Act Of God Bond
What Does Act Of God Bond Mean?
A bond issued by an insurance company, linking principal and interest to the company's losses due to natural disasters.
Investopedia explains Act Of God Bond
Such bonds create flexibility for insurance companies if an unforeseen natural disaster occurs. Because principal and interest depend directly on losses resulting from natural disasters, the insurance company can soften the financial strain by delaying, reducing or eliminating payment of the bond.
