Explained: What Is The Act of God Clause In Insurance Policies

Recently, the devastating Morbi accident happened in Gujarat, killing over 140 people, and dozens of people are still missing after falling into the river. Many are debating whether the incident can be attributed to human error or if it was an inescapable occurrence beyond conscious intervention.

Many individuals describe the Gujarat bridge destruction as an "act of God," while others believe it was the fault of the concerned authorities involved in the bridge's restoration work.

The authorities have focused their attention on a private company called Oreva, which is deemed responsible for the mishap. A criminal investigation has been launched against the company.

AP

This debate erupted after the opposing party labeled the Morbi incident an "act of fraud." At the same time, many claimed that bridges and roads were destroyed in India due to environmental and climate issues and acts of God.

What exactly is the "Act of God" clause?

The tort law principle underpins the 'act of God' defense. "Act of God" is a term used by insurance companies and in legal terminology to categorize a natural occurrence beyond human control. In legal parlance, it is referred to as a "natural catastrophic event" for which no one can be made liable. It is a crushing defeat that occurs immediately due to a natural cause and could not have been avoided through prudent, diligent, and careful planning.

BCCL

The Covid-19 pandemic, which caused India's growth to slow, can be referred to as an extraordinary 'Act of God.' According to Salmond, the clause includes any act humans cannot avoid by exercising reasonable caution. Such mishaps are the outcome of organic forces and are incompatible with human agency.

In short, it is a mishap or incident without any human action or purpose, such as thunderstorms, tsunamis, or earthquakes.

"Vis Major" is another term for "Act of God." Vis major is a Latin term that refers to a "superior force" that results in damage that is neither caused nor entirely avoidable by humans.

Act of God: Through the legal lens

Insurance companies use the "act of God" clause in various situations. Many insurance terms and conditions are particular when it comes to acts of God. In contractual agreements, such as insurance contracts, the clause may add up to an exception to liability.

Reuters

Several insurance companies and providers do not cover losses caused by natural disasters. Hence, insurers should check their policies for coverages and exclusions for acts of God.

Comprehensive auto insurance typically includes coverage for acts of God. People must purchase separate flood and earthquake insurance for damages that are not typically covered by standard homeowner policies.

According to consultants, the application process in such scenarios is much more convenient than in wellness or life insurance policies because the document requirements are relaxed.

Policyholders only need to notify the insurer of the loss, and the consultant will be dispatched. Furthermore, because the cause of the loss is usually recognized as an act of God, insurance companies typically implement many consultants to assess the loss and rapidly settle claims.

The act of God is defined as something opposed to the act of man. The actions of God are subject to different laws in each country, and some countries do not recognize the concept at all.