Act of God

What Is an Act of God?

An act of God is defined as an event that is beyond human control or activity, such as a natural disaster such as a flood or earthquake.

The phrase "act of God" in business is not associated with any particular religion or belief system. Contractual language that refers to acts of God is known as a force majeure clause, and it is commonly used by insurance companies. Typically, these clauses limit or eliminate liability for injuries, damages, and losses caused by acts of God.

Understanding Acts of God

Acts of God are triggered by events such as floods, earthquakes, or natural disasters. These are events that are thought to be uncontrollable by human intervention. If contracts contain force majeure clauses, which mean "superior force," parties may not be held liable if the contract's terms cannot be carried out.

It is critical to carefully read the language used in these clauses. Some clauses may specifically identify events that fall under its guidelines, such as a pandemic or flood. These clauses may also specify whether they will provide a 50 percent or full refund, as well as any other form of restitution.

What constitutes a natural disaster varies by state. When a contract contains catchall clauses, it may help to broaden the scope of which events qualify as acts of God. These clauses may include "any other event beyond a party's reasonable control."

Examples of Acts of God

The NBA has an act of God clause, as do many other sports and entertainment contracts. The contract specifically includes events such as a pandemic. According to the contract, a portion of the players' salaries can be withheld for each canceled game caused by the event.

An act of God clause in a contract, on the other hand, does not mean that no one is liable for damages.

A natural disaster, such as a flood or an earthquake, is rarely predictable or avoidable. Importantly, the insured cannot use the event as an excuse to not take reasonable precautions to prevent or mitigate damage.

Assume a dilapidated warehouse collapses during an earthquake, injuring onlookers. The building's collapse, according to the owner, was caused by an act of God. However, the insurer will almost certainly deny the claim, and there may be no recourse in court because the owner failed to take reasonable precautions to ensure the structural integrity of the building.

Similarly, governments must take reasonable precautions to avoid disasters. Assume a state fails to maintain a dam, which bursts and causes significant damage to a community. This is not a supernatural occurrence. Although heavy rains caused bodies of water to swell, the flooding was caused by the government's failure to maintain water retention systems.

Special Considerations

Exclusions for damages caused by acts of God are frequently included in insurance policies.

Policyholders should carefully review their policies to determine what types of damages are covered by acts of God. They can then make educated decisions about whether to purchase additional insurance to protect themselves and their property from specific risks.

A typical homeowner's insurance policy, for example, excludes most acts of God, particularly hurricanes. As a result, coastal homeowners typically purchase separate flood insurance to supplement their protection. Flood insurance is provided in the United States by the National Flood Insurance Program, which is managed by the Federal Emergency Management Agency (FEMA).

It should be noted that some homeowner insurance policies cover damage to the home caused by specific acts of God but not damage to other buildings or structures owned by the policyholder.

What Are Examples of Acts of God?

Earthquakes, tsunamis, hurricanes, and storms are common examples of God's acts.

What Is Another Term for the Act of God?

"Vis Major" is another term for "Act of God." Vis major is a Latin term that refers to a "superior force" that causes damage that is neither caused nor preventable by humans.

What Kind of Insurance Policy Covers Acts of God?

Comprehensive auto insurance typically covers acts of God such as hurricanes, lightning strikes, earthquakes, and other natural disasters.

In terms of homeowners insurance, many standard policies cover natural disasters and weather events such as wind, hail, and wildfires. Damage caused by floods and earthquakes, on the other hand, is typically not covered by standard homeowners policies. Homeowners must purchase separate flood and earthquake insurance.

What Is an Insurance Definition of an Act of God?

The definition of an act of God in the insurance industry is essentially the same as the standard definition: an act of nature that could not have been predicted or prevented, and for which no human is to blame.

What Does the Act of God Mean to Business Property Insurance?

It is critical to understand the specifics of your commercial property insurance policy. Specific acts of God are sometimes excluded from coverage. For example, weather-related events such as floods, hail, or earthquakes may necessitate the purchase of additional coverage.

What Is the Difference Between Force Majeure and the Act of God?

Acts of nature, in general, are not considered acts of God. Meanwhile, force majeure refers to both natural disasters and extraordinary circumstances caused by human intervention. An outbreak of a contagious disease, government lockdowns, or war are all examples of force majeure.