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Home is a sanctuary, a place where individuals and families feel safe and secure. However, unforeseen events and natural disasters can render a property uninhabitable. In such distressing situations, understanding how your UK home insurance provider deals with alternative accommodation becomes crucial. 

Most standard homeowners’ and tenants’ insurance policies provide alternative accommodation cover in case the worst happens to your property. This coverage is designed to help policyholders manage the financial burden of needing temporary accommodation and possibly living expenses if their property becomes uninhabitable due to a covered peril such as fire, storm, flood or other insured disaster.

Steps to Take After Your Property Has Become Uninhabitable

When a policyholder’s property becomes uninhabitable, taking prompt and organised steps can help manage the situation effectively and make the most of their homeowner’s insurance coverage. Here’s a suggested sequence of actions:

  1. Ensure Safety: The priority is always the safety of everyone involved. Make sure to evacuate the property if it is unsafe and follow any directions from emergency services.
  2. Notify Your Insurance Company: Contact your insurance provider as soon as possible to report the damage. Most companies have a 27/7 claims hotline. The sooner you notify them, for example, the quicker they can start the claims process.
  3. Document the Damage: Take detailed photos and videos of the damage to your property and any affected belongings or lost items, including their value, if possible.
  4. Secure the Property: If it’s safe and feasible, take steps to prevent further damage. This might include covering broken windows, turning off water to prevent leaks, or securing a tarp over damaged roofing. However, do not start repairs before an insurance adjuster has inspected the property unless absolutely necessary.
  5. Review Your Insurance Policy: Familiarise yourself with the specifics of your coverage, including what perils are covered, the limits on your policy for dwelling and personal property, and specifically, your coverage for alternative accommodation or loss of use.
  6. Keep Receipts of Additional Living Expenses: If you need to relocate temporarily, keep all receipts related to your living expenses, including accommodation, meals, and any other costs your insurance policy may cover under additional living expenses.
  7. Understand Your Options for Temporary Housing: If your policy includes coverage for alternative accommodation, discuss your options with your insurance representative. They can explain how the reimbursement process works and what expenses are covered. 
  8. Seek Professional Advice if Necessary: If you encounter any difficulties with your claim, consider consulting a professional. This could be an independent loss assessor who works on your behalf, especially if you believe your claim is being handled incorrectly. If you are in this position call our free Property Claim Helpline on 0800 002 5819, for a no-obligation consultation.

How Your Insurance Provider Can Help 

When a property becomes uninhabitable, insurance providers typically offer emergency measures to ensure the safety and well-being of the policyholders:

  1. Provide Reasonable Accommodation:
    • Insurers often arrange for temporary accommodation to meet the immediate needs of the policyholders. This could include hotels, serviced apartments, holiday lets, or rental homes.
  2. Emergency Repairs:
    • Immediate repairs may be carried out to make the property habitable on a short-term basis. This could involve fixing essentials such as electricity, and water supply, or securing the property against further damage.
  3. Financial Assistance:
    • Policyholders may receive financial assistance to cover immediate expenses related to relocation, such as meals and transportation. Some insurers may also cover storage costs for your belongings and cattery fees if you have pets needing alternative accommodation also.

Longer-Term Accommodation Solutions:

For situations where a property requires extensive repairs or rebuilding, insurers offer longer-term accommodation solutions:

  1. Alternative Rental Properties:
    • Insurers often facilitate the rental of a comparable property while the insured residence undergoes reconstruction or repairs.
  2. Temporary Housing Allowance:
    • Policyholders may receive a stipend to cover the cost of renting a temporary home while the insured property is being restored.
  3. Rebuilding or Relocation Assistance:
    • In cases where the property is beyond repair, insurers may assist in finding a new permanent residence or contribute to the cost of rebuilding on the same site.
  4. Extended Stay in Alternative Accommodation:
    • If the reconstruction process takes longer than expected, insurers may extend the period of temporary accommodation coverage to ensure policyholders’ ongoing comfort and security.

Comparing Longer Term Accommodation Solutions:

Longer-Term Let vs Hotel

When faced with the need for alternative accommodation, the choice between staying in a hotel and opting for a longer-term let can significantly impact both the cost and the overall experience. While hotels offer immediate convenience, the economy of a longer-term let becomes apparent when considering extended durations, typically around 6 to 12 months. Let’s delve into the factors that contribute to this comparison.

