Every once in a while, I will run across a situation where someone asks are acts of God covered by their insurance, or someone claiming acts of God are excluded from their insurance. This has mystified me, because I spent many years working in the personal insurance industry, and I never saw the words “act of God” in an insurance policy, either covering them or excluding them. I can’t say this term is not used in any insurance policy, but I have not seen it used in auto or home insurance.
It seems an act of God does have a legal definition in the USA, and this blog post will explain how it might affect you & your insurance, and how to find out what is covered by your own insurance, so you are not surprised when you have a claim, and feel ripped off.
What is an act of God?
An act of God is an inevitable accident which cannot be prevented or avoided by the acts of people. For example, a natural disaster, such as a flood, lightning, earthquake, tsunami, or tornado, may be considered an act of God.
Do Insurance Policies Exclude Acts of God?
In my experience, the answer is no, the term is not used in insurance policy language. But I am not familiar (nor is anyone) with every insurance policy from every insurance company, even for home & auto insurance.
If you want to know what is covered by your insurance, contact your agent, or your insurance company if you don’t have an agent, and have them review the limitations, exclusions, & causes of loss covered by your insurance. Ask to receive a copy of your insurance policy, and read it. Ask your agent /insurance company if you have any questions.
A common mistake people make is they buy insurance and assume they are covered for anything costly happening with their home & auto. You need to know how you are covered, before you have a claim, to know if you have the coverage you need.
Acts of God & Auto / Car Insurance
If you want to be insured against most acts of God (hurricane, lightning, flood, tornadoes, hail, etc.)for damage to your car, ask your agent about Comprehensive coverage. Comprehensive coverage is one of the two types of coverage insuring you for damage to your car, when people use the slang term, “full coverage.” The other type of coverage insuring damage to your car is Collision coverage.
If you’re car is damaged by a collision — you hit another car or object, like a tree, or another car hits you, or a shopping cart rolls into your car, or if you overturn (upset is the proper term) your car, you are covered, if the damage is more than your deductible, if you have Collision coverage.
Comprehensive coverage insures your car from damage for causes other than collision. In fact, some insurance companies call their Comprehensive coverage Other Than Collision coverage.
Both Comprehensive coverage & Collision coverage are subject to exclusions and limitations. Your claim will be denied for a collision if you intentionally hit another car.
You may consider the eventual mechanical breakdown of your car an act of God, but your auto insurance policy is not going to cover it — not because an act of God is excluded, but because damage from mechanical breakdown is excluded.
The Comprehensive coverage, if you have it on your auto insurance policy, covers damage to your car from earthquake, flood, hail, fire, and other natural disasters. Usually, any cause of damage to your car is covered, unless it is excluded.
It’s hard to find an act of God which is excluded by Comprehensive coverage. But a common exclusion is contamination from a biological or chemical agent. If the contamination is naturally occurring and inevitable, it could be considered an act of God, but once again, it is not excluded because it may be considered an act of God.
Comprehensive coverage may sound like it is expensive — anything called Comprehensive sounds like it should cost a lot more — but it is usually a lot less expensive than Collision coverage, and makes sense to have it, even on older cars, unless your car is in poor condition and of little value.
There can be important differences among insurance companies’ auto insurance policies, and you want to make sure you buy the auto insurance policy meeting your needs.
However, coverage like Comprehensive & Collision are usually standard among most insurance companies. A Comprehensive claim covered by one car insurance company will typically be covered in the same way with another car insurance company.
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This makes it easy to shop for the best price. Consider the complaint record & customer service of each insurance company, decide on the coverage you need, then insure with the best auto insurance company for you at the lowest price.
Acts of God & Home Insurance
Two big acts of God — earthquake and flood — are excluded from basic homeowners insurance policies. Some insurance companies allow you to purchase additional coverage for earthquake. Flood insurance is available as a separate insurance policy.
Homeowners insurance policies, too, have standardized coverage, and similarities among insurance companies. But unlike most auto insurance, there can be extremely important differences in coverage available from competing home insurance companies.
It’s okay to shop for the best price for home insurance, but don’t buy the cheapest home insurance policy, if there is another home insurance policy with much better coverage, at a reasonable price.
Many home insurance policies insure your home on an “open peril” basis, meaning unless the cause of damage (the “peril,” such as a hurricane or earthquake) is excluded, it is covered.
The personal property inside the house is usually insured on a “named peril” basis, meaning only the perils listed in the policy (such as “explosion,” “theft,” or “vandalism,” if they are listed as covered perils in your insurance policy) are covered.
Acts of God, which are not excluded, or specified in the policy as covered, will be insured.
I can’t stress enough it might be possible how your home insurance works may be different than I describe, so contact your agent and ask about your insurance coverage limitations and exclusions, and get a copy of your policy and read it. You can use the page on my website for home insurance coverage, to learn about common limitations & exclusions, and home insurance coverage you may need, but your agent’s insurance company may not offer.
How an Insurance Claim Can Be Denied for an Act of God
I think the most common way an insurance claim is not covered, due to an act of God, is when you place a claim against another person’s insurance.
The claim may be denied because the cause of damage is considered an act of God, and the person you think is responsible for the damage to your property (or injury to you or your family) is not legally responsible, liable, or negligent.
For example, a windstorm blows down your neighbor’s tree and it crashes into your house. You may think the owner of the tree is legally responsible for the damage caused by the falling tree, but this is rarely the case.
A tree uprooted by a severe windstorm is usually an unpreventable act (Act of God), so the owner of the tree is not liable, and the owner’s liability coverage under their home insurance will decline the claim.
However, your home insurance usually covers damage caused by a tree crashing into your home.
When it comes to insurance exclusions, excluding specific events, such as a flood by an home insurance policy, is more specific and less ambiguous, than trying to exclude “acts of God.” Make sure you know what is covered by your insurance policies, and shop for the best price for the insurance coverage you need.
What’s excluded by your home or auto insurance policy? Tell me about it. Please leave a comment on my facebook page. Follow me on Twitter for important insurance consumer news and new blog entries at CarInsWatch.