A simple guide: alternative accommodation insurance

Nobody wants to be left out in the cold – so do you know if your current home insurance policy includes cover for alternative accommodation?

Nobody wants to be left out in the cold – so do you know if your current home insurance policy includes cover for alternative accommodation?

Chris King
Head of Home Insurance
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Posted 18 NOVEMBER 2021

What is alternative accommodation cover?

If your house becomes uninhabitable because of an event that you’re insured for, like a flood or fire, then your insurance provider could pay for the costs of temporary alternative accommodation while repairs take place. 

Most buildings insurance and contents policies will include alternative accommodation cover, but check the terms and conditions carefully just to be sure. It’s also worth checking what limits might apply – there’s usually a maximum amount you can claim for alternative accommodation costs, so make sure you’re comfortable with the cover offered.

What type of alternative accommodation could I be offered?

The aim is to provide you with ‘reasonable’ accommodation that will let you carry on as normal and not stop you from commuting to work, taking children to school or taking part in your usual leisure activities. You shouldn’t be expected to stay in a two-bedroom house if you have four children, for example.

The type of accommodation you’re offered is likely to be dependent upon the circumstances of your claim. If you need to be out the house for a couple of days or weeks, then you might be put up in a hotel or B&B. You could also choose to stay with your family.

If you’re likely to be out your home for several months due to the extent of damage, it’s more likely that a rental property would be offered.

Typically, your insurance provider will assess your requirements and needs to work out the type, size and location of property needed for the time it takes for your house to be repaired. Policies aren’t likely to offer a like-for-like guarantee, but will instead provide an adequate alternative to your damaged home.

You’ll have to agree suitable alternative accommodation with your provider. If you choose somewhere and move in before it’s approved, you won’t be able to claim for anything you spend.

If your whole neighbourhood is affected, say by a flood, you may find that you have to be rehoused further away than you would prefer. But if this means you have to pay additional transport costs, for example, this should be covered by your policy.

What about my pets and belongings?

If you can’t take your pets to your temporary new home, your insurance provider might pay for kennel or cattery fees. Some insurance providers will also cover storage costs for your belongings.  

It’s important to check your policy if you need this, as cover varies aming providers. 

How much am I covered for?

Policies vary from provider to provider, but you could expect cover for around 20% of the sum insured towards alternative accommodation costs. Some providers will just set out a maximum figure.

What if I’m a landlord?

If you rent out a property and your tenancy agreement states that you’ll provide alternative accommodation for tenants, you might want to check that your landlord insurance includes it. If you’re obliged to provide alternative accommodation for tenants should your property becomes uninhabitable for one of the reasons set out in your insurance policy, alternative accommodation insurance could cover this cost. 

If it isn’t in your tenant’s contract and your rental property becomes uninhabitable as a result of an insured event like fire or flood, you should be able to claim for loss of rent insurance to cover the income you’ve lost as a result of your tenants no longer paying rent. This can also apply to holiday home owners who are unable to rent out their property.

What if I am a tenant? 

Whether you’re provided with alternative accommodation will depend on your rental agreement. If it’s not included, you’ll have to find somewhere else yourself. Your landlord shouldn’t charge you rent for somewhere that’s uninhabitable – but check your tenancy agreement to see what it says. Get advice from Citizen’s Advice or housing advice charity Shelter if your landlord won’t agree to suspend or reduce your rent payments 

If you’re a council or housing association tenant, you should be offered somewhere else to stay.

For what reasons can I make a claim for alternative accommodation?

You can make a claim for any insured event that has made your home uninhabitable. Examples include:

Check your policy carefully, as each insurance provider has their own definition of ‘uninhabitable’. In most cases it would cover loss of:

  • electricity or running water
  • toilets or bathrooms
  • kitchen
  • heating, especially during the winter months
  • flooring, if it’s been stripped out due to insurance-related works and you have young children
  • sleeping facilities
  • or the property is in an unsafe condition to live in 

The Financial Ombudsman considers that what is unsafe for some policyholders may not be unsafe for others. It cites as an example a property that might be unsuitable for an asthmatic customer if there’s a lot of dust or damp. So whether your claim is accepted may depend on your personal circumstances.

What is a disturbance allowance? 

A disturbance allowance is compensation for the reasonable extra costs you might have to pay out by choosing to remain in your home or living in the type of accommodation you’ve been re-housed in. 

For example, you might spend more money on food because you’ve been placed in a hotel or B&B that doesn’t have cooking facilities. 

Typical reasonable additional expenses that might be considered are: 

  • additional food expenses
  • laundry fees
  • travel expenses
  • rehousing of pets
  • council tax

How long will alternative accommodation be paid for? 

Alternative accommodation is typically paid until your property becomes habitable or safe again, subject to the limit on the policy. Sometimes this could be part way through the repairs, but it’s common for all the repair work to be completed before you’re asked to return home. 

However, your insurance provider may sometimes refuse to pay for alternative accommodation, even if repair works haven’t finished or the property is still uninhabitable or unsafe, if the maximum limit to be paid out under the policy has been reached. 

The insurance provider can stop paying this type of cost when the property is deemed safe to live in again.

What else should I consider about alternative accommodation cover? 

A very important point to remember is that your insurance provider will need to approve, and in some cases even choose, the accommodation where you’ll be staying, as well as tradespeople to carry out the necessary repairs to your damaged property. 

Moving into accommodation or carrying out works without telling your insurance provider could invalidate your claim.

If you can cope with living with repair work, you might want to stay in your property in any rooms that are still habitable. If you need portable facilities installed, like a portable kitchen or bathroom, the cost should be covered by your insurance. This isn’t an option that suits everyone, but if it’s feasible and you feel it’s better than uprooting everyone, it could be worth considering. But you’ll need to discuss options with your insurance provider.

What’s next?

We can help you find and compare a range of trusted home insurance providers that offer alternative accommodation cover.

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