Home Programs Emergency management Recovery DFAA Manual to assist in the interpretation of federal guidelines EPC 22/88 Interpretation - Private Sector

Interpretation - Private Sector

1. Because of the numerous individual requests received for assistance, many detailed interpretations have been rendered since the Disaster Financial Assistance arrangements came into being. It is not the purpose of this manual to detail each of these interpretations but rather to record certain general principles relating to the eligibility of individual requests and to identify some of the more common items as eligible or ineligible.
2. Some provinces have followed the practice of providing individual assistance based on damage estimates less a certain deductible portion of, say, $100 or $200 or a certain percentage of the estimate. This is for the province to decide. Regardless of the practice followed, eligible costs for purposes of the DFA arrangements are identified from those which the province has actually paid.
3. Clean-up Payments. When an individual is faced with extensive property damage, he/she is required to put considerable time and effort into simply cleaning up the property. It would not be logical to allow an individual to hire someone to do the work and treat those costs as eligible while not recognizing work the individual does. Therefore, it has become practice under the arrangements to accept, as an eligible cost, compensation provided by provinces to individuals for cleaning up their own property, provided a maximum number of hours of compensation is established in provincial assistance policies and each case is substantiated by a damage appraisal report. The eligible rate for sharing that compensation is at the provincial minimum wage.
4. Eligible costs for assistance to repair or restore (as opposed to clean-up) an individual's residence and/or property will be based on the damage appraisal report. Federal officials may be required to determine the adequacy of the private sector appraisal process and reports.
5. Garden and Lawn Damage. Generally, costs for landscape repair in the private sector are not eligible for sharing, other than for debris clearance. An exception occurred in one instance where sod, recently placed, was washed away by a flood and a municipal bylaw required residential properties to be sodded. It is now accepted that, where sod is in place for less than 12 months prior to the disaster, and where local bylaws require such landscaping, the cost of replacing the sod may be accepted as an eligible cost.
6. Fences on private, non-farm property are not eligible for federal assistance.
7. Loss of Foodstuffs. As a general rule, foodstuffs are not eligible for assistance. However, food in freezers or root vegetables stored in root cellars could be eligible provided a reasonable maximum value per individual or per household is applied by the province. Such eligible costs would not normally include perishable food or canned goods. However, in special cases, where emergency food supplies have been lost, such losses could be accepted. Examples of emergency food supplies might be those stored in survival shelters or in remote habitations/isolated communities. Vegetable crops in gardens are not eligible.
8. Appurtenant Buildings and Property. Eligible costs may include damage to garages and driveways. Other appurtenant buildings are not accepted unless the owner is a full-time farmer, hunter or trapper, or is engaged in an occupation in which the appurtenant buildings are essential to his/her livelihood.
9. Vehicles. The cost of repairing or replacing personal vehicles lost or damaged in a disaster is not acceptable for federal financial assistance. An exception might be farm equipment owned by a full-time farmer or non-road industrial vehicles, such as those used in small lumber operations, if they were not insurable.
10. Money provided as compensation for loss of income, loss of opportunity or inconvenience is not acceptable for federal assistance.
11. Chattels. Major appliances, such as stoves and refrigerators, which cannot be repaired, are eligible. Where such appliances can be repaired, the cost of repair is eligible. Luxury items such as sporting goods, stereos, luxury fur coats, etc., are not eligible for federal assistance.
12. Some home entertainment items are acceptable if a maximum amount to be applied to replacement of the equipment is set by the province. For example, television sets have been accepted as eligible where the amount provided by the province was sufficient for only a basic model television. The only exception to the general rule that stereos not be accepted was damage caused by a flood in Yukon where it was considered that because of the isolation, home entertainment equipment would be acceptable up to a maximum based on the cost of basic equipment.
13. One other exception should be noted. In Saskatchewan, certain fur coats, which had been stored in basements for the summer, were lost in a flood. They were not of the luxury type but were coats that could be classified as "heavy winter clothing." The province established a maximum amount for compensation and this was accepted.
14. Items that have been excluded from individual requests for assistance are jewellery, cosmetics, lost income, meals and accommodation (except in the immediate disaster period), documents and books, recreation and pleasure items, tools, seasonal decorations, typewriters, electric razors, lawnmowers. Reference books, tools and informatics equipment required for a vocation are considered eligible.
15. Absentee Owners. Damage to property not occupied by the owner as a principal residence on a day-to-day basis is not generally eligible under the guidelines.
16. Estate requests for assistance are not eligible for sharing. Estate requests refer to legal and other costs associated with the settlement of estates of people killed in the course of a disaster. In one case, the owner of a property had died before the disaster, the house was not being lived in, and the heirs were waiting for the estate to be settled. Costs to repair damage to the house and property were ineligible.
17. Recreational property such as private camps, clubs and cottages are not eligible for assistance except where one is used as a principal residence by the owner. Also not included are repair costs to private roads (as opposed to public roads) leading to or on such recreational properties.
18. Private roads. Unless a road has been designated by the province as a public road, repair costs are not eligible.
19. Several instances have arisen where an unoccupied home under construction has been damaged or destroyed. These cases involved individuals building homes into which they were planning to move upon completion. The interpretation has been that where both homes, i.e. the one being lived in and the one under construction, are damaged or destroyed, the individual can be compensated for one. Where only the home under construction has been damaged, the individual has not lost his/her principal residence and therefore no compensation is eligible. When the principal residence is under repair and uninhabitable resulting in the owner making mortgage payments as well as paying rent for temporary accommodation, neither the mortgage payments nor rent are considered eligible for compensation. Construction materials, in storage or available for use for home construction or development, lost or damaged, are not eligible.

