Americans are among the most insured societies globally, with net premiums of $1.28 trillion reported in 2020 alone. Most people are familiar with the more common types of insurance, such as health insurance, life insurance, home insurance, and auto insurance.
But there are certain things in insurance that inspire a lot of confusion among the general population. One of these is the act of God insurance clause. Many misconceptions exist about acts of God in insurance, with many people believing that it’s something insurers use to avoid paying claims.
To help dispel any confusion about acts of God in insurance, we’ve prepared this guide on the subject. Read on to learn more.
What Is an Act of God?
An act of God is a term used in insurance to refer to an act of nature that could neither have been foreseen nor avoided. It’s an event where no one may be assigned blame. Acts of God come about as a direct result of natural causes.
Some of the events classified as acts of God include floods, earthquakes, tornadoes, lightning strikes, volcanic eruptions, and hail. None of these events are caused by someone or can be prevented.
Now that you’ve seen what an act of God is, it’s also a good idea to know what doesn’t constitute an act of God. Generally, anything that’s caused by a person or that could have been reasonably anticipated and protected against or prevented is not an act of God. For instance, an accidental fire in your house isn’t regarded as an act of God as it’s avoidable.
Note that most insurers today opt not to use the term “act of God” due to its broad nature. Instead, your insurer may opt to outline all specific exclusions to make it clear what your insurance policy covers and doesn’t cover.
Does Your Homeowners Insurance Cover Acts of God?
Home insurance helps protect your home against the high drama of your greatest fear: having your home destroyed. Given that a home is, for the majority of Americans, the biggest purchase of their lives, it’s no wonder home insurance is so popular. In fact, 95% of homeowners have homeowner’s insurance.
Many standard home insurance policies offer protection against natural disasters, including tornadoes, hurricanes, and lightning storms. But certain acts of God aren’t covered under these policies. You’ll be hard-pressed to find a standard home insurance policy that covers floods and earthquakes, for instance.
Many homeowners opt to purchase separate flood insurance policies to protect against this act of God. It’s generally advisable for you to do the same, particularly if you live in an area that’s at risk of flooding. The good news is that there are easy ways to keep your flood insurance cost low, so you don’t need to worry about this policy becoming a big burden to you.
Tips for Preparing for Acts of God
Acts of God may be unforeseeable, but there are simple things you can do to stay ready for them. Here are four ways to ensure that an act of God doesn’t mess up your life for good.
Never Assume Anything
One of the biggest mistakes homeowners make is ensuring that their home insurance policy covers everything imaginable. Every policy will always have certain exclusions, and it helps to know what these are early enough. This way, you can take the necessary action to guard against what’s not covered in your policy.
Determine Whether to Purchase Add-ons or Separate Policies
As soon as you know what your policy doesn’t cover, take proactive action to find coverage for that. For instance, you can choose to purchase flood insurance or get coverage for earthquakes.
Note that it’s not just your home that you need to insure against acts of God. If you frequently travel and have travel insurance, you may opt to upgrade your policy to cover any disruptions caused by acts of God, such as volcanic eruptions that cause disruptions to travel.
Be Honest With Your Insurer
While taking out your insurance policy, be open with your insurance provider about your level of risk. Try to find out anything you may not already know about how much risk you face. For instance, you can do some research on whether your local area faces a long-term risk of flooding.
If the time does come when you need to make a claim, it’s also important to be as honest as possible with your insurance provider. Resist the temptation to omit or embellish any information.
Try to Mitigate Risks
Even if you have a policy that covers certain acts of God, it’s still a great idea to take any reasonable measures that may help prevent damage from these acts. For instance, making sure your drains are functioning properly can minimize the amount of damage in a storm.
Also, you can choose to have hurricane-resistant windows put in. This will help keep your home safe in the event of a hurricane.
Note that failing to take reasonable measures to keep your home safer from certain acts of God may result in a dispute with your insurer when you make a claim. On the other hand, taking these measures could earn you impressive discounts on your policy.
Don’t Let an Act of God Catch You Unprepared
An act of God may be outside your control, but that doesn’t necessarily mean you can’t prepare for it before it happens. The best way to do so is to get an insurance policy that covers the disruption and damage caused by this happening.
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