Legal Definitions - out-of-pocket expense

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.