Collateral Source Rule

Category: legal

An evidentiary rule preventing a defendant from introducing evidence that the plaintiff's accident expenses have already been paid by independent sources like health insurance.

The collateral source rule ensures that a negligent party cannot escape financial liability for the medical bills or property damage they caused simply because the victim maintained good insurance coverage. The jury computes damages based on the full value of the harm inflicted; any downstream reconciliation or subrogation (repaying the insurance company out of the settlement) is handled post-verdict outside the presence of the jury.

Common Examples

• The plaintiff's counsel filed a motion in limine invoking the collateral source rule to block the defense from mentioning the private health insurance payouts.
• Recent state-level tort reform measures have systematically rolled back the traditional collateral source rule, allowing real-world paid medical rates into evidence.