Your home insurance can be one of the most important investments you would ever need. While you hope and pray that nothing catastrophic happens to your beloved home, having it insured gives you confidence and peace of mind that you would be well-covered in any such unforeseen events. Depending on your requirements, insurance companies can provide you with matching options that allow you to optimize the value of your investment. If you are located in an area where there’s a high probability of natural disasters wreaking havoc, you may want to consider an “Acts of God” insurance.
What are “Acts of God”?
In the insurance industry, the phrase “Acts of God” refers to events or catastrophes that take place without human influence, cannot be predicted, and cannot be prevented by human intervention. Protection from the aftermath of tornadoes, floods, and fires are just some of the standard inclusions that an Acts of God insurance would have. But these provisions may not exactly be clear-cut as you expect them to be. Your insurer will still exclude any misjudgment on your part and can classify them as negligence. If your house caught fire and was found to be due to faulty electrical systems, it will not constitute as an act of God because your responsibility in making sure your electrical wirings are safe is a form of human intervention. But if your house caught fire due to a lightning strike, then that’s a different case. Without any chance for human intervention or negligence, it is clearly a natural disaster.
If you are located in an area that is prone to flooding, your house design can be a gray area in judging whether the damage that the floods caused are acts of God or preventable by your own intervention. While the damage will be the same, the underlying rationale could be different from your insurer’s perspective. It is in this aspect that you would need clarification from your agent before deciding to get an Acts of God insurance from the right provider. Ironically, although an earthquake is a naturally occurring phenomenon, insurance companies would have a different stance in considering whether its damage is an act of God. It’s best to clarify with your agent exactly what your policy covers because, among natural disasters, an earthquake can be one of the most devastating events and one that a business enterprise would want to avoid.
To get one or not?
If you are wondering whether it’s best to get an Acts of God insurance or not, you must first understand the perils that you realistically face. The age of your house, the materials it is built with, and your location are important factors that you should consider. If your home has been standing for many decades and is built with materials that may no longer be sufficient to withstand a natural calamity such as tornadoes or floods, it’s highly probable that underwriters will avoid you or will give you a higher premium. As in the case of any other insurance coverage, your insurer will make sure that you are not prone to suffering from major disasters and that they will be protected from financial losses.
If you are aware that your house is built on a disaster-prone area, it pays to have an Act of God coverage, but be sure to know every detail especially so that you are likely to be paying hefty premiums. On the contrary, there are places where insurers can include an Act of God protection without a significant increase in premiums. This is enjoyed by the privileged who live in areas where there are historically little chances of being struck by natural disasters.
What’s the bottom line?
Acts of God insurance as in the case of standard insurance coverage is all about your protection. Deciding whether to buy one rests entirely on a thorough understanding of your circumstances. If you are aware that you need one, then buy by all means. Acts of God are inherently unpredictable and unpreventable by human hands. By this definition, it doesn’t provide for any exemption despite historical accounts. If you can have one with a minimal increase over your standard coverage, why not?
