Alternative Accomodation Allowance

littlerock

My buildings and contents insurance includes an Alternative Accommodation Allowance which I am having to use to move into temporary rented flat for 6 months while my house is repaired (extensive water damage from neighbours fire). As it is quite an expensive area round here, we have only been able to afford a modest flat although we have a largeish house with a lot of furniture (area has gentrified since we moved here.)

We have to move some furniture out to enable the restoration to take place . And there is not room to fit it all in our temporary flat, so some has to go into store. We have been told by the insurers that Alternative Accommodation Allowance has to cover all furniture storage (and moving furniture,) as well as initial hotel accommodation after the fire, temporary accommodation in flat for 6 months , furniture pack for the flat ,,( no furnished flats round here,), all services at the flat including council tax ( which we have to pay twice ) and any incidental expenses.

We are worried that these costs are racking up. I have studied the policy very carefully and there is just one line stating an Alternative Accomodation Allowance (max £20k) is payable for accommodation if house is made uninhabitable, while it is repaired.

There is no mention anywhere of storage of contents while house is repaired or any incidental expenses. We are moving some of our furniture to the flat and also have to pay the removal cost out of the allowance as above, and still need to store more. This is just not mentioned in the policy document at all.

Has anyone any experience of this, maybe if you were flooded out and had to claim relocation on your insurance?

Chickenlips

Speak to your adjuster or Insurer about this.

None of us have crystal balls, so we cannot guess the terms and conditions of your policy.

littlerock

I have studied my policy extremely carefully and there is no mention anywhere of an allowance or heading where you can charge storage of belongings or furniture while you are living in temporary accommodation when your house is restored.

Under Alternative Accommodation it says: "we will pay up to £20,000 for the cost of reasonable similar accommodation for you and your pets during the time necessary for your home to be restored to a condition in which it is fit to live." Of course the clause has stayed the same for several years while the cost of property round here has rocketed.

All the other clauses are about damage to your property and replacement of stuff. It is as if storage or other related expenses, like moving stuff out while the home is repaired, do not exist.

At first sight £20k AAA seems OK but we are apparently looking at being out for 6-8 months for the restoration. A 3 bed semi in London in our neighbourhood costs around £2,300-£2,500 a month to rent. And all the agents want a 12 month agreement for an unfurnished place.

The loss adjuster for our insurer says all incidental expenses including things like storage and removal and utility bills also have to be charged to Alternative Accommodation and so in our case are limited to being within the £20,000 allowance. We already clocked up 8 nights in the local Premier Inn which is £90 per night at this time of year, while we looked for an affordable flat which was also vacant.

Although it does not say this specifically in the policy, it appears this AAA amount acts as a cost centre for everything not a specific loss or not directly repair related. This is from one of the UK's leading insurers.

I just wondered if anyone else had experience of this?

paddyandstumpy

£20k AAA is a low limit.

That said, it's up to you to ensure you are adequately insuring yourself, the insurer can't decide for you.

If the cost of AA exceeds the limit, the insurer can simply pay you to the limit and you are liable for any amount in excess of this.

Do you have a separate AAA limit under buildings cover?

littlerock

Until fairly recently Zurich used to pay AAA as up to 20% of rebuilding cost but quite recently they sneakily added a separate clause on the last page, changing that to £20k. I should have paid better attention. TBH it never occurred to me I could increase the AAA limit.

That became the default amount in the policy and there was no specific option to increase this by paying an increase premium for a larger allowance or for additional expenses. It is just a clause in the main policy.But then I never expected that accommodation allowance would have to cover all the costs, like storage, not associated with replacing contents, in a catastrophic situation.

Chickenlips

There is normally a limit on both building and contents that are added together (unless insured by separate insurers). £20k sounds more like the limit oncontents cover.

D_M_E

Keep detailed accounts of all your costs incurred above and beyond the £20k limit, including storage costs, and don't forget about the added cost of insurance for your stuff in the storage unit.

When everything is finally ready to move back to your own property, present your bill to your neighbour's insurers for payment.

Also consider a 6-month rental and go periodic when the 6 months is up.

If 12 months is the minimum rental term then that is what you will have to take and would think that any charges and fees for unused months if you move back early would and could be added to your total.

That's what I would do.

TSx

Most home insurance policies these days are written on the basis of specifying what cover there is, anything not specified is excluded. As you've noticed, on a strict reading of this, there is no cover for any of the consequential costs of moving out of the property - utilities, storage, furniture packs etc. The convention has built up that these all come under the alternative accommodation section. If you run out of cover there, the issue is that there isn't anywhere else to cover these items.

There are no details on the cause of the fire - but I'd let your insurers deal with the recovery (any potential action against the neighbour) rather than approaching them directly. They will let you know if they feel there is any liability that attaches to your neighbour (although this is unlikely unless they have been negligent in allowing the fire to happen). If they do believe you are liable, and for a claim of this size they are likely to involve solicitors who will usually tag any claim for uninsured losses onto their own.

littlerock

20k is definitely the buildings AAA on my Zurich policy. As I said it used to be up to 20% of rebuilding cost but sneakily got changed to an endorsement saying max 20k for AAA around 4-5 years ago, added on the back page. Never thought to seek an increase. There is another 25k for AAA on my contents policy so I suppose it could be worse.

I have looked at other policies currently on sale and esure offers 75k for AAA on buildings and 10k on contents and assumes you will use the contents cover for consequential costs of moving out of the building. LV on the other hand, offers 25k AAA for both buildings and contents.

My insurance company (for Bdgs) has told me it is investigating suing my neighbours for costs.

Jlo31

So how much accommodation cost does your contents cover? Can't you use your contents allowance as well?

I had a look at my policy with direct line and I'm £25k buildings cover and £15k contents cover limits for accommodation?

Rodders53

My policy with RSA through John Lewis is unlimited, and the cheaper policies have £115k or £60k combined. Sometimes it's worth paying a little bit extra?

However, OP check out your legal cover and ask about claiming uninsured losses back from the other insurer?

Zurich's current policy download https://www.zurich.co.uk/home-insurance states max £25k under the Buildings Extra Cover section 16 and max £10k under Contents Extra Cover section 21. Totalling £35k but even that's still not a great sum for a major re-build?