A guide to alternative accommodation cover and home insurance

What’s alternative accommodation cover?

Buildings and contents insurance pays for necessary repairs to your home if it’s damaged by an insured event and can help replace belongings if they get damaged or stolen.

But what if a disaster - like a fire, flood or burst pipe - leaves your home uninhabitable in the short term and you’ve nowhere to go while repairs are carried out?

Luckily, most home buildings and contents insurance policies include alternative accommodation cover as standard, but if not, you can usually add it on as an optional extra for a fee.

It pays to temporarily rehome you and your family if your property is damaged to such an extent that it’s unsafe to live in. Or if essential rooms like the kitchen, bathroom and bedrooms are unusable.

Insured events that alternative accommodation insurance typically covers includes floods, fires, subsidence, storm damage, burst water pipes and substantial damage caused by a break-in to your home.

How much am I covered for?

Alternative accommodation cover will pay for the cost of a stay away from your home while it’s being repaired.

If your home is extensively damaged and repairs take several months, the cost of living somewhere else (on top of mortgage repayments) can be substantial.

But each policy will have its own conditions and individual limit of cover. So check your documents carefully.

Out of 311 building insurance policies listed on Defaqto, 94% offer alternative accommodation cover of £25,000 or more.

Some policies specified a definite figure while others offered up to 20% of the sum insured on your buildings insurance. That means if you had cover £200,000 total buildings insurance cover with a 20% claim limit, you’d be able to claim up to £40,000 for alternative accommodation.^[1]

Alternative accommodation cover can be included in both buildings and contents insurance policies. Of the two, buildings insurance typically offers the higher amount of accommodation cover to pay for the main cost of rehoming you.

Contents policies usually offer a smaller amount of alternative accommodation cover (often less than £10,000) designed to pay for any shortfall, plus the cost of putting your belongings into storage, if necessary.

What alternative accommodation could be provided?

Your insurer will be expected to offer you a temporary stay in a rental property that’s of a similar type to your own home, if possible. So, if you have a three-bedroomed house, you should expect to be housed in a property with the same number of bedrooms.

Similarly, the property should be in an area that allows you to carry on with your normal everyday life. Things like commuting, taking the children to school and carrying on normal leisure activities should be able to continue uninterrupted.

In some cases, this may not be an option. For example, if your whole neighbourhood has been flooded, you’ll have to be rehomed further away than perhaps you’d like.

However, if the location you’re temporarily rehoused in means you have to pay a substantial amount more for transport to and from work or your children’s school, then you can ask for these additional costs to be reimbursed by your insurer.

In cases where you only need to be out of your home for less than a couple of weeks, your insurer will likely offer you a stay in a hotel or B&B instead.

Does my landlord have to provide alternative accommodation?

Private landlords aren’t required to rehome you in alternative accommodation if the property you’re renting is uninhabitable. It will depend on what’s specifically written in your tenancy agreement.

Whatever the case, you shouldn’t have to continue to pay rent for a home that you can’t live in, but it’s worth noting that landlords aren’t legally obligated to stop charging you.

It’s important to not rely on alternative accommodation being provided if your tenancy agreement doesn’t stipulate it.

If you’re a council tenant, then the local authority should provide you with somewhere else to stay in these circumstances.

Information for landlords

It’s not compulsory for landlords to provide alternative accommodation to tenants. It depends on your tenancy agreement.

If it’s written into the agreement that you’re committed to rehouse a tenant should the property become uninhabitable, then it’s a good idea to take out a landlord insurance policy that includes alternative accommodation cover. Otherwise, you’d have to bear the expense yourself.

What about my pets and possessions?

If you can’t take your pets with you to your temporary housing, alternative accommodation cover could pay for boarding in kennels or a cattery.

And if your possessions need to be moved out of your home to protect them while repairs take place, then alternative accommodation cover can also pay for the cost of putting them into storage.

What reasons can I make a claim for alternative accommodation?

If your home is damaged to such an extent that it’s uninhabitable, then you can usually make a claim for alternative accommodation.

Your insurer will have its own definition for what qualifies as uninhabitable. For example, just cosmetic issues or minor damage to walls, floors and ceilings won’t count.

Uninhabitable conditions usually include:

• Major structural or other damage that leaves the property unsafe to live in
• No electricity or running water
• Unusable kitchen, bathroom, toilets or bedrooms
• No heating (especially in winter)

How to make a claim

If your property suffers major damage caused by an insured event you can make a claim on home insurance.

If there’s a major incident, a loss adjuster will usually be sent to your home to assess the damage, the extent of repair work necessary and whether or not your home is fit to live in.

If it’s decided that it’s safe to live in while repairs are carried out and all the necessary essentials like running water and electricity are working, then you may be advised to stay in your home while repairs are underway.

But if it’s deemed unsafe then your insurers will accept a claim for alternative accommodation costs and discuss the available options with you.

What is a disturbance allowance?

You may find that you incur extra costs - either in your own home or in alternative accommodation - while repairs are completed.

For example, if you’re staying in a hotel or B&B where there’s no cooking facilities, or if your kitchen has been affected by a fire but your home is still habitable, you may have to pay extra for meals out or takeaways.

Or if your home or accommodation doesn’t have a washing machine, you may need to use a launderette.

Similarly, petrol or public transport costs for your commute may be costing you more.

Your insurer may agree to pay you a disturbance allowance to cover these additional necessary expenses. There may be a standard daily rate per child and adult that they pay out, depending on the policy.

If you want to claim more than they’re offering, you’ll need to keep receipts and provide evidence that your normal outgoings were considerably less than what you’re currently having to spend.

How long will alternative accommodation be paid for?

Alternative accommodation costs should be paid until your property is safe to live in, subject to the maximum limit on the policy.