What is an 'Act Of God'

An act of God describes an event outside of human control or activity. It's usually a natural disaster, such as a flood or an earthquake. Insurance policies  usually specify which particular acts of God they cover, if any. 

The phrase “act of God” is not actually associated with any particular religion or belief system. Contractual language referring to acts of God are known as force majeure clauses.

BREAKING DOWN 'Act Of God'

Acts of God do not imply no one is liable for damages. A natural disaster usually isn't foreseeable or preventable. However, the insured cannot use the event as an excuse for not taking reasonable care to try to prevent or protect against damages.

Say a dilapidated warehouse falls over during an earthquake and injures bystanders. The owner claims an act of God caused the building to fall. However, this claim probably won't hold up in court, because the owner didn't take reasonable care in maintaining the structural integrity of the building.

Likewise, governments also need to take reasonable care to prevent disasters. Say a state failed to maintain a dam that burst and caused major damage to a community. This is not an act of God.

Exclusions for Acts of God

Insurance policies often have long lists of exclusions for damages caused by acts of God. Policyholders should check the text of their contracts to see what types of damages caused by acts of God will or will not be covered in the event of a disaster. They can then decide if they want to purchase additional insurance to protect themselves from certain risks. 

For example, a typical homeowner’s insurance policy excludes acts of God. For this reason, homeowners very near the coast typically purchase special flood insurance to add additional protection.

Of note, some homeowner insurance policies cover damage  to the home itself related to specific acts of God, but not to other buildings or structures owned by the policyholder.

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