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.

  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. Tortfeasor

    The individual, company, or entity that is found to have committed ...
  4. Continuous Injury Trigger

    An insurance policy coverage theory in which any policy that ...
  5. Attachment

    A legal term referring to the action of seizing property in anticipation ...
  6. American Rule

    A rule in law and economics that says attorney fees should be ...
Related Articles
  1. Financial Advisor

    How Trump Could Let the Fiduciary Rule Die on the Vine

    If Donald Trump keeps his promise to repeal the fiduciary rule his administration could do so by not defending it against pending lawsuits.
  2. 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 ...
  3. Financial Advisor

    Lawsuits Aim to Overturn DOL's Fiduciary Rule

    Five lawsuits have aimed to overturn the DOL fiduciary rule introduced in 2016.
  4. Small Business

    Stop Scams In Their Tracks

    Find out how to protect yourself and your loved ones from financial fraudsters.
  5. Financial Advisor

    Ready for the Fiduciary Rule? You Should Be

    Despite the opposition it faces, advisors should still plan to comply with the fiduciary rule. Here's why.
  6. Financial Advisor

    How Do Workers' Compensation Benefits Work?

    What you need to know about Workers' Compensation benefits.
  7. Small Business

    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.
  8. Financial Advisor

    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 ...
  9. Insurance

    What Does Renter's Insurance Cover?

    Renter's insurance is supposed to cover a tenant's personal property as well as liability claims, but not all policies deliver.
  10. Insurance

    What Does Renter's Insurance Cover?

    Renter's insurance is supposed to cover a tenant's personal property as well as liability claims, but not all policies deliver.
  1. How does the 80% rule for home insurance work, and how do capital improvements affect ...

    Learn what the 80% rule in homeowner's insurance is and what homeowners need to do so their insurance company covers 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. 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 >>
  4. When did people first start using collateral to secure loans?

    Read about the history of lending and collateral, including a time when an entire nation was pledged as collateral for all ... Read Answer >>
  5. 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. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  2. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  3. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
  4. Leverage Ratio

    A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or ...
  5. Annuity

    An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income ...
  6. Restricted Stock Unit - RSU

    A restricted stock unit is a compensation issued by an employer to an employee in the form of company stock.
Trading Center