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Simple English definitions for legal terms
out-of-pocket expense
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A quick definition of out-of-pocket expense:
Out-of-pocket expenses are costs that someone pays for using their own money. These expenses can be reimbursed in certain situations, such as when someone incurs costs because of a contract or legal dispute. However, not all expenses qualify as out-of-pocket expenses, and some states have specific rules about what types of expenses can be reimbursed. Examples of out-of-pocket expenses include medical bills, travel costs, and expenses that an employer has agreed to reimburse.
A more thorough explanation:
An out-of-pocket expense is a cost that an individual pays from their own money. These expenses can be reimbursed in certain situations, such as when they are incurred due to a contract or tort dispute. However, out-of-pocket expenses typically only cover reliance damages and not expectation damages.
- Expenses incurred by a victim while assisting a police investigation into a crime they were a victim of (e.g. travel costs, lost wages)
- Hospital and medical expenses
- Travel, meal, or other expenses incurred by an employee that their employer has agreed to reimburse
For an expense to be considered an out-of-pocket expense, the individual must have actually paid or been charged for it. Some states may have additional limitations on what expenses qualify as out-of-pocket expenses.
These examples illustrate how out-of-pocket expenses are costs that an individual pays themselves, rather than being covered by someone else. They can be reimbursed in certain situations, but only cover certain types of damages.