Understanding What Really Matters in Your Policy

Natural disasters, such as floods and earthquakes, are common topics of discussion when referring to “Acts of God” in conversation or within pop culture – but also when speaking about insurance policies.

It may surprise you to know that while these are common topics, the truth is that “Acts of God” are not generally a term that is used in modern insurance policies, and understanding exactly what you’re protected from can have a huge impact on your livelihood if disaster strikes. Let’s dive into what this means and how it affects you as a policyholder.

“Acts of God” – what exactly does it mean?

Historically, “Acts of God” referred to natural disasters or events that were seen as beyond human control, such as floods, storms, tornados, earthquakes, and all kinds of weather in between.

While the term might be an easy catch-all to describe these weather events, it’s no longer a contractual phrase that appears in insurance policies.

Modern insurance policies rely on clear, specific language to outline what is and isn’t covered. Using catch-all terms like “Acts of God” would leave too much room for interpretation, which isn’t ideal for either the insurer or the insured in the event of a claim.

What Determines Your Protection

Instead of referencing “Acts of God,” your insurance policy will specify covered perils and exclusions. Here are a few key points to consider:

1. Named Perils vs. All-Risk Policies
   • Named Perils Policies only cover specific risks listed in the policy, such as fire, theft, or wind damage. If a peril isn’t named, it’s not covered.
   • All-risk policies (sometimes called “comprehensive policies”) cover all perils unless explicitly excluded. This type of policy offers broader protection.
2. Exclusions
   • Policies often exclude certain risks, such as earthquakes, floods, or landslides. However, depending on your location and needs, you can purchase additional coverage for these risks, like flood or earthquake insurance.
3. Human vs. Natural Causes
   • Insurance policies may distinguish between damages caused by natural events and those caused by human actions. For example, damage from a storm might be covered, but neglecting to repair a leaking roof could lead to a denial of coverage for subsequent water damage.

Why the Distinction Matters

The phrase “Acts of God” can create confusion, leading people to think their insurance will or will not cover certain types of weather events. Whether or not an event is covered depends entirely on the terms of your policy and what is specifically included or excluded.

For example:

• If a tornado damages your home, the damage is likely covered if windstorms are included in your policy.
• If a flood damages your property, you’ll need water coverage that specifically covers flooding in order to be protected.

Tips for Understanding Your Policy

1. Ask Questions: If you have questions about specific coverage or exclusions, contact us. We’re here to help.
2. Read Your Policy Carefully: Don’t skim through the fine print. Take the time to understand what’s covered and what isn’t.
3. Consider Additional Coverage: If you live in an area prone to specific natural disasters, talk to your broker about supplemental coverage to fill any gaps in your protection.

Final Thoughts

While the term “Acts of God” will probably stick around for a while, it’s not something you’ll find in insurance policy wordings. What truly matters is understanding the specifics of your coverage, including the perils covered and excluded by your policy. By educating yourself and working with our team of local insurance professionals, you can ensure you’re prepared for whatever comes your way.

Have questions about your protection? Contact us today to review your policy and make sure you’re protected against the unexpected.