What is a collateral source rule?

The collateral source rule is a legal principle that applies to insurance claims law in Washington and other states. It states that if a person receives compensation from a third-party source for an injury or loss that is the result of someone else’s negligence, that person cannot receive an additional award from the liable party for the same injury or loss. This rule aims to prevent double recovery. Under the collateral source rule, if a person is injured by a negligent party and they receive compensation from a third-party source, such as a health insurance provider, the injured person cannot also recover damages from the negligent party. This is true even if the amount of damages received from the third-party source is less than what would have been received in a claim against the negligent party. For example, if a person is injured in a car accident and the other driver was at fault, the injured person may receive medical expenses covered by their health insurance. Even though the health insurance may not cover all of the medical costs, the injured person cannot make a claim for the remaining costs from the at-fault driver because of the collateral source rule. The collateral source rule also applies to situations where a third party pays for the damages or losses caused by a negligent party, such as when a store pays for the damage done to a customer’s property. In this situation, the customer is not allowed to collect from the store and from the negligent party for the same damages.

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