[F121]
501(c)(3)
A company that qualifies and is formed under IRS code 501(c)(3) is not-for-profit and is exempt from income tax. Charities are formed under 501(c)(3).
[F122]
501(c)(9) (VEBA)
A trust formed under IRS code 501(c)(9), also known as a Voluntary Employee Beneficiary Association. Used by self-insured groups to fund their group health and other employee benefits plans. Contributions made to the trust are deductible from federal income tax and appreciation of trust assets is not taxable.
[F000]
401(k) Plan
Retirement plan in which employees can make contributions (or elective deferrals) to the plan on a pretax basis. Employers can also make contributions to the plan on behalf of the employee. The maximum combined amount that can be contributed by the employee and employer is 25% which is also subject to a dollar amount cap. A 401(k) Plan is also known as a qualified savings plan.
[F000a]
403(b) Plan
Retirement plan, designed specifically for public school and other local or state public employees, in which employees can make contributions (or elective deferrals) to the plan on a pretax basis. Employers can also make contributions to the plan on behalf of the employee. The maximum combined amount that can be contributed by the employee and employer is 20% which is also subject to a dollar amount cap. The 403(b) Plan is similar to the 401(k) Plan. Other employees eligible for this type of plan are those employed by nonprofit, scientific, religious or charitable organizations.Content
[F001]
Face
The first page of an insurance policy, normally the Declarations.
[F002]
Face amount
As used in life insurance, the amount stated on the first page of the policy that will be paid at maturity, upon death of the insured or expiration of the endowment period. Additional benefits may be provided by riders or dividends. Also known as face value.
[F003]
Face value
As used in life insurance, the amount stated on the first page of the policy that will be paid at maturity, upon death of the insured or expiration of the endowment period. Additional benefits may be provided by riders or dividends. Also known as face amount.
[F004]
Facility of payment clause
A provision found in group life and industrial insurance policies that allows the insurer to pay benefits to persons or parties other than the insured or a beneficiary, under certain specified conditions. This clause was designed to assist in benefit payments when there is lack of clarity as to the actual beneficiary, and thus to prevent potential litigation against the insurer.
[F123]
Factor
In rating a property-casualty insurance policy, a factor is a multiplicative item. The base rate may be 1.00 with an increase factor of 10% applied because of a higher than expected exposure to theft. Thus, the new rate would be $1.10.
[F005]
Factory Insurance Association
Now called Industrial Risk Insurers, this is a consortium of major stock property and casualty insurers formed to write large, highly protected risks and to provide fire laboratory facilities and engineering services. The organization was formed in 1975 by the merger of the Factory Insurance Association and the Oil Insurance Association. Headquarters: Hartford, CT.
[F006]
Factory mutuals
A group of direct-writing mutual insurance companies, independently owned and operated, which underwrite highly protected risks of substantial value on a reciprocal reinsurance basis. The central organization in New England maintains extensive fire laboratory facilities and provides its members with engineering services.
[F007]
Facultative certificate
The formal document between the ceding company and the reinsurer with respect to the reinsurance cession for facultative reinsurance.
[F008]
Facultative reinsurance
Reinsurance effected item by item and accepted or declined by the reinsuring company after scrutiny, as opposed to reinsurance effected by treaty. The word facultative connotes that both the primary insurer and the reinsurer have the faculty or option of accepting or rejecting the individual submission, as distinguished from the preset obligation to cede and accept already agreed upon by the parties in treaty reinsurance.
[F009]
Facultative treaty
A contract between a ceding company and a reinsurer with regard to the handling of the placement of individual risk. In a facultative treaty there is no automatic requirement to cede by the ceding company, nor is there a requirement to accept a risk by the reinsurer. Each may be negotiated individually.
[F124]
Fair Credit Reporting Act (FCRA)
Became law in 1971. The purpose of the law is to protect consumers against the circulation of inaccurate or obsolete information and to ensure that consumer reporting agencies are fair and equitable in their treatment of customers. The Federal Trade Commission administers the law.
[F010]
Fair Plan
A program to provide "fair access to insurance requirements" for property owners who experience difficulty in buying insurance on property located in blighted or deteriorating urban areas. Basically the plan assures a property owner of physical inspection of property and a promise to provide fire and allied lines insurance if the property is adequately maintained and if recommended improvements necessary to make the property insurable have been made. Many of these plans have been extended to cover statewide in those states adopting them.
