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.

Investopedia explains '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.


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