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What's Considered An Act Of God or Act Of Nature?

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Wednesday, May 13, 2015

What's Considered An Act Of God or Act Of Nature?

When you buy a home, you don't even want to think about how many types of disasters it's vulnerable to. Hurricanes, tornadoes, fires, falling trees, wind and ice storms, and even volcanic explosions -- they're all so destructive, you'd rather just cross your fingers and hope they don't happen.

Well, the bad news is these disasters do happen. The good news is you're covered for a lot of them. The major catastrophes that damage or destroy your home are recognized by insurance companies as "acts of God" or "acts of nature." You might even know them as types of "force majeure," a legal term that means "superior force" in French.

Whatever you or insurers call these catastrophes, they're unforeseeable, unavoidable, very costly, and completely out of your control. If you don't have homeowners insurance, you take full responsibility for the damage they cause. However, if you have homeowners insurance, you transfer that responsibility to your insurance company.

Here are the "acts of God" (or "acts of nature") that a standard insurance policy covers:

  • Lightning
  • Fires
  • Windstorms: hurricanes, tornadoes, severe thunderstorms, hail, ice storms
  • Volcanic eruptions
  • Explosions
  • Smoke
  • Falling objects (like a tree, or even a meteorite!)
  • Spoiled food, in case of a power outage after a natural disaster

Say you have a harsh winter, and an ice storm damages your roof. Your insurer will help pay to repair your roof. Let's take it a step further and assume the ice storm also causes a power outage. If your food gets spoiled from the power outage, most insurers will cover up to $500 worth of food. If you want more compensation to replace your spoiled food, you can tack on extra coverage to your homeowners policy.

"Acts of God" include damage caused by humans, too. Here are the man-made disasters that a standard policy covers:

  • Vandalism
  • Theft
  • Damage from riots or civil unrest
  • Acts of terrorism that cause explosions, fire, or smoke

Coverage Limits For "Acts Of God"

The major caveat of insurance coverage is that a homeowners policy doesn't protect against every act of "God" or nature.
Here's what homeowners insurance won't typically cover:

  • Earthquakes (although fire damage caused by an earthquake is covered)
  • Floods
  • Mudslides
  • Windstorms (in areas at high risk for hurricanes)

Say you live an area at high risk for earthquakes, fires, floods, or windstorms. Your insurer probably won't cover the cost of repairs if disaster strikes. (A standard policy definitely won't cover earthquake or flood damage, no matter where you live.) If you want to be covered for these especially destructive catastrophes, you'll have to buy added coverage.

Coverage Limits For Man-Made "Acts Of God"

Since there are limits to the "acts of God" or "acts of nature" that a policy covers, you're right in assuming there are limits to the types of man-made disasters that insurers actually pay for.

Here's what a standard homeowners policy doesn't cover:

  • Overflow from sewer systems, sump pumps, or drains
  • Environmental contamination, including pollution caused by human activity
  • Contamination from mold, rodents, or pests
  • Nuclear, biological, or chemical terrorist attacks
  • Acts of war

We know what you're thinking: Insurers cover "acts of terrorism" but not "acts of war." What's the difference?

Well, acts of terrorism don't necessarily happen during times of war, and they don't typically cause as much large-scale damage as war does. While most policies won't specifically say "We cover terrorist attacks," they do compensate for damage from fire, smoke, and explosions. Since a terrorist attack usually causes these types of damage to your home, you'll probably be covered if your home gets assaulted by evildoers.

Of course, there are exceptions to the types of terrorist attacks that a policy covers. In case of a nuclear, biological, or chemical attack, damage to your home won't be compensated.

If those limitations seem too nitpicky, think about it this way: If companies were to insure against acts of war, they'd take on the risk of paying for thousands to millions of homeowners claims. If they were to insure against a nuclear attack, they'd be liable for unimaginable, possibly irreparable damage. If they were to insure against a biological or chemical attack (like anthrax), they'd also have to cover damage from other types of contamination or pollution.

Make Sure You're Protected From Major Catastrophes

The damages compensated by homeowners insurance depend on your insurance provider and where you live. Before you search for a policy, make a list of questions about which specific "acts of God" an insurer will cover.

If you live an area that's at high risk for earthquakes, floods, and hurricanes, or certain damages that insurance companies don't cover as an "act of God," buy additional coverage. These add-on policies, called "riders," could save you from total financial ruin.

If you own a home, your most crucial step toward protecting your home is to buy the right amount of homeowners insurance. If you have complete coverage, and your home gets struck by an "act of God," you'll be thanking your lucky stars (maybe even God himself) that you have the best possible homeowners policy.