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Acts of God?

Updated on March 7, 2013

What is an Act of God?

Act of God is a legal term for events outside of human control, such as sudden floods or other natural disasters, for which no one can be held responsible. This does not protect those who put others in danger of acts of nature through negligence, such as an adult who instructs a group of children to stand under a tree to escape a lightning storm.

The legal term, "Act of God", does not necessarily imply that God had a direct intervention which specifically caused a "natural" occurrence or disaster. 

Act of God, also know as

  • force majeure
  • vis major
  • inevitable accident
  • unavoidable casualty  

An act of god is a natural and unavoidable catastrophe that interrupts the expected course of events) "he discovered that his house was not insured against acts of God"

In the law of contracts, an act of God may be interpreted as an implied defense under the rule of impossibility, i.e., the promise is discharged because of unforeseen, naturally occurring events that were unavoidable and which would result in insurmountable delay, expense or other material breach.

In other contracts, such as indemnification, an act of God may be no excuse, and in fact may be the central risk assumed by the promisor, e.g., flood insurance or crop insurance, the only variables being the timing and extent of the damage. In many cases, failure by way of ignoring obvious risks due to "natural phenomena" will not be sufficient to excuse performance of the obligation, even if the events are relatively rare, e.g., the year 2000 problem in computers.

Under the Uniform Commercial Code, 2-615, failure to deliver goods sold may be excused by an "act of God" if the absence of such act was a "basic assumption" of the contract, but has made the delivery commercially "impacticable". 

Acts of God and Home Insurance

Home insurance policies sometimes contain clauses which refer to an ‘Act of God’. These tend to limit liability for natural phenomena such as lightning strikes, floods, hurricanes, tornadoes, earthquakes and plagues of frogs – freak occurrences which cannot be prevented.

Insurance providers occasionally include these clauses to protect themselves from the hefty payouts usually associated with such unpredictable events. So, in the event that your property is damaged by what is deemed to be an ‘Act of God’, you may find that your insurance provider refuses to pay out. At which point, you might well take certain names in vain.

To this end, it’s always an idea to check your home insurance policy and see what’s excluded under the ‘Act of God’ clause. Obviously, the very essence of these exemptions is that they are unpredictable, so it can be difficult to judge if they apply to you. For example, you may not think of your property as being particularly lightning-prone, but you never know. However, it is certainly prudent to check for supposedly freak events which are becoming more prevalent, such as floods. If you do live on a floodplain, and yet floods are considered to be an ‘Act of God’ by your insurance provider, then you may later regret being underinsured.

That said, policies today often provide cover for chance occurrences in their standard buildings insurance inclusions. A certain level of flood damage cover may be provided, for example – probably no surprise since flooding seems not uncommon nowadays. Likewise a certain degree of storm damage cover may be provided. To be sure of the extent to which you’re covered, be sure to read the small print in your policy.

What if your house were to be destroyed? It is obviously unlikely, but not unheard of. In such a situation, if you have taken out buildings insurance (which you almost certainly will do if you have a mortgage, as it is likely to be one of your lender’s requirements), then you will be able to recover your rebuild cost. Plus some policies may be able to provide an ‘alternative accommodation’ payment in the undesirable event that your property is rendered uninhabitable for a period of time.

Last, but by no means least, it is an idea to know exactly what constitutes this exemption in the eyes of your insurance provider. Don’t get caught out by vague wording… If the situations which constitute an ‘Act of God’ aren’t specifically defined in your policy, then request clarification from your insurer, so that they cannot hide behind something loosely defined in the event of a claim. Possibly the best advice that can be given – with ‘Act of God’ clauses and as with all insurance – is know your policy!

Home Sweet Home

From a period of reasonable stability, we have seen interest rates fall and flexibility in the range and number of financial products reduce so, today, it is important that we all rethink our finances. Credit cards, store cards, hire purchase, secured loans, bank overdrafts and mortgages all need to be reviewed on an ongoing basis.

An important part of most people's finances is the home that they live in. With recent changes in interest rates and house prices in the UK, everyone, at every stage of their life, should be encouraged to review the way their home is financed. If you have been renting in the past, now could be an exceptional opportunity to get onto the housing ladder. If you have a short-term interest only mortgage, or any mortgage which allows you the option to review, now is the time to speak to a remortgage advisor.

With interest rates at their level lowest for years, now is the time to review all your financial commitments and plan for the future. Consolidation of your debts could be a first step to recover your personal financial freedom. Calling a Mortgage Officer will enable you to discuss, in total confidence, your current financial commitments.

If you own a home, your options could be to remortgage to pay off all your outstanding commitments or just to reduce your monthly outgoings. Other options include a secured loan using your home as security. Companies like www.goremortgage.co.uk will do all they are able to give you the widest range of realistic and responsible solutions tuned to your particular financial situation.

They will prepare a range of scenarios based on a thorough understanding of your circumstances and, when you're ready they will act fast to deliver the solution that will put you on the path to financial freedom. If you are looking to consolidate debt, please get a remortgage loan quote to start things of on the right foot.

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    • LondonGirl profile image

      LondonGirl 9 years ago from London

      Good advice - you should always read the small print of any contract you enter into.

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