Both buildings and contents policies will provide a separate limit of cover up to a percentage of your sum insured for alternative accommodation costs when you have a valid claim. There is normally a higher amount of cover under buildings cover as the sum insured is normally higher than for contents.
For example, if your buildings are insured for £200,000 and you have a 20% allowance within this policy for accommodation, Insurers will pay up to a maximum of £40,000 per claim for any related costs. In order for this cover to be valid however, it is a requirement that you:
Have suffered a valid insured incident (e.g: fire) that is covered by the policy
The property is uninhabitable for normal living purposes
Uninhabitable = 'unable to be lived in'
Each different Insurer will have its own version of what uninhabitable is however, they are broadly the same and likely to include:
Loss of water supply to the property
Loss of all sanitary facilities (washing facilities / toilets etc)
Loss of heating during winter
Substantial structural damage (i.e: walls / roof etc) caused by a major fire, flood, impact etc
If anyone living at the property has a medical condition that is affected by the damage or repairs being undertaken (this may have to be proven however)
Loss of cooking facilities - however, it will normally be considered if it is possible to install temporary cooking facilities or pay an allowance for alternative eating arrangements before Insurers will consider paying for accommodation in this scenario
If none of the above apply however, you have a medical condition that will be affected by the damage (e.g: damp) or the related restoration / repairs (drying, strip out works, dust etc), if you can provide medical evidence such as a doctors certificate confirming the medical condition and that staying at the property will have a negative impact on your health, Insurers are likely to allow this as a valid reason for them to pay for alternative accommodation costs.
If the alternative accommodation claim is valid, the policy will provide cover for similar accommodation, up to the financial limit detailed within the policy.
When deciding on the best accommodation settlement option, Insurers will take into consideration a number of factors, the main one being how long the accommodation is required which will have a bearing on the most suitable type of accommodation.
Types of accommodation that can be considered:
B&B or Hotel
When the period of accommodation required is small - days to a few weeks (the cost of a hotel per room can easily be in excess of £3,000 per month per double room).
Private rental or serviced apartment
This is more suitable when repairs are going to be in excess of 3 months as it will usually be more cost effective (even if a minimum 6 months lease is required) and also provides more suitable living arrangements with cooking facilities and more living space.
Staying with friends / family
If this is an option, Insurers will provide you with a cash allowance (this will normally be less than a rental cost).
This is not a common method, however, is a suitable possibility if accommodation required to be for an extended period of time and you wish to remain onsite or if there is no suitable accommodation in the area (this can occur when large geographical areas are damaged such as during floods).
This can be a cash allowance made to you instead of taking a rental or hotel and gives you the freedom to take a holiday or live at the property despite it being considered habitable
WHAT ARE YOU ENTITLED TO UNDER THIS COVER?
If you have a valid alternative accommodation claim, Insurers are liable for payment of reasonable costs for the accommodation. In addition to this, there are a number of others things that you may be able to claim if you can demonstrate that you have suffered financial loss relating to the claim. These items can easily be included within the claim (as long as your policy does not specifically have an exclusion for it - refer to your alternative accommodation policy wording):-
Additional food expenditure (this frequently occurs when staying at a B&B or Hotel where you have no cooking facilities). Note that you should not include for your normal weekly food expenditure - additional costs only
Mail redirection to the temporary address
Additional travel expenses (if you have had no option but to live further away than your normal location resulting in increased commuting / travelling costs)
Telephone redirection (this becoming less of a requirement due to mobile phones however, if you need a landline for internet etc and the property you are moving into does not have one, you may be able to negotiate this)
Rehousing of your pets (if they cannot stay in your alternative accommodation)
Cost of removal / storage if you are having to move into an alternative property and require large amounts of your furnishings / belongings to be moved or if you need to clear this property from your own home to facilitate repairs
Laundry costs if you are staying in a B&B or hotel
If you have both buildings and contents insured with different Insurers and you have sustained both buildings and contents damage, each Insurer is liable for contributing to the costs. You can however try to get one insurer to deal and they will then sort the sharing of costs in the background.
You can source your own accommodation or many Insurers now have an accommodation supplier who they can appoint to organise for you - this can save you a lot of hassle and time having to search and obtain estimates which especially useful if you need the accommodation on an emergency basis.
If you have the option to stay with friends and family, consider this option before opting for a hotel or rental and establish what Insurers are prepared to pay you as you may find this offer much more financially appealing and suitable for your own circumstances
On occasion, insurers/adjusters can utilise preferred accommodation suppliers who for a fee, locate hotel/leased dwellings. Alternatively, the Policyholder can make enquiries with local estate agents and submit proposals which can be authorised if deemed reasonable. When we receive the information, a review is completed to establish if this appears to be a consistent rental for area and is like for like in line with Insured's own property.
If you have to move out of your own property, you may be entitled to freeze your council tax as this is not payable when the property is unoccupied - make enquiries with this as soon as possible to ensure that you are not paying additional costs for this when you are entitled to cancel it. When you move back home, you must reinstate your council tax
When the property has been made habitable again, Insurers will expect that you move back home and will cease paying for any accommodation related costs. Therefore, if you want to make some home improvements during the repairs, you may find that Insurers are reluctant to extend your accommodation as this is not covered by your policy and you would be responsible for such costs.
If you are obtaining a rental property, it will be likely that there will be a refundable deposit payable which is commonly the equivalent of a months' rent in advance. Strictly speaking, you are responsible for paying this as it is you who is responsible for looking after the property during your stay. It is however more common for Insurers to pay this if you advise them that you have not got the financial means to pay this deposit - the Insurer has a duty to treat you fairly and will likely agree to pay for it (when returned from the landlord however, the proceeds must go back to the insurance company)