Is There An Act Of God Exclusion In Insurance Policies?

Is There An Act Of God Exclusion In Insurance Policies?

There are a lot of things in the world, in life and in business that is misunderstood.  Far too often commonly held views and perceptions seem to outweigh fact, data and reality.  This is particularly true in the world of insurance as for most people paying for insurance is something they begrudgingly do and little to no joy, satisfaction or pleasure is derived from the experience.

Despite the lack of joy insurance brings people and businesses owners alike insurance is a critical part of society that facilitates all forms of commerce and business by transferring risk to others thereby making things like mortgages, business deals and relationships, encouraging exploration, entrepreneurship etc. all possible. Despite all the good that insurance does in the world and the billions of dollars paid to deserving policyholders who receive compensation for injuries, property damage and financial losses they suffered at no fault of their own insurance are still marred by a lot of negativity and misinformation.  One area of misinformation that should be discussed are exclusions that exist in every single insurance policy and the question is there an act of God exclusion in insurance policies?

So… Is There An Act Of God Exclusion In Insurance Policies?

Insurance policies are contracts that need to have boundaries and limitations established to ensure clarity on what is covered and not covered which is understandable as you can’t buy an insurance policy for all risks.  You can however buy insurance policies for many or very specific risks through products like commercial general liability insurance or commercial property insurance that are built and priced according to the things being insured.  In those, and all insurance policies, you will find exclusions that limit what the policy will cover and exclusions are included for 1 of 3 reasons:

3 Reasons Insurance Policies Contain Exclusions:

1. Something is uninsurable – an example is war risk…almost all policies exclude coverage if a war breaks out and causes a loss
2. Something is more appropriately covered under a separate policy – ex. Commercial general liability policies exclude coverage for financial losses from services performed because that is exactly and specifically what professional liability/E&O insurance is for.
3. The insurer does not want to insure something specific – insurance companies may want to exclude certain things because they aren’t comfortable with it.

Despite there being many types of exclusions and/or ways that insurance companies limit their risk it’s important that we firmly and clearly answer the question “is there an act of God exclusion in insurance policies?” with a loud and resounding NO! When people talk about an Act of God exclusion they are typically talking about weather-related events that could cause damage to property like, floods, earthquake tornadoes, hurricanes, windstorms, hail, etc….all of which are fully insurable under a typical Canadian commercial property insurance policy if negotiated appropriately.

Our hope is that this clarifies a few things about insurance, but our expert business insurance brokers would also be more than happy to discuss the specifics of any insurance policy, exclusion or question you may have.