[F011]
Fallen building clause
A provision in some property insurance policies that voids coverage should a significant portion of the insured building collapse from causes of loss other than those covered in the insurance policy. For example, if the policy covers fire or explosion, and the building collapses as a result of flood, the fire coverage becomes void.
[F140]
False arrest
Arrest or detention which involves the illegal restraint of an individual’s liberty; it is considered to be a type of personal injury.
[F012]
Family automobile policy
A predecessor personal automobile policy insuring liability, medical expense, physical damage and uninsured motorists, available only for individually owned, private passenger cars and some small trucks. It is somewhat similar to the combination automobile policy but provides broader coverage. This type of policy has been replaced by the personal auto policy, PAP, in most state jurisdictions.
[F013]
Family deductible
A health insurance policy deductible that was designed to address the expenses for services of the entire family unit rather than application to each person.
[F014]
Family health plan
Health insurance protection designed to cover the family unit as a whole instead of on a per-person basis.
[F015]
Family income life insurance
A type of life insurance program with both whole life and term life insurance products. Should the insured die before a specified date in the policy, benefits are paid in the form of monthly income. After that date, a flat amount is paid.
[F016]
Family life policy
A type of life insurance program with both whole life and term life insurance products in one policy, designed to cover all the members of a family unit.
[F017]
Farmers comprehensive personal liability insurance
Similar to comprehensive personal liability coverage, but amended to take care of the special accident risks found around the farm. A legal liability or third-party policy, i.e., it protects the farmer against bodily injury or property damage claims from others, including at times claims from farm employees.
[F018]
Farmers mutual insurers
An affiliation of small, domestic, mutual insurance companies that were originally formed by farmers to offer insurance coverage for farm property and farm-related causes of loss such as hail and crop, as well as other traditional coverages such as fire and wind.
[F019]
Farmowners-ranchowners policy (FO-RO)
A package policy for farming and ranching risks which can be described as a homeowners policy adapted for farm and ranch properties. Basically, the policy provides property and liability insurance to which may be added appropriate additional coverages such as animal collision, employers liability, custom farming, etc.
[F020]
FAS--free along side
A marine insurance term indicating that when goods are shipped FAS, the shipper agrees to assume all costs and liabilities for loss until the goods are safely on the pier or dock alongside the vessel.
[F020a]
FASB--Financial Accounting Standards Board
National board set up to review and administer accounting standards.
Fault Liability System
(See tort liability.)
[F021]
Faulty workmanship exclusion
Most liability policies contain this property damage exclusion for products-completed operations losses, although it is now more often referred to as the work performed exclusion. The intent of this exclusion is to make sure that insureds are maintaining acceptable standards of performance and are not using the insurance contract to recover for poor training or poor business practices by the insured. Coverage does not exist for property losses to work performed or as a result of the work performed by the insured.
[F125]
FCAS
Fellow Casualty Actuarial Society designation sponsored by the Casualty Actuarial Society. Headquarters: Arlington, VA.
[F023]
FC&S--free of capture and seizure
A clause which exempts the marine insurance company from paying losses caused by capture or seizure by enemies of a country.
[F022]
FCIA--Foreign Credit Insurance Association
A group of insurance companies cooperating with the Export-Import Bank of Washington (Exim-bank) to provide foreign credit insurance for American exporters, thus assisting United States business to become more competitive in foreign trade. Coverage provides for credit and political risks. Headquarters: New York, NY.
[F126]
FCLA
Fraud Claim Law Associate designation sponsored by the American Educational Institute. Headquarters: Basking Ridge, NJ.
[F024]
Federal Crime Insurance Program
This discontinued program was administered by the Federal Insurance Administration to provide limited burglary and robbery coverage for property owners who experienced difficulty in buying insurance on property located in blighted or deteriorating urban areas. It was successful in using federal reinsurance to encourage insurance carriers to continue writing in distressed areas and was phased out in the 1980s. It has gained new interest as a roadmap to move terrorism coverage from a governmental protected program to a fully private coverage.
[F024a]
Federal Employees' Group Life Insurance Policy (FEGLI)
Group life insurance policies offered to federal employees. Premiums are paid by insureds through payroll (or benefits) deductions.
[F025]
Federal Insurance Administration
A government office (part of the Department of Housing and Urban Development) handling insurance programs such as the Federal Riot and Civil Commotion Reinsurance Contract (which backs up policies provided by FAIR Plans in force in a number of states), Federal Crime Insurance and the Federal Flood Insurance Program.
[F127]
Federal risk retention act
An insurance company organized by a group of businesses or institutions in the same line of business to provide liability insurance for the owners or organizers. As permitted by federal legislation passed in 1986, such a group is eligible to provide insurance for its members in any state after being licensed in any one state.
