Statement of Practice
Every company should have a statement of practice regarding its policy toward the damage of its
facilities by a negligent party. If the company supports the loss of use theory, then it should
be included in the company’s statement of practice.
The statement below is an example of such a policy:
Statement of Practice Regarding Recovery of Costs for Damage to Company Facilities
It is the company policy to seek reimbursement from responsible parties for the costs associated
with damage to company facilities. It has been the practice of the company to investigate each
incident, and to seek damages from the responsible party in all appropriate circumstances.
Where investigations establishes that liability for facility damage resides with a party other
than the company, the company has routinely sought to recover from such party its actual
restoration costs, including but not limited to the actual costs (including overhead) of labor,
material, and associated equipment necessary for expeditious restoration.
In appropriate cases, and where such damages can be established with reasonable certainty, the
company also seeks reimbursement for loss of use of its facilities during the period required for
repair. The company does not currently seek to recover lost revenues, even though such damages
might be legally permissible; however, nothing contained herein should be deemed a waiver of the
company’s legal right, in the future, to seek recovery of any damages permitted by law.
Calculations of the damage amounts for loss of use are based upon full capacity of the damaged
facility and competitive vendor monthly rates for equivalent T3 service. This rate is broken down
into a daily rate. The calculation of damages for loss of use multiplies the daily rate times the
full T3 capacity of the damaged facility.
Theory Information
Tort Law that loss of use is based on:
Restatement (Second) of Torts #931, comment (b) p. 552 (1979).
The owner of the subject matter is entitled to recover as damages for the loss of the value of the use,
at least the rental value of the chattel or land during the period of deprivation. This is true even
though the owner in fact has suffered no harm through the deprivation, as where he was not using the
subject matter at the time or had a substitute that he used without additional expense to him.
Losses of use damages are suffered on every network and facility damage requiring repair. Loss of use dollars are calculated on the full capacity, lease rate, and time to repair, of the damaged facility. Proven negligence should be the determining factor for seeking loss of use damages.
Example:
- When your car is damaged as a result of someone else’s proven negligence, you are entitled to the following compensation
dependant on State case law:
- Medical expenses
- Repair expenses
- Rental car expenses
- Loss of use dollars for the loss of your personal car during the time of repair
The loss of use theory can be applied to utility facilities that are damaged through negligence by a third party.
Loss of Use damages are claimed when an owner has suffered the loss of their property due to someone’s negligence, resulting in a damaged or severed facility. The owner is entitled to loss of use dollars which are calculated by the replacement facility rental costs for full capacity, provided by prevailing rate structures for like facilities. Claims for Loss of Use are based on US Tort Law - Restatement (Second) of Torts #931, comment (b) p. 552 (1979).