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Simple English definitions for legal terms
out-of-pocket loss
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A quick definition of out-of-pocket loss:
Out-of-pocket loss is when you lose money unexpectedly. This can happen when something you own loses value or gets damaged, or when you have to pay for something unexpected like a car accident. If you have insurance, they may cover some of the cost of the loss. But if you don't have insurance, you will have to pay for the loss out of your own pocket.
A more thorough explanation:
Out-of-pocket loss refers to a financial loss that an individual or business incurs due to an unexpected event or risk. This loss is not covered by insurance or any other means of compensation, and the individual or business must bear the cost themselves.
For example, if a person's car is stolen and they do not have comprehensive insurance coverage, they will have to pay for the cost of the car themselves. This is an out-of-pocket loss.
Another example is if a business invests in a new product that fails to sell, resulting in a loss of money. This is also an out-of-pocket loss.
Out-of-pocket losses can be significant and can have a negative impact on an individual's or business's financial situation. It is important to plan for and mitigate these risks as much as possible.