globe wearing a surgical mask

May 6, 2020

Is COVID-19 an act of God?

2 min read


Is COVID-19 an act of God? For insurance, it doesn’t matter

There is a common misconception out there that “Acts of God” are never covered by insurance. This belief is founded in the history of insurance, and in fact there have been “Act of God” exclusions in many an insurance policy through the ages.

The reality is that in Canada today, insurance policies do not contain any references to Acts of God. Instead, Canadian insurance policies refer to specific “perils” that may be covered or excluded, depending on the policy. Perils that might be covered in an insurance policy include things like overland flood, lightning strikes, wind etc. As far as COVID-19 goes, if it is covered under any insurance policy, it would be under a peril called pandemics.

Health insurance

In Canada, all permanent residents are covered under a provincial or territorial health plan, and those plans all cover a wide variety of medical issues, including pandemics.

If you were traveling and bought emergency travel medical insurance, that would also usually cover you if you came down with COVID-19 while overseas. Of course, insurance companies are not in the business of protecting you from likely occurrences, so once COVID-19 became a known thing in early March and governments started issuing travel advisories and the like, insurance companies started excluding COVID-19 from their policies. If you try to buy travel medical insurance right now, or if you already had insurance but decide to travel in spite of the current travel advisories, your policy won’t cover you if you get sick with COVID-19 while away.

Auto and home insurance

The only part of a personal home or auto insurance policy that might cover you for losses related to the outbreak would be your third party liability coverage. If someone sues you because they claim that something you did (or failed to do) caused them to catch the virus, liability insurance would theoretically protect you. The likelihood of these kinds of lawsuits seems fairly low right now.

Business insurance

The more likely scenario is that people may sue businesses and government agencies if they believe that those businesses took actions (or failed to take actions) that led to someone getting the virus. It’s not clear whether such lawsuits would have a good chance of being successful at this point, but it appears that most insurance companies would at least cover legal costs if a suit is filed.

The coverage that many business owners may be counting on given the widespread business closures and slowdowns that have resulted from the pandemic is business interruption insurance, which is part of many business insurance packages, and covers a company’s losses if they have to shut down for an extended period. Unfortunately, it’s fairly certain that business interruption claims related to the pandemic will be denied. The way these policies are written almost always makes it clear that the interruption needs to be caused by physical damage to the property, or to adjoining properties.

Wedding and trip cancellation insurance

There are certain types of insurance that would typically cover losses from a pandemic like COVID-19. Wedding, event and trip cancellation insurance would ordinarily cover you if you had to cancel your event or trip due to the coronavirus outbreak. Again, insurance companies started excluding COVID-19 in early March, so don’t count on being covered for outbreak-related cancellations if you buy wedding, event or trip cancellation insurance right now.

The COVID-19 crisis is raising a number of issues related to insurance, including many policyholders missing payments, and properties being at risk of losing certain coverages if they are unoccupied. On the bright side, many insurance companies are taking advantage of much lighter traffic and lower auto insurance claims costs to return some premium to their customers and perhaps help them make ends meet. See our COVID-19 insurance directory to see what your insurer is doing to help its customers during the pandemic.

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