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?

Rachel Lacey
Insurance and money expert
6
minute read
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Last Updated 21 SEPTEMBER 2022

What is alternative accommodation cover?

If your house is damaged by a fire or flood, there’s a reasonable chance you won’t be able to stay there while repairs are being carried out. This will be the last thing you need in the midst of a disaster, but the good news is that your home insurance provider may well pay for temporary alternative accommodation in addition to footing the repair bill.

Most buildings insurance and contents policies will include alternative accommodation cover, but it’s a good idea to check the terms and conditions carefully, just to be sure.

It’s also worth checking what limits might apply before you buy a policy – there’s usually a maximum amount you can claim for alternative accommodation costs and some policies will be more generous than others.

What type of alternative accommodation could I be offered?

The aim of alternative accommodation cover is to provide you with ‘reasonable’ accommodation while your home is uninhabitable. That means you should be able live your life as close to ‘normal’ as possible and be local enough that you can get to work and the kids to school. If you’ve got four kids you wouldn’t be expected to squeeze into a two-bed flat, but equally if there’s only two of you, don’t hold out for a three-bed semi.

The type of accommodation you’re offered is also likely to depend on the nature of your claim. If you only need to be out of the house for a couple of days or weeks, then you might be put up in a hotel or B&B. Some policies may also allow you to stay with friends or family and pay a contribution towards expenses.

If your home needs major repairs and you’re likely to be out of your home for several months, you’ll probably be offered a rental property.

Before you’re offered any accommodation, your insurance provider will usually assess your requirements and needs – this should ensure it’s the right size, has the facilities you need and is in a convenient location. Bear in mind policies aren’t likely to offer a like-for-like guarantee, but will instead provide an adequate alternative to your damaged home.

It’s important to note that you’ll have to agree suitable alternative accommodation with your provider. If you arrange your own accommodation and move in without getting approval from your insurer, it’s unlikely to foot the bill.

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

What about my pets and possessions?

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 if they don’t fit in your new accommodation.

If you think you’ll need cover for pets or storage it’s important to check your policy, as cover does vary between providers.

How much am I covered for?

This will depend on your policy. Some providers will offer you a maximum figure, while others will offer you a proportion of your total sum insured, such as 20%. That would mean if you had £300,000 worth of cover you could claim up to £60,000 for alternative accommodation.

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 its covered by your landlord insurance. If you’re obliged to provide alternative accommodation for tenants should your property become uninhabitable, alternative accommodation insurance could cover this cost, so long as it’s for one of the reasons set out in the policy.

If it isn’t in your tenant’s contract and your rental property becomes uninhabitable as a result of fire or flood, your tenants will have to move out and find their own alternative accommodation. Loss of rent insurance can cover this lost income until your property is habitable again. This can also apply to holiday home owners who are unable to rent out their property.

What if I’m 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 so-called ‘insured event’ that has made your home uninhabitable. This is likely to include:

Check your policy carefully too, as each insurance provider will have their own definition of what constitutes ‘uninhabitable’. In most cases you would expect it to cover the 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
  • bedrooms/sleeping areas

It should also pay out if the property is not safe to live in. However, it’s important to be aware that whether or not your claim is paid could depend on your circumstances. For example, a property with damp or dust might only be considered unsafe if you or a member of your household has certain health problems, like asthma.

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:

  • food
  • laundry fees
  • travel expenses
  • pet accommodation
  • council tax

How long will alternative accommodation be paid for?

Alternative accommodation will usually be paid for until your own home is habitable and safe for you and your family to move back in.

Some policies have a maximum amount they will pay out though. If you reach this limit you may need to start footing the bill yourself, or move back in before the repair work is finished.

This is why it’s important to check the terms of your cover to prevent any surprises further down the line.

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 you’ll be staying in. They may also employ the 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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