Cost per Night:

  • Hotel: While hotels provide comfort and services, they often charge premium nightly rates. Over an extended period, these costs can accumulate significantly. If your requirements for alternative accommodation are deemed to be around two months or longer, then your insurer will likely opt for a longer-term rental property for cost reasons.
  • Longer-Term Let: Rentals for 6 to 12 months typically come with a lower per-night cost compared to hotels. Landlords may offer discounted rates for longer leases, making it a more economical choice in the long run.

Flexibility in Duration:

  • Hotel: While hotels are excellent for short-term stays, their costs become prohibitive when extended over several months. Hotel rates are generally optimised for shorter durations, and the lack of flexibility in pricing can make them less economical for extended periods. If you require long-term alternative accommodation, you will likely be placed in a hotel initially, but then move to a longer-term let when one can be located.
  • Longer-Term Let: Opting for a rental allows for more negotiation on lease terms and rates. Landlords are often willing to provide more favourable terms for tenants committing to longer stays, creating a cost-effective solution.

Living Expenses:

  • Hotel: Staying in a hotel typically involves additional expenses for meals, laundry, and other services. These costs can quickly add up over an extended stay.
  • Longer-Term Let: Rentals often come with facilities for cooking and laundry, providing the opportunity for significant savings on daily living expenses. This can contribute to a more economical and comfortable living arrangement over an extended period.

Discounts and Special Offers:

  • Hotel: While hotels may offer discounts for longer stays, these are often limited and may not match the cost-effectiveness of a dedicated rental.
  • Longer-Term Let: Landlords, property managers, or agencies will prove more cost-effective for leases extending to 6 or 12 months.

Comfort and Stability:

  • Hotel: While hotels offer immediate comfort, they may lack the homely atmosphere and stability that come with a longer-term rental.
  • Longer-Term Let: Rentals provide a stable living environment, offering a sense of home that is often lacking in hotels. This stability can be especially crucial during times of stress, such as when dealing with the aftermath of an uninhabitable home.

Alternative Accommodation Policy Limits

Alternative accommodation policy limits in the UK refer to the maximum amount of coverage that an insurance policy provides for temporary housing or living arrangements when the insured property is deemed uninhabitable due to covered perils. These policy limits are an essential aspect of home insurance and play a crucial role in determining the extent of financial assistance an insurance company will provide for temporary accommodation.

Here are key aspects to understand about alternative accommodation policy limits in the UK:

Policy Coverage:

  • Home insurance policies in the UK typically include coverage for alternative accommodation or loss of use. This coverage comes into play when the insured property is rendered uninhabitable due to insured events such as fires, floods, storms, or other perils specified in the policy.

Policy Limits:

  • Alternative accommodation policy limits define the maximum amount that the insurance company is willing to pay for the insured’s temporary living arrangements. This limit can vary depending on the specific terms and conditions outlined in the insurance policy.

Variability in Limits:

  • Different insurance policies may have varying policy limits for alternative accommodation. The amount is usually specified in the insurance policy documentation. Some policies may have a fixed monetary limit, while others might offer a percentage of the overall sum insured for the property.

Factors Affecting Limits:

  • The policy limits for alternative accommodation can be influenced by factors such as the level of coverage selected by the policyholder, the type of events covered, and any additional endorsements or warranties added to the policy.

Duration of Coverage:

  • Policy limits may be set on a per-event basis or as a total limit for the policy period. For instance, the policy may specify a maximum amount per day, per week, or month for alternative accommodation, and it could be applicable until the insured property becomes habitable again or for a predefined duration, such as 12 or 24 months.

Negotiation and Extensions:

  • In some cases, policyholders may negotiate with their insurance company for higher limits, especially if the duration of alternative accommodation is expected to be longer than the standard coverage period. Extensions may be possible, but they require agreement between the insured and the insurer.

Communication with Insurer:

  • Policyholders must communicate promptly with their insurance company when facing a situation where alternative accommodation is needed. Understanding the policy limits, coverage terms, and the process for reimbursement can help ensure a smoother experience during a challenging time.

Alternative accommodation policy limits in the UK are an integral part of home insurance. Policyholders should carefully review their insurance policies, understand the specified limits, and be aware of the factors that can influence coverage. Open communication with the insurer and adherence to documentation requirements can help facilitate a smoother claims process when seeking reimbursement for temporary living arrangements.

