Do Insurance Companies Pay for Acts of God?

When it comes to natural disasters, you might hear the term “act of God” in the insurance exclusions. Damages from these events are often unforeseeable, and your standard homeowners policy might not cover them.

Unfortunately, some insurance companies try to claim acts of God exclusions to avoid paying out on policy claims. We have handled numerous insurance policy denials for reasons like these at the Law Office of Matthew L. Sharp over the years.

Do insurance companies pay for acts of God? We’ll provide you with an answer below.

What Is an Act of God?

“Acts of God” are natural disasters or severe weather conditions that happen due to natural causes. Many times, they are beyond human control. Insurance policies often cover some damages caused by acts of God. However, some policies may exclude certain types of damage or specific events. Usually, there are clauses that limit liability for any damages, injuries, or losses caused by these acts.

What Qualifies as an Act of God?

Hurricanes cause extensive damage. Most homeowners insurance does cover windstorms and wind-driven rain. However, you may need flood insurance for any storm surge and flooding damage. Keep in mind that flood insurance is often a separate policy, and you will need to purchase it separately from your regular homeowners insurance policy.

Like hurricanes, tornadoes cause substantial wind damage, leaving in their wake fallen trees and debris. Most policies cover damages, but once again, you would want to review your policy to learn about limitations. Along with severe storms comes lightning. With a lightning strike, your home could experience fire, smoke, and other damage. Many of these losses are covered under standard homeowners insurance policies.

What Are Exclusions?

While some acts of God are covered, such as lightning strikes or windstorms, others are excluded from coverage.

One of the most common exclusions centers around floods, especially in areas susceptible to hurricanes. Standard homeowners insurance policies do not cover flood damage, so if you live in a flood-prone area, separate flood insurance is necessary.

The National Flood Insurance Program, which is managed by the Federal Emergency Management Agency (FEMA), does provide insurance to homeowners living in these areas.

Also, a typical homeowner policy does not cover earthquake damage. Once again, those living in these regions will need to purchase a separate policy that will cover any earthquake-related damage.

Finally, wildfires could be excluded depending on the policy.  While standard homeowners insurance covers wildfire damage, additional coverage may be necessary for homes in areas that are prone to these natural disasters.

Keep in mind that some policies may not use the term “act of God.” Instead, they might just list the exclusions in your policy. For this reason, you will always want to carefully review the terms to see what is excluded and what is not.

Car Insurance and Acts of God

Comprehensive coverage may cover acts of God. It pays for damage to a vehicle caused by anything other than a collision, such as hail damage, falling trees, floods, and other events beyond human control.

But comprehensive coverage has deductibles. You’ll need to pay out of pocket before insurance kicks in. A higher deductible can lower your insurance premiums, but it also means you’ll pay more out of pocket if you file a claim.

On the other hand, a lower deductible means you’ll have to pay higher premiums, but it reduces your out-of-pocket expenses if you file a claim.

Policy Limits

Insurance policies include both inclusions and exclusions. Inclusions refer to what is covered under the policy, while exclusions refer to what is not covered. If an event falls within the general scope of coverage, it may be covered even if it is not explicitly listed as an “act of God.”

For example, say a homeowner experiences damage to their home due to a volcanic eruption. At the same time, what if their policy doesn’t explicitly mention volcanic eruptions?

They may still have coverage for fire damage resulting from the eruption. This is because the policy covers fire damage, even though the term “act of God” isn’t explicitly used.

When Denials Become Bad Faith Insurance Claims

Bad faith insurance describes the unethical practices that some insurance companies employ to avoid fulfilling their contractual obligations to policyholders. In other words, an insurance company acts in bad faith by failing to provide adequate coverage or denying a valid claim.

For example, if you experience property damage due to a weather event, and the insurance company claims it’s due to an “act of God,” it does not necessarily mean that you are not entitled to compensation. Sometimes, human negligence could still be the cause of the damage, and the insurance company must pay the claim.

If you suspect that your insurance company is acting in bad faith, you may want to seek legal advice to help you protect your rights and hold the insurance company accountable for its actions.