Will insurance pay for alternative accommodation if a roof needs repair, when the damage isn’t covered by the policy?

It’s not uncommon for trustees or owners to ask whether their insurance will cover alternative accommodation when major repair work, such as roof replacement, is needed. The answer depends entirely on why the repair is being done.

The short answer
Insurance only covers alternative accommodation (or loss of rent) when the repair or reinstatement follows insured physical damage caused by an insured event. For example, a storm, fire, severe flood, or another sudden, unforeseen catastrophic peril.
If the roof work is due to maintenance, wear and tear, or ageing materials, then the insurer will not pay for either the repairs or the cost of temporary accommodation.

What the policies say
All three leading community scheme insurers we work with –  let’s call them Insurer A, Insurer B, and Insurer C – express this principle very clearly in their wording.

Insurer A
Under “Extra Cover Following Damage”, the policy states that it will pay if the building or unit is damaged to the extent that it is not habitable, but only for the period necessary for repairs or reconstruction. Here, “damage” means physical loss or damage caused by a single, sudden, unintentional and unexpected event. This confirms that the event must be insured for damage, not deterioration or routine maintenance.

Insurer B
Defines “Damage” as “accidental, sudden and unforeseen, physical loss, damage or destruction of insured property provided the event causing such damage is not excluded from cover”.
Temporary Accommodation Costs are defined by reference to “loss or Damage,” meaning the benefit only applies after insured damage has occurred.
The policy also excludes any Business Interruption (which includes alternative accommodation) that is not a result of insured physical damage, confirming this interpretation.

Insurer C
Under Section 2 – Property Insurance, Sub-Section C (Rent / Alternative Accommodation), the defined events are explicit:
• “Loss of rent as a result of the property insured being so damaged by any of the perils specified as to be rendered untenantable…”
• “Costs necessarily incurred in respect of equivalent accommodation in consequence of your unit being damaged by any insured peril…”.
Again, the insurance contract wording makes it clear that both loss of rent and alternative accommodation are only payable after the insured event causing physical damage to the property.

Understanding “consequential loss”
Loss of rent and alternative accommodation cover is often referred to as consequential loss, meaning a financial loss that arises ‘as a consequence’ of physical damage.

This is different from resultant damage, where one form of physical damage leads to another (for example, water damage following a burst pipe event). Consequential loss refers instead to the financial impact that follows, such as lost rental income or the cost of temporary housing. These covers typically appear under the Additions or Extensions section of a policy because they only apply after the initial insured event.

Put simply: Without the initial insured event, there can be no consequential loss, and therefore no payment for loss of rent or alternative accommodation.

Why “insured damage” is the key phrase
Insurance policies operate on the principle of indemnity, i.e. to restore the insured to the same position they were in immediately before an insured loss. If the work being done is preventative, maintenance-related, or due to gradual deterioration, no insured event has taken place, and therefore, no claim can be triggered.
A roof that needs replacing because it’s reached the end of its life is a maintenance expense, not an insurance event, but if the roof was damaged by a storm and rendered unsafe or uninhabitable, the damage would be insured, and temporary accommodation could be claimed during reinstatement.

Practical takeaway for trustees and owners