

    The U.S. Supreme Court declined to hear an appeal by Altria's (NYSE: MO) Philip Morris USA unit over a $25 million penalty it was assessed by a Portland, Oregon, jury in a case involving a smoker's ...
  4. Personal Finance

    What Is Collateral?

    Collateral is property or other assets that a borrower offers a lender to secure a loan. If the borrower stops making the promised loan payments, the lender can seize the collateral to recoup ...
  5. Personal Finance

    Cover Your Company With Liability Insurance

    Every business is susceptible to legal action. Find out how to protect yours.
  6. Personal Finance

    Do You Need Casualty Insurance?

    Find out how different types of coverages can protect you and which policy is right for you.
  7. ETFs & Mutual Funds

    What This Market Timing Ruling Means for Investors

    What the Janus Supreme Court ruling on market timing means for investors and advisors.
  8. Managing Wealth

    Creating a Risk Management Plan for Your Small Business

    Learn how a complete risk management plan can minimize or eliminate your financial exposure through insurance and prevention solutions.
  9. Insights

    Oracle Battles Google for 9.3B in Damages

    Oracle and Google head to court to decide whether or not APIs are covered under fair use in copyright.
  10. Investing

    Advising FAs: Explaining Disability Insurance to a Client

    Disability is a very critical type of insurance that most individuals should consider carrying. When it comes to your personal finances, long-term disability can have a devastating effect if ...
RELATED FAQS
  1. How does the 80% rule for home insurance work, and how do capital improvements affect ...

    The 80% rule refers to the fact that most insurance companies will not fully cover the cost of damage to a house due to the ... Read Answer >>
  2. How can I request a Social Security disability award letter?

    Learn about award letters and how to apply for Social Security disability benefits. Gain insight as to why disability applications ... Read Answer >>
  3. Does renters insurance cover water damage?

    Learn how renters insurance provides personal property coverage for items damaged by water only if the water is the result ... Read Answer >>
  4. What are some examples of unexpected exclusions in a home insurance policy?

    Learn about commonly excluded perils with different standard insurance policies. Explore events that homeowners should consider ... Read Answer >>
  5. What is the difference between the rule of 70 and the rule of 72?

    Find out more about the rule of 70 and the rule of 72, what the two rules measure and the main difference between them. Read Answer >>
  6. Does homeowners insurance cover tree damage?

    Discover how damage to a home from fallen trees is covered under your homeowners insurance policy if it happens suddenly ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center