Collateral or incidental damage occurs when attacks targeted at military objectives cause civilian casualties and damage to civilian objects. It often occurs if military objectives such as military equipment or soldiers are situated in cities or villages or close to civilians. Attacks that are expected to cause collateral damage are not prohibited per se, but the laws of armed conflict restrict indiscriminate attacks. Article 57 of the 1977 Additional Protocol I to the 1949 Geneva Conventions states that, in an international conflict, "constant care shall be taken to spare the civilian population, civilians, and civilian objects." In addition, under Article 51, carpet bombing is prohibited, as are attacks that employ methods and means of combat whose effects cannot be controlled. Finally, attacks are prohibited if the collateral damage expected from any attack is not proportional to the military advantage anticipated. Military commanders in deciding about attacks have to be aware of these rules and either refrain from launching an attack, suspend an attack if the principle of proportionality is likely to be violated, or replan an attack so that it complies with the laws of armed conflict.

In internal conflict, civilians have little legal protection from collateral or incidental damage. Additional Protocol II requires that, so long as they do not take part in hostilities, the civilian population and individual civilians "shall enjoy general protection against the dangers arising from military operations" and "shall not be the object of attack." Protocol II also prohibits acts or threats of violence whose primary purpose is "to spread terror among the civilian population."

Parties to recent major armed conflicts, such as the Gulf War and the wars in the former Yugoslavia, have used the term collateral damage as part of an effort to demonstrate that their attacks were lawful. The claim is either that no collateral damage was caused or that the damage was minimal or proportional. Neutral observers might reach different conclusions than the parties to these conflicts. The death of many civilians in Iraq during the Gulf War due to the the lack of electricity in hospitals, which was the result of the destruction of almost all Iraqi power plants by allied air attacks, has been asserted by Iraq as disproportionate collateral damage. On the other hand, NATO officials in spring and summer 1995 quite rightly claimed that NATO attacks on Bosnian Serb military targets in Bosnia-Herzegovina did not kill civilians in a disproportionate manner and that therefore collateral
damage was proportional.

Thus, besides having legal implications, the term is often used to win political support for a specific method of warfare or to counter allegations of violations of humanitarian law. The observer is reminded that whatever the claims of governments or armed forces, attacks directly targeted at the civilian population are in violation of the basic principle of distinction and cannot be referred to as having caused collateral damage.

(See civilian immunity.)