Small Business

20. Small business is defined as an owner-operated business where the owner/operator is acting as a day-to-day manager and is dependent for his/her main livelihood on that business. The individual concerned should have no other major source of income. The damage suffered must not have been reasonably insurable. Some judgement may be required when estimating the extent to which the livelihood of the owner has been affected. In these cases, the onus is on the owner/operator to demonstrate that the damage incurred has placed his/her livelihood in jeopardy. Indicators could include audited financial statements for the preceding two or three years and documentation of the cost to repair the damage. When it is decided that a small business is eligible, financial assistance is based on the total loss, including loss or damage to fixed or removable assets, the cost of measures to limit damage during the disaster and, generally, costs associated with restoring the business.
21. Small business, as defined, can include many operations that otherwise would not be eligible. It could include a person who operates, as a business, rental income properties; an individual who builds houses by himself/herself for eventual sale; and farm operations. It is important, in considering eligibility, to determine whether the individual concerned receives his/her major source of income from the business. Special rules for farm properties are covered elsewhere in this manual.
22. Specific cases arising from small businesses and co-operatives of particular interest include:
    • Requests for assistance received from developers engaged in construction of residential or commercial properties. Payments to such developers, unless they are extremely small scale and essentially a one-person operation (which is rare), have not been eligible for federal assistance.
    • Trappers who have lost equipment, including traps and snowmobiles, through flooding. These losses were considered eligible provided no insurance coverage had been available.
    • Assistance provided to restore farm lands to workable condition where a farm operation had been seriously affected by flood, erosion, land gouging, landslide, or other catastrophe.
    • Assistance to a co-operative considered eligible for federal sharing as it was essentially non-profit and important to the economic viability of the community.

Large Business

23. Assistance to large businesses is not generally provided. Large businesses (i.e. those which do not fit the definition of small business) usually have sufficient resources to cover damage costs and continue operating, unless the damage is extremely severe. In addition, large businesses normally have access to comprehensive insurance coverage. If the financial viability of a large business were threatened by a disaster, the problem would normally be considered in the context of economic development policy for the affected area, not in the context of the Disaster Financial Assistance arrangements. However, assistance may be provided in unusual circumstances if the Minister is satisfied that assistance is warranted.

Farm Operations

24. Eligible farm operations are those in which full-time farmers derive their sole or major source of income from the farm. Hobby farms or farming operations where the owners/operators have an unrelated full-time employment that is the primary gross income source are not eligible for federal financial assistance. The following illustrate interpretations which have been used for farm operations:
    • Livestock Losses
    • Payments for livestock losses have generally been deemed ineligible since research has shown that almost without exception livestock losses can be covered by insurance, even for rising water. There have been occasional situations where livestock could not be insured and these losses have been considered eligible.
    • Crop Insurance
    • In almost all cases, crops damaged by disasters have been insurable under the Federal-Provincial Crop Insurance Program. This program is made up of a federal "umbrella" program under which provinces can choose the crops they wish to cover under their own programs. Many cases have arisen where certain crops were not insurable in a province although the province could have insured the crop under the federal "umbrella" program. These crop losses were deemed ineligible. The Federal Crop Insurance Program provides coverage for fallow and bare land and for unseeded acreage. Agriculture Canada, Crop Insurance Division, should be consulted in the event of any uncertainty.
    • Thus crop losses are seldom eligible for assistance under the Disaster Financial Assistance arrangements. Eligible cases relate to new or experimental crops that have not yet generally been planted by the farming community in a given locality and therefore have not been included under the federal "umbrella" program. This is particularly for some types of horticultural crops. These have been eligible where federal crop insurance could not have been made available by the province to farmers under the federal program.
    • Cases have arisen where crops already harvested and in storage have been destroyed by rising water. These losses have been eligible except where either government or private insurance was available.
    • Farm Buildings
    • A farmhouse would be treated in the same manner as any other house and while in non-farm cases appurtenant buildings other than garages are not eligible, outlying farm buildings on a working farm are generally considered eligible. Also included as being eligible are repairs to, or replacement of, farm machinery, in cases where such machinery could not have been insured
25. The guidelines provide that eligible costs shall include restoring farmland to workable condition where practicable. Restoration of farmland to workable condition would include replacement of topsoil, restoration of fertility by manure or commercial fertilizer and land levelling. Damage to land cannot normally be insured against and has been included as eligible, particularly where land gouging or erosion has occurred. However, a general principle has been applied that, if the area of the farm which suffered damage was not in production, the cost of restoration would not be eligible. Farmland left fallow in the normal cycle of crop rotation and in accordance with good farming practice would be considered as being "in production." As well, it should be noted that loss of market value of a farm because of land damage which cannot be restored is not an eligible cost unless the cost of restoration exceeds the fair market value of the land unit lost or damaged. In the latter case, the lesser is eligible. As a general rule, loss of income, loss of production, or loss of market value are not eligible.
26. Fences on working farms where livestock is kept are eligible for assistance. Ornamental fences around farmhouses are not eligible.
27. There was one instance where insurance coverage on farm buildings, as opposed to the farmhouse itself, could only be purchased for up to 10 per cent of the appraised value of the house. In this case, the losses were accepted. The loss was defined as being the estimated or actual damage less any recoveries provided by the insurance. For individuals who had not carried insurance, only the portion of the estimated or actual damage to such buildings which exceeded 10 per cent of the appraised value of the house was considered eligible to ensure equal treatment with those who had insured their outbuildings