What is an Act of God in Insurance?

You may have heard the phrase “act of god” in relation to insurance coverage before. In this article, you’ll find out

• What an “Act of God” means.
• The “Force Majeure” clause.
• Protection against hurricanes and storms.
• Protection against flooding.
• Protection against falling trees .
• Protection against COVID-19.

So what do we really mean when we talk about “acts of god” in relation to UK insurance policies?

Well, as we mentioned up top, nothing really – in terms of UK insurance policies. But we can define what people are referring to when they use this phrase. 

Normally, an “act of god” is an unforeseen event that wasn’t anybody’s fault, so nobody is liable. It really refers to damage caused by freak accidents and extreme weather. The most common events we might refer to an Act of God are:

• Floods
• Hurricanes
• Falling trees
• Earthquakes
• Volcanic eruption
• Storms
• Lightning
• Hail showers

In the UK, some of these events are more likely than others. Obviously, we don’t tend to get many volcanic eruptions or earthquakes. 

And while we don’t have an “Act of God” clause, some of these might be covered under “Force Majeure”. 

“Force Majeure” is a French phrase that literally translates to “superior force”. It covers you if something outside of your control prevents you from carrying out your business operations that you’ve promised to do. 

While many insurance policies have specific clauses for extreme weather problems, any other “Act of God” type situation is probably covered under a “Force Majeure” clause. 

For example, remember that Icelandic volcano that nobody on the news could pronounce –  Eyjafjallajökull? It disrupted air travel all over the world, interfering with supply lines and business travel. Something like that could trigger the Force Majeure clause. 

It’s probably worth checking your insurance policies for this clause and double checking with the insurer what exactly they cover under it, because they do vary between companies. 

Extreme weather is becoming more common in the UK. Recently we’ve seen extreme flooding disrupting travel and causing huge amounts of damage in some small towns. Extreme snow-fall has also grounded entire airports in recent years, so it’s definitely worth double checking with your insurers if you’re covered for events like these under specific policies or a Force Majeure clause. 

Luckily, we don’t generally get hurricanes in the UK. The last one we experienced was in 1987. But insurance can cover work interrupted by powerful storms.

It varies depending on your insurance company, but there is a general rule of thumb when it comes to valid claims. 

If the storm produces normal winds and a minimal amount of damage, it won’t be considered a Force Majeure event. But, if it causes unexpected amounts of damage or interferes with business operations in an unexpected way, it can qualify because it would be an extreme circumstance that’s outside anybody’s control.

Flooding is more common in certain parts of the UK, and most insurance policies will have specific clauses dedicated to flooding. 

These will usually refer to building insurance because flooding can cause huge amounts of damage. But flooding could count as a Force Majeure if the floods have affected travel and supply chains. 

This can happen when main roads are closed due to flooding or train lines are closed and suspended because of extreme floods. 

Falling trees can come under extreme weather, because they often fall when there are powerful winds or lightning strikes that knock them over. To qualify as a force Majeure event, it has to have some other unlikely cause that wasn’t directly caused by another person.

It’s unlikely, but it can happen. Sometimes things just fall down, and we can include other things in this category like falling debris from mountain roads. 

Again, if you’re claiming under a Force Majeure clause, the falling trees or debris will have to have had an effect on your ability to complete your business operations. So it usually means something has fallen on a building, some vital equipment, or a company vehicle. 

COVID-19 could definitely qualify as a Force Majeure because it was an unforeseen event that nobody was liable for. Although, again, it does depend on the individual insurance companies. Something so unprecedented is difficult to make definitive claims about. 

If your business is having trouble because of the effects of COVID-19, there are a number of government grants and reliefs that the UK government is offering at the moment to help with the negative effects that COVID-19 has had on UK businesses. :

• Recovery loan scheme
• Coronavirus Additional Restrictions Grant (England only)
• Self-Employment Income Support Scheme
• Coronavirus Job Retention Scheme
• Statutory Sick Pay Rebate Scheme

Even if your insurance company doesn’t recognise the pandemic as an event, the government does. So don’t hesitate to check out the support you can get. 

The Countingup business current account makes it easy to manage all your financial data in one simple app. The app comes with free built-in accounting software that automates the time-consuming aspects of bookkeeping and taxes. 

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