Collateral Source Rule
What Does Collateral Source Rule Mean?
The Collateral Source Rule is a legal principle that stipulates that parties being sued for damages are still responsible for paying those damages if the plaintiff wins the case, even if the plaintiff is receiving compensation for their losses from other sources, such as an insurance policy. In essence, the Collateral Source Rule mandates that tortfeasors must still compensate the plaintiff, regardless of any other coverage that has already addressed the losses.
Insuranceopedia Explains Collateral Source Rule
The Collateral Source Rule is necessary because defendants in civil suits may attempt to evade paying damages if they know or suspect that the plaintiff’s losses have already been covered by an insurance policy. However, under the current law, tortfeasors are not exempt from paying damages simply because the plaintiff’s insurance has already compensated them for their losses. As a result, plaintiffs may sometimes receive double compensation for their losses, recovering funds from both their insurer and the defendant.
