The collateral source rule is a legal principle that prohibits a defendant from introducing evidence of compensation received by the plaintiff from sources other than the defendant to reduce the damages awarded to the plaintiff. This rule aims to prevent the defendant from benefiting from the plaintiff’s insurance coverage or other sources of compensation, ensuring that the plaintiff is fully compensated for their losses.
The Collateral Source Rule is a legal principle that allows an injured party to receive compensation from a defendant, regardless of whether they have already received compensation from another source, such as insurance.
The rule benefits injured parties by allowing them to receive full compensation for their damages, even if they have already received compensation from other sources. This ensures that they are not unfairly penalized for having insurance or other benefits.
The Collateral Source Rule typically applies to economic damages, such as medical expenses and lost wages. However, it may not apply to non-economic damages, such as pain and suffering, as these are often subject to different rules and limitations.
In some jurisdictions, the defendant may be allowed to introduce evidence of collateral sources to argue that the injured party has already been compensated and should not receive additional damages. However, this varies depending on the specific laws and rules of the jurisdiction.
There are certain exceptions to the Collateral Source Rule, such as when the injured party has already been fully compensated for their damages or when the collateral source is a government program, like Medicare or Medicaid.
The Collateral Source Rule is not universally applied in all states. Some states have modified or abolished the rule, while others have limited its application to specific circumstances.
The Collateral Source Rule can impact insurance companies by potentially increasing the amount they have to pay in claims. If an injured party is entitled to receive compensation from both the defendant and their insurance company, the insurance company may be required to reimburse the injured party for the amount received from the defendant.
The Collateral Source Rule can be challenged in court, particularly in jurisdictions where it is not universally applied. Parties may argue that the rule is unfair or that it leads to double recovery for the injured party.
The Collateral Source Rule can impact settlement negotiations by influencing the amount of compensation sought by the injured party. If the injured party knows that they can receive compensation from both the defendant and their insurance company, they may be less willing to accept a lower settlement offer.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 5th April 2024.
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