Living Accommodation Insurance: What's Covered?

Living accommodation insurance, also known as alternative accommodation insurance or additional living expense (ALE) insurance, is a type of coverage that helps pay for temporary housing, meals, transportation, and other living costs if you're unable to live in your home due to damage or destruction. This type of insurance is typically included in homeowners or renters insurance policies and provides reimbursement for expenses that exceed your usual living costs. It helps maintain your standard of living while your home is being repaired or rebuilt after a covered loss, such as fire, flood, or storm damage.

Characteristics of Living Accommodation Insurance

Additional living expense (ALE) insurance

Living accommodation insurance, also known as alternative accommodation insurance, is a standard component of a homeowners insurance policy. It covers the cost of temporary accommodation and possibly living expenses if a policyholder's property becomes uninhabitable due to a covered peril, such as fire, storm, flood, or other insured disasters. This type of insurance ensures that policyholders can maintain a similar standard of living while they are temporarily displaced from their homes.

ALE insurance is a type of living accommodation insurance that covers the additional costs incurred by policyholders when they are temporarily displaced from their homes due to a covered loss. It is typically included in homeowners or renters insurance policies and covers expenses such as food and accommodation until the primary dwelling is inhabitable again. Here are some key points about ALE insurance:

• Coverage: ALE insurance covers additional living expenses such as the cost of staying at a hotel, the increase in monthly food bills due to eating out, laundry costs, furniture rental, storage costs, and moving or displacement costs.
• Calculation of Payouts: ALE insurance reimburses the difference between the policyholder's normal living expenses and the additional costs incurred during displacement. It is important to keep receipts and documentation for all expenses to support the claim.
• Policy Limits: ALE insurance policies typically have coverage limits, indicating the maximum amount the insurance company will pay for additional living expenses. Policyholders can opt for additional coverage by paying a higher premium.
• Duration: ALE coverage lasts for the duration of the displacement, typically until the property is repaired or rebuilt.
• Filing a Claim: To file an ALE insurance claim, policyholders should contact their insurance provider and inform them about the covered event and their displacement. They will need to submit necessary documentation, such as receipts and evidence of the loss, to support their claim.
• Exclusions: ALE insurance claims are restricted to specific types of instances. For example, it may not cover vacancy, maintenance or normal wear and tear, uninsured events, preventable losses, illegal activities, government action, or voluntary displacement.
• Optional vs Mandatory: ALE insurance is typically optional in renters insurance policies and is not required by law in most cases. However, it provides valuable protection during displacement.

Alternative accommodation cover

If you are a tenant and the home you rent becomes uninhabitable, you are not obliged to continue paying rent. If you are a council tenant, the local authority should provide you with alternative accommodation. If you are a private tenant, it is your landlord's responsibility to provide alternative accommodation, but this may vary depending on the rental agreement.

Most building and contents insurance policies include alternative accommodation cover, but it is important to carefully check the terms and conditions, as well as any limits that may apply. There is usually a maximum amount that can be claimed for alternative accommodation costs, so it is essential to ensure that you are comfortable with the level of cover provided.

Loss of use coverage

Living accommodation insurance, also known as alternative accommodation cover, is a type of insurance that provides financial assistance to homeowners or tenants who are temporarily unable to live in their property due to damage caused by events such as fires, floods, or storms. This type of insurance is typically included in standard home insurance policies and can help cover the costs of temporary alternative accommodation, food, transportation, and other additional living expenses incurred during the period of displacement.

• Temporary housing: Loss of use coverage will reimburse the cost of staying in a hotel, motel, apartment, or other temporary accommodation while your permanent residence is being repaired or rebuilt.
• Excess food expenses: Any additional food expenses incurred due to the inability to cook at home or the need to dine out more frequently are typically covered.
• Transportation costs: If you need to travel farther to work or school because of your temporary relocation, loss of use coverage can help cover the increased transportation costs.
• Storage costs: The coverage includes reimbursement for storage costs of household items and personal belongings during the period of displacement.
• Moving costs: If you need to transport your belongings to a new location, loss of use coverage can help cover transportation and parking fees.
• Additional utility bills: Any excess utility bills, such as electricity or water charges, that you may incur while staying in temporary accommodation are typically covered.
• Pet boarding: If you cannot take your pets with you to your temporary accommodation, loss of use coverage may include reimbursement for kennel or cattery fees.

It is important to note that loss of use coverage has limits, and the specific items covered and reimbursement amounts may vary depending on your insurance provider and policy. It is crucial to carefully review your home insurance policy or renters insurance policy to ensure you have adequate coverage for loss of use. Additionally, the reason for your home becoming uninhabitable must fall under the covered perils or risks specified in your insurance policy, such as fire, wind, snow, hail, lightning, vandalism, or theft.

Reimbursement for costs of living elsewhere

Additional living expense (ALE) insurance covers the costs of living elsewhere when your home is uninhabitable due to a covered loss. This could include situations where your home has suffered damage from a storm or flood, or if your home is in an uninhabitable state due to a loss of essential utilities, such as heating.

ALE insurance is typically included in homeowners or renters insurance policies and covers expenses such as food and accommodation costs until your primary dwelling is inhabitable. This includes hotel stays, restaurant meals, transportation costs, laundry expenses, and even pet boarding fees. It is important to note that ALE only covers additional costs that exceed your usual living expenses. For example, if you are staying in a hotel, your insurance will cover the hotel bill but not your regular mortgage or utility bills.

Most insurance policies include an automatic amount of ALE coverage, typically ranging from 10% to 30% of your dwelling coverage. However, you may be able to increase this amount or opt for a level called "actual loss sustained," which removes any financial caps on your claims.

To file a claim for ALE, it is important to keep detailed records of all expenses and submit receipts for reimbursement. Insurance companies generally reimburse for expenses as they are incurred, so it is crucial to keep all receipts and submit them in a timely manner.

ALE insurance provides valuable protection during displacement, ensuring that you can maintain a similar standard of living while your home is being repaired or rebuilt.

Home insurance and contents policies

Home insurance policies typically cover the domestic fixtures and permanent structures of your home, including fences, sheds, and garages. It is important to note that home insurance may differ depending on your living situation. For example, if you live in a strata complex, home insurance is usually provided through your strata levies. On the other hand, if you are a landlord, you will need to consider landlord insurance, which includes additional benefits such as cover for malicious damage by tenants and loss of rental income.

Contents insurance, on the other hand, focuses on protecting your personal belongings within your home, such as electrical appliances, furniture, and other household items. It covers these items in case they are damaged, destroyed, or stolen. Contents insurance is important for both homeowners and renters alike, as it provides peace of mind and financial protection for your valuables.

When considering home and contents insurance, it is crucial to understand the features included as standard and those offered as optional cover. Additionally, reviewing and updating your insurance coverage regularly is essential to ensure that you have adequate protection. This is especially important if you make changes to your property or acquire new valuable items.

In the unfortunate event that your home becomes uninhabitable due to disasters such as fires or floods, alternative accommodation cover, provided by most home insurance policies, can assist you with temporary living arrangements. This cover typically includes the cost of temporary accommodation and may also cover additional living expenses such as meals and transportation.

By understanding the specifics of your home insurance and contents policies, you can ensure that you have the necessary protection in place to safeguard your home and belongings.

Frequently asked questions