Home insurance is one of the most essential pieces of protection that any owner can have for their house. In the event of a fire, theft, or vandalism, home insurance can help defray what might otherwise be an insurmountable cost. The right homeowner insurance companies can bring peace of mind to a homeowner by providing excellent service and reliability, coupled with a track record for payment and satisfaction. What a homeowner needs to be aware of, however, is that every home insurance policy carries with it certain limitations on what will be paid out. Even the most comprehensive of policies will have limits, often defined as “Acts of God.”
To a home insurance company, an Act of God is something that no amount of care could have predicted or prevented. A poorly maintained electrical system could cause a fire, and could also be repaired in such a way that a fire would be almost impossible. This type of peril, as it is often known to insurers, can be predicted and corrected for. If a fire were to occur, the homeowner would be covered for part or all of their damages, because it was a predictable risk. An Act of God falls outside of this category.
A flood is an excellent example of this. Except in states with specific flood insurance coverage, floods are generally regarded as Acts of God because they are both extremely unlikely and are not preventable. As far as the insurance company is concerned, a flood is not factored into the risk when a house is assessed, and they are under no obligation to pay out for an event that no one could have predicted, especially as the cost to repair or replace large numbers of houses could bankrupt the company. So far, US insurance law supports this policy, allowing homeowner insurance companies to deny coverage for acts that are beyond human control. However, as more and more natural disasters are being revealed as having some type of human origin, this policy is being called into question. For the moment, however, any homeowner looking to add coverage to their property that will cover any Act of God will also be paying substantially higher homeowner insurance rates, and may even have to seek a separate, specialized insurance company.
One of the reasons that typical homeowner insurance rates are able to stay at a reasonable level is because of the unlikelihood of an Act of God actually occurring. In a state with no flooding history and no tornadoes, either of those events taking place is extremely low on the scale of probability. This means that although typical home insurance will not cover them, it should never have a need to.