August 1, 1997
25.4.122
The grievor sought approval of a US $5,000 claim for compensation for damage/loss of personal and household effects in accordance with FSD 64.07.
As a result of the Los Angeles earthquake, the grievor suffered loss and damage to personal effects and vacated privately-leased accommodation for five days due to the loss of utilities. The grievor's insurance policy was for $50,000 US with earthquake insurance on the full amount of the policy. The grievor had an option of a 5% deductible or a 10% deductible; he chose the 10% deductible, that is $5,000 US.
The bargaining agent representative stated that consideration was given to the evacuation of the grievor's residence at the time of the earthquake and he was offered the possibility of staying in the Official Residence; he chose instead to stay with friends until he could re-occupy his privately-leased accommodation. There was no question that a natural disaster did in fact occur . The insurer approved his claim for loss of effects but reduced the amount of compensation by a deductible of $5,000 US as the loss was caused by an earthquake.
The representative made reference to a letter dated September 25, 1995 in which the department stated that "FSD 64, as written, does not provide for the contingency of claims for losses against the Crown as a result of the event, i.e. the earthquake, but only for claims for reimbursement of losses related to the evacuation after such an event."
The grievor chose to take earthquake insurance for the full amount of his householder's policy of $50,000 US, thus incurring a 10% deductible of $5,000 US. In the bargaining agent's view, this reflected a responsible and economic decision.
The bargaining agent representative took exception to the department's argument that "the fact that a personal decision was made to assume a larger risk (10%) by the employee who had the choice of insuring at the lower deductible does not, in my view, justify rolling this risk over to the Crown". In the bargaining agent representative's opinion, there would be a larger risk in taking out earthquake insurance in Los Angeles of only $20,000 US for personal and household effects which had been insured for $100,000 US against fire and theft, than for choosing a l0% deductible (rather than a 5% deductible) for earthquake insurance based on the full insured value of personal and household effects.
Notwithstanding the efforts to resolve this situation without resorting to the redress procedure, it was the bargaining agent representative's position that FSD 64.07 provides the authority for payment of the claim, as submitted. It specifies "Where the employee has suffered a loss of material possessions because the events described in Section 64.01 have occurred, the deputy head may authorize compensation for such loss...". According to the representative, it appears clear that this is a direct reference to "hostilities, natural disaster or other threatening circumstance" referred to in FSD 64.01(a). Otherwise, the reference would have been "when an emergency evacuation has occurred."
The departmental representative maintained that the earthquake in Los Angeles did not necessitate an evacuation from post.
The representative acknowledged that the grievor left his apartment for five days and lived with friends. The grievor was insured for loss and damage to his personal effects. His policy gave him the option of a 5% or a 10% deductible; the grievor made a personal choice when he opted for the 10% deductible. Damages to the grievor's residence were estimated at $15,435 and in accordance with his policy, was reimbursed $10,435.
On September 25, 1995, the department advised that the grievor's claim had been reviewed and that Mission had confirmed that no evacuation had taken place; consequently, FSD 64 did not apply.
In responding to a question regarding the department's position should an employee not have earthquake insurance, the representative noted that according to 64.07, "...where the deputy head considers that the employee has not taken reasonable precautions against such loss, the assistance of the appropriate foreign service interdepartmental coordinating committee shall be requested to determine the amount of compensation, if any, to be paid."
The representative concluded by stating that it was the department's position that the grievor was treated within the intent of the FSDs given that neither the Deputy Head nor the senior officer authorized an emergency evacuation following the earthquake.
The Executive Committee could come to no agreement as to the intent of the directive and therefore came to an impasse on the matter.