How to Tell Your Home is Uninhabitable

An insurance company will typically consider a home uninhabitable when it deems the living conditions unsafe, unsuitable, or impractical for the policyholder to live in the home due to damage or other circumstances covered by the insurance policy.

The specific criteria for determining whether a home is uninhabitable may vary depending on the terms and conditions of the policy and the nature of the damage or loss. However, some common scenarios where a home may be considered uninhabitable include:

Structural Damage

Significant damage to the structure of the home, such as collapsed walls, roof damage, or compromised foundations, making it unsafe for normal occupancy.

Severe Damage to Essential Services

Damage that renders essential services such as electricity, water, heating, or plumbing inoperable or unsafe, making the home uninhabitable.

Health and Safety Hazards

Conditions that pose health and safety risks to occupants, such as extensive mould growth, fire damage, or exposure to hazardous materials like asbestos.

Loss of Liveability

Damage that significantly impairs the liveability of the home, such as extensive water damage, flooding, or smoke damage from a fire, making it impractical or uncomfortable to live in the house.

Legal or Regulatory Requirements

Situations where local authorities or building inspectors deem the property uninhabitable due to violations of building codes, zoning regulations, or health and safety standards.

When assessing whether a home is uninhabitable, insurance companies typically rely on the expertise of adjusters, surveyors, or other qualified professionals to evaluate the extent of the damage and its impact on the habitability of the property.

Once it is determined that the home is uninhabitable, the insurance company may provide the policyholder with temporary accommodation or other forms of assistance as specified in the insurance policy.

The Process of the Insurance Claim

The process for a UK insurance company appointing an agency to find alternative accommodation for a policyholder typically involves several steps:

Assessment of Claim

The insurance company first assesses the claim to determine if the policyholder is eligible for alternative accommodation benefits. This assessment usually involves reviewing the policy terms, the circumstances of the claim (e.g., damage to the insured property), any relevant documentation provided by the policyholder., and the nature of the damage to the property. 

Identifying of Need for Alternative Accommodation

If it’s determined that the policyholder requires alternative accommodation to stay in while their property is being repaired or rebuilt, we expect the insurance company will initiate the process of appointing an agency to find suitable accommodation.

Selection of Agency

The insurance company may have pre-approved agencies or contractors for providing alternative accommodation services. Alternatively, they may conduct a selection process to choose an agency based on factors such as reputation, expertise, availability, and cost-effectiveness. 

Contract Negotiation:

Once an agency is selected, the insurance company will negotiate a contract outlining the terms of the arrangement. This contract may include details such as the scope of services to be provided, the duration of the accommodation needed, the maximum allowable expenses, and any other relevant terms and conditions. However, it is important to note that any contract will be between the accommodation provider and the policyholder, not the insurance company.

Coordination with Policyholder

The insurance company communicates with the policyholder to inform them of the arrangements for alternative accommodation and to gather any necessary information or preferences regarding their housing needs.

Arranging Accommodation:

The appointed agency then begins the process of finding suitable alternative accommodation for the policyholder. This may involve searching for rental properties or arranging temporary accommodation such as hotels or serviced apartments, depending in most cases, on the policyholder’s requirements and the availability of options in the local area.

Monitoring and Support

Throughout alternative accommodation, the insurance company and/or the appointed agency may provide ongoing support to the policyholder, ensuring that their needs are met and addressing any issues or concerns that may arise.

Claim Settlement

Payments for short-term accommodation will be made by the insurance company, either directly to the supplier, via any agency, or to the policyholder. With longer-term accommodation, the insurer may issue monthly payments in advance, or sometimes 3 or 6 monthly.

Deposit or Bond

The insurance company will sometimes be willing to issue an advanced payment for the deposit or bond, but this will be in the name of the policyholder. The bond amount will then be deducted from the policyholder’s claim settlement, and the bond returned to the policyholder at the end of the accommodation period.

It’s essential for both the insurance company and the agency to communicate effectively with the policyholder throughout the process to ensure a smooth and satisfactory experience.

Conclusion

When faced with the unfortunate circumstance of an uninhabitable property, home insurers play a crucial role in providing support and solutions. From emergency measures to longer-term accommodation options, this cover will ease the burden on policyholders during challenging times. Understanding the coverage and assistance available under a home insurance policy is essential for homeowners to handle such situations with confidence and resilience.

If you would like to speak to an expert about this or any other aspect of your claim, call our free Property Claim Helpline on 0800 002 5819, for a no-obligation consultation.

Disclaimer

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