## Facts

- Harding was injured while traveling on a public highway in the Town of Townshend due to a defect attributable to the Town’s failure to maintain the road safely.
- Before the injury, Harding purchased accident insurance for a $7 premium.
- Harding received $130 from his insurer for the injury.
- Harding sued the Town in tort for damages arising from the same injury.
- The trial court instructed the jury to reduce damages by the “net” insurance proceeds ($123, reflecting $130 less the $7 premium), effectively crediting the Town for Harding’s insurance.

## Issues

1. Whether amounts an injured plaintiff receives from an insurance policy the plaintiff purchased and paid for must be deducted from tort damages recoverable from the defendant responsible for the injury.

## Decision

- The Vermont Supreme Court reversed the damages reduction.
- The court held that insurance proceeds received under a policy purchased by the plaintiff are collateral to the defendant and do not diminish the defendant’s liability.
- The case was remanded for further proceedings consistent with awarding damages without deduction for the insurance payment.

## Legal Principles

- Benefits paid to a plaintiff from the plaintiff’s own insurance are a collateral source and do not reduce damages owed by a tortfeasor.
- A defendant is not entitled to credit for payments funded by the plaintiff’s premiums and obtained independently of the defendant.
- Any reimbursement or subrogation rights connected to insurance payments are matters between the insured and the insurer, not a basis for reducing the defendant’s liability to the plaintiff.

## Conclusion

The court applied the collateral source rule, holding that a municipality liable for a highway defect must pay full tort damages even if the injured plaintiff also received payments from insurance the plaintiff purchased, because such insurance is an independent benefit that cannot be used to reduce the wrongdoer’s responsibility.


Harding v. Town of Townshend, 43 Vt. 536 (Vt. 1871)