Noun
act·of·God | ˈakt-əv-gäd
Definition: A hazard outside human control.
They referred to the flood as an act of God.
Act of God is a term that sometimes pops up in discussions about insurance coverage. It’s meant to describe an event that is outside human control—usually natural disasters.
However, you won’t typically see the actual phrase “act of God” in insurance policies. While it may appear in some other types of contracts, it’s more of a colloquial term (not to mention a bit archaic).
Depending on the policy or contract, acts of God more appropriately fall within force majeure clauses. Force majeure clauses allow for the contract to be suspended or terminated due to extraordinary events, which some may refer to as acts of God.
There are many misconceptions about acts of God and insurance, particularly home insurance.
For starters, there’s a belief that insurance won’t cover acts of God. While this may be the case in some forms of insurance, it’s certainly not the case with home insurance. Home insurance policies do cover many things that are considered acts of God—you could even say it’s their main purpose.
Of course, there are certain things that home insurance won’t cover, like landslides or coastal flooding. For that reason, home insurance policies avoid vague phrases like acts of God. Instead, they’re very specific about which types of losses they do or don’t cover.
In insurance, things that cause losses are known as perils. On a named perils policy, the wordings will list each and every peril that the policy covers. On a comprehensive policy, the opposite is true: it will list each peril that it does not cover.
In either case, the following perils are covered by almost every home insurance policy in Canada, despite being considered acts of God:
Some providers offer optional coverage for earthquakes or inland floods, too. In fact, the only common acts of God that are totally excluded are the aforementioned landslides and coastal floods. But, they are excluded individually by name—the term “act of God” has nothing to do with it.
The only way to know for sure which perils your own insurance covers (or excludes) is to check your policy wordings or ask your provider—just don’t get stuck trying to find the phrase “act of God.”
Looking for another insurance definition? Look it up in The Insurance Glossary, home to dozens of easy-to-follow definitions for the most common insurance terms. Or, get an online quote in under 5 minutes and find out how affordable personalized home insurance can be.
About the expert: Daniel Mirkovic
A co-founder of Square One with 25 years of experience in the insurance industry, Daniel was previously vice president of the insurance and travel divisions at the British Columbia Automobile Association. Daniel has a bachelor of commerce and a Master of Business Administration (MBA) from the Sauder School of Business at the University of British Columbia. He holds a Canadian Accredited Insurance Broker (CAIB) designation and a general insurance license level 3 in BC, Alberta, Saskatchewan, Manitoba and Ontario.
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