What is the collateral source rule?

The collateral source rule is a legal concept in California related to accident law. It states that if a person injured in an accident is compensated by another source, such as insurance, the amount of damages they are seeking from the other party cannot be decreased by the amount they’ve already been paid. In other words, if a person seeking damages from the other party in an accident can show that they have already been compensated for the damages incurred (e.g. through insurance), their damages award is not decreased by the amount already paid. This ensures that the injured person is not at a disadvantage due to being compensated by another source. For example, if a person is injured in a car accident and receives compensation from their car insurance for medical bills, the collateral source rule allows that person to still seek damages from the other driver involved in the accident. This is because their damages award isn’t decreased by what they’ve already been paid by the insurance company. In California, the collateral source rule is largely a product of common law, rather than statutory law. As such, it can be subject to interpretation by the courts. However, in general, the rule ensures that an injured person is not disadvantaged due to receiving compensation from another source.

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What is the collateral source rule?

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