What is Collateral Source Rule?
Updated January 24, 2026
A legal doctrine preventing defendants from reducing damages by showing the plaintiff received compensation from other sources like health insurance.
Understanding Collateral Source Rule
The rule prevents wrongdoers from benefiting because plaintiffs had insurance or other coverage. In some states, the rule has been modified by statute. It means plaintiffs can recover medical bills even if insurance paid less than the billed amount.
Examples
- 1Full medical bills awarded despite insurance payment
- 2Defendant cannot mention plaintiff's disability payments
- 3Jury not told about health insurance coverage
Related Terms
Damages
Monetary compensation awarded to a person injured through the wrongful conduct of another party. Damages are intended to restore the injured party to the position they were in before the injury occurred.
Statute of Limitations
A law that sets the maximum time after an event within which legal proceedings may be initiated. Once the statute of limitations expires, the claim is typically barred forever.
Settlement
An agreement between parties to resolve a legal dispute without going to trial. Settlements typically involve the defendant paying the plaintiff an agreed-upon sum in exchange for dropping the lawsuit.
Discovery
The pre-trial phase in a lawsuit where each party can obtain evidence from the opposing party through various methods including interrogatories, depositions, and requests for documents.
Deposition
Sworn, out-of-court testimony given by a witness or party that is recorded for later use in court proceedings. Depositions are a key part of the discovery process.
For Personal Injury cases
The record behind a term like this one is built by the client, not the file.
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