Which type of damages compensates for out-of-pocket expenses like medical costs?

The correct answer is that special damages compensates for out-of-pocket expenses, including medical costs. Special damages are designed to address the quantifiable financial losses that a person has incurred as a direct result of an injury or an event. This type of damage includes specific costs that can be calculated, such as medical bills, lost wages, rehabilitation expenses, and other tangible losses.

General damages, on the other hand, encompass non-monetary aspects such as pain and suffering or loss of enjoyment of life, which are not easily quantifiable. Punitive damages are intended to punish the wrongdoer and deter future misconduct, rather than to compensate the injured party for their actual losses. Compensatory damages is a broader category that includes both general and special damages, but when discussing out-of-pocket expenses specifically, special damages is the most relevant term.