Short answer. It depends on who paid the premiums. If the usufructuary shared the cost of insuring the building with the owner, he keeps enjoying the replacement building or receives the interest on the indemnity if the owner will not rebuild. If he refused to contribute, the owner takes the whole indemnity.
What the law says
If the usufructuary shares with the owner the insurance of the tenement given in usufruct, the former shall, in case of loss, continue in the enjoyment of the new building, should one be constructed, or shall receive the interest on the insurance indemnity if the owner does not wish to rebuild.
Civil Code, Article 608 — Shared Insurance. Read the full provision →
Sharing the premium is what buys a share in the proceeds
Article 608 of the Civil Code ties the insurance money to the premium, not to who happened to be living in the building. A usufructuary who contributed his share of the insurance does not simply pocket half the cheque. His usufruct follows the money. If the owner rebuilds, the usufructuary carries on enjoying the new building on the same terms as before. If the owner chooses not to rebuild, the usufructuary receives the interest on the indemnity — the fruits of the fund — while the capital stays with the owner, who is the one who owns the thing. That mirrors the whole logic of usufruct: use and fruits to one person, ownership to another.
If the usufructuary refused to chip in
Where the usufructuary was asked to contribute and refused, and the owner insured the building alone, the owner receives the full amount of the indemnity in case of loss. The usufructuary who declined to pay cannot claim the benefit of a policy he did not fund. Article 608 preserves, however, the right given to the usufructuary in the preceding article, which deals with what happens to the usufruct when the building is destroyed and land remains. So refusing to insure does not automatically wipe out every remaining right — it only forfeits the claim on the insurance money itself.
Points this rule does not decide
Article 608 does not oblige anyone to insure in the first place; the duty to contribute normally arises from the deed, the will, or an agreement between owner and usufructuary. It does not tell the insurer whom to pay — the policy's own terms and the named insured govern that, and an insurer confronted with two claimants may require the dispute to be settled first. It also does not cover destruction with no insurance at all, damage short of total loss, or the separate question of who repairs what during the usufruct.
What to keep on file
The evidence that decides this fight is unglamorous: the policy, the premium receipts, and any letter offering or declining to share the cost. Where a usufructuary was never invited to contribute, that is a different situation from a refusal, and the correspondence is what shows it. Anyone creating a usufruct over a building would do well to state in the deed who insures, in what amount, and what happens to the proceeds — the Civil Code default only applies where the parties said nothing. This is general legal information; the outcome in any particular case turns on the documents.