Policy Information

    Loss of use objectives:

  • Is used to stimulate negotiations with identified defendant/representing insurance company
  • Is minimized to one day with the intent to present a fair and reasonable demand
  • Is calculated on lease cost competitive pricing
  • Is calculated on total capacity on the damaged switch section of the route
  • Is used to insure collection of 100% of direct damages
  • Is increased to represent total time facilities are on temporary restoration facilities if/when litigation is filed.

The mission for the company is to settle the claim for a minimum of 100% direct damages and not have to go to court. Loss of use is based on current tort law and can be traced back to English shipping laws during the nineteenth century. Simply stated, “Someone has lost the right to use their chattel due to someone else’s negligence.” Loss of use is defined as an incident of ownership. The owner of the property suffers a loss of use when deprived of the right to use the property while it is being repaired.

A loss of use price quote, for a comparable T-3, is requested from other IXC and local service venders. The lowest price quote (usually a 3 or 5 year contract price) is used in a continuing effort to be fair and reasonable. Monthly recurring charges are not included in the loss of use equation. Calculations utilize the lowest monthly rate quoted, divided by 30, to produce a one-day T-3 price quote. This price is then multiplied by the total T-3 capacity of the damaged facility

Capacity for loss of use can be calculated by straight T3 capacity and applying the technology riding the damaged facility on a per pair basis. If one fiber is already/previously damaged, the “pair” is then excluded from the calculations.

    Advantages of loss of use:

  • Legal award given as a result of a negligent act
  • Bargaining leverage
  • Monetary influence to achieve 100% of direct damages
  • Funding for damage prevention activities
  • Industry supported
  • Good case law through summary judgments and litigation in most states

    Disadvantages of loss of use:

  • Ultra high or unreasonable damage dollar amounts
  • Bad case law through summary judgments or litigation in some states due to misrepresentation and unproven liability
  • Negative initial reaction to damage amount claimed