Insurance and 'acts of God' – who is liable?

Insurance protects your assets if they are damaged and destroyed – but what happens when no one is responsible?

'Acts of God' are usually defined as an unforeseen accident or event out of the control of people and most often refer to natural disasters such as tornados, floods, hurricanes and forest fires.

However, most insurers today will not refuse to pay out in the event of an act of God, as these are now usually written into the contract.

Here, Tom Mortimer, Compliance Manager at Block Management UK, explores what an act of God is and what it means in terms of property insurance.

What is an act of God?

The Association of British Insurers (ABI) define an act of God as "an event that is not the fault of any individual, such as a natural disaster".

Unfortunately, this is a bit of a vague term, as some natural disasters, such as forest fires, could have a human cause – for example someone throwing a lit cigarette end out of a car window.

This is why the phrase has become less popular in recent years and why you will rarely see the phrase included in a contract.

Many people think insurers can use it as an excuse not to pay out – but this isn't the case nowadays.

Are you covered?

In a word – yes – but it is always best to check with your insurer.

Insurers like to be specific, so do not use the term 'act of God', preferring now to explain in detail in a contract what is covered and what is not.

The AIB's website reads: "Most insurance policies do not contain an exclusion for acts of God. "The policy will set out what is insured and what the main exclusions are. If loss occurs from an event covered, then the insurer will pay out, in accordance with the policy terms and conditions."

Force Majeure

Although the term act of God is now rarely used in insurance, it is important to say it is different from force majeure.

Force majeure is a clause in a contract allowing parties to excuse their obligations due to unforeseen circumstances, such as natural disasters but also including human-caused events.

For example, if a transport company cannot deliver the package they promised due to unforeseen strike action that disrupts its business, it may be able to avoid breaking the terms of the contract using force majeure clause.

This remains a common clause in contracts, giving parties protection against extraordinary events outside their control affecting their ability to fulfil their obligations.