Insurance: What exactly constitutes an "Act of God"?

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    By Moneytips

    "Acts of God," for insurance purposes, are defined as events that occur through natural causes and could not be avoided through the use of caution and preventative measures. In essence, the phrase "Acts of God" refers to natural disasters.

    The phrase generally brings to mind hurricanes, tornadoes, earthquakes, hail, or floods. However, the lines can be fuzzier than most people realize.

    For example, consider fires. An accidental fire in your home is not considered an Act of God because it could have been prevented, either by someone's actions in starting the fire accidentally or poor workmanship during construction of the house. A fire caused by a lightning strike that consumes multiple homes, such as often occurs in the West, would be an Act of God. What happens when a similar fire is an act of arson?

    The key is whether a human or humans could reasonably be considered at fault -- at least until insurance companies find a way to sue God.

    Now for the big question: Is your car or home covered against Acts of God?

    In both cases, the answer depends on what type of policy you purchased and the coverage and exclusions that it includes. Many Acts of God may be covered, but the definition of an Act of God is whatever your policy says that it is.

    Generally, you will not see the phrase "Act of God" in policies, and perhaps not "natural disasters." Policies tend to refer to specific risks or classes of risk as "perils." Anything that is not spelled out as a specific exclusion or risk is subject to debate, and you can guess who will win that debate. It is important to ask for definitions to be spelled out before a debate on the subject becomes necessary.

    While your policy may vary, several generalities are usually true with respect to Acts of God.