| Read Time: 2 minutes | Collateral

The collateral source rule is important for your case. The rule allows an injured person to recover the full value of their medical expenses regardless of any insurance payments made on their behalf.


The collateral source rule is long-settled in Virginia law.

Here’s how the Virginia Supreme Court describes the rule: the law seems quite well settled that damages, recoverable for personal injuries inflicted through the negligence of another are not to be reduced by reason of the fact that the injured party had been partly compensated for his loss by insurance which he has procured and for which he has paid.

The reason for this rule is that the defendant, who by his negligence, has injured another, owes such other compensation for the injuries he has inflicted and the payment for those injuries from a collateral source cannot relieve the defendant of his obligation.

Acuar v. Letourneau, 260 Va. 180, 189 (2000)

Why Collateral Source Rule Exists

The rule is designed to strike a balance between two competing principles of tort law:

  1. A plaintiff is entitled to compensation sufficient to make him whole, but no more; and
  2. The defendant is liable for all damages that proximately result from his wrong. A plaintiff who receives a double recovery for a single tort enjoys a windfall; a defendant who escapes, in whole or in part, liability for his wrong enjoys a windfall. Because the law must sanction one windfall and deny the other, it favors the victim of the wrong rather than the wrongdoer.

Schickling v. Aspinall, 235 Va. 472, 474-475 (1988). 

The plaintiff who purchases health insurance (and has paid monthly premiums) should not have a reduced recovery because of their good planning in purchasing health insurance.

If an accident victim prevails in her lawsuit, she rightfully receives full monetary recovery for her medical expenses, even those expenses her health insurance company paid. 

How the Rule Works

Suppose you are hurt in a motor vehicle accident and need treatment at the emergency room, but you have health insurance.

You incur a $1,000 bill from the emergency room; your health insurance pays $750 of the bill; you pay a $100 copay; and the remaining $150 is written off – sometimes called contractual adjustments.

Provided you can prove the other driver was completely at-fault, the collateral source rule allows you to recover the full $1,000 from the at-fault driver’s insurance company, regardless of any payments your health insurance company made on your behalf.

Why the Rule is So Important for Your Case

It is very important injured people know about the collateral source rule because insurance adjusters may take advantage of your lack of knowledge.

An adjuster may offer to pay your “out-of-pocket” expenses without explaining the collateral source rule. Some people may accept that offer because it might sound reasonable to them.

But knowing the collateral source rule will allow an injured person to recover the full value of their medical expense.

In addition, injured people need to know they are entitled to recover pain, suffering, and other categories of non-economic damages.

You need an experienced attorney to help you understand the value of your case.

Author Photo

James Frogale is the owner of Frogale Law. He opened the Firm to help ordinary people have a trusted advocate against the Multi-Billion Dollar insurance industry.