[F026]
Federal Tort Claims Act
Historically, the sovereign, or government, cannot be sued without its consent. The Federal Tort Claims Act altered this principle and allows persons to sue the United States for personal injury or damage to property under circumstances in which the United States, if a private individual, would be liable for such injury or damage.
[F026a]
Fee for service
In health insurance, it is the type of coverage where the insurer pays the specified portion of the charges when a patient goes to the physician, service or hospital of choice. Often considered to be the "traditional" form of health insurance coverage, fee for service protection is rivaled by HMOs, PPOs and other similar types of plans.
[F026b]
FEGLI--Federal Employees' Group Life Insurance Policy
Group life insurance policies offered to federal employees. Premiums are paid by insureds through payroll (or benefits) deductions.
[F027]
Fellow of the Institute of Actuaries (FIA)
A degree or title held by one who has passed examinations and has been admitted to the Institute of Actuaries in England.
[F141]
Fellow servant or employee defense
A common law defense that is generally used in cases that are related to work (one employee injures another).
FFD
(See Full Family Direct.)
[F028]
FIA--Fellow of the Institute of Actuaries
A degree or title held by one who has passed examinations and has been admitted to the Institute of Actuaries in England.
[F029]
F.I.A.--full interest admitted
An agreement in a policy of marine insurance that the named insured's ownership or right to collect the proceeds of the insurance is agreed to at the inception of risk without further proof of an insurable interest at time of loss.
FIC
(See Financially Impaired Company.)
[F030]
Fidelity bond
An insurance policy which reimburses an employer for losses resulting from dishonest acts of employees. May be written to cover specific employees or all employees, using either a schedule or blanket basis, or by scheduling positions versus named persons.
[F031]
Fiduciary
A person who occupies a position of trust, especially one who manages the affairs of another. For example, the guardian of a minor is a fiduciary.
[F143]
Fiduciary bond
A fidelity bond that protects a dependent party (such as a legal estate) against the dishonest acts of a fiduciary.
[F032]
Fiduciary liability insurance
Protection for those who administer pension and welfare funds, profit-sharing and other employee benefit programs against loss for errors and omissions by the administrator. The need for this coverage was created by the Employee Retirement Income Security Act (ERISA) of 1974. Also known as pension trust liability insurance.
(See Employee Retirement Income Security Act of 1974 (ERISA).)
[F033]
Field
Territory away from the office.
[F128]
Field underwriter
In property-casualty insurance a field underwriter may be a company-employed underwriter who works out of a branch or in-home office and who spends a considerable amount of time in the field with agents, prospective insureds and policyholders. A field underwriter in life insurance is often synonymous with an agent.
[F129]
Fifth dividend option
The additional term insurance nonforfeiture option found in life insurance.
(See also nonforfeiture benefit or nonforfeiture value.)
[F034]
Film coverage insurance
An inland marine coverage providing protection for broad or "all-risk" causes of loss to exposed motion picture, magnetic or video tapes, which also include sound tracks and recordings.
[F130]
Final average benefit formula
Used in pension plans. Unlike career average benefit formulas that average earnings over the entire employment career in the plan, the final average formula looks at the last few years of earnings: i.e., the formula will use the average of the three highest earning years out of the last five to calculate the benefit. This formula is often thought to encourage workers to work just as hard before retirement as they did during their earlier working years.
[F035]
Financed premium
Insurance premiums that are financed, either by an outside financial institution or, in some cases, through a financing agreement arranged with the insurer, which involves interest and collateral. This is not the same as an installment premium whereby the insurer allows the insured to pay the earned premium as it becomes due on an installment basis.
[F035a]
Financial Accounting Standards Board (FASB)
National board set up to review and administer accounting standards.
[F036]
Financial guaranty
A guaranty that a sum of money will be paid. A form of bond.
[F037]
Financial planner
An entity that offers direction and advice regarding finances, investments, retirement income and various other aspects in handling the overall finances of the individual.
[F038]
Financial responsibility clause
Language in a policy describing coverage required by any financial responsibility law.
[F039]
Financial responsibility law
A statute (in force in most states) which requires a motorist to provide evidence of the ability to pay for negligence in causing losses to others from the operation of a motor vehicle. Typically, the evidence furnished is an insurance policy, although most states also permit a bond or cash deposit to be used in lieu of a policy.
[F040]
Financial underwriting
Financial underwriting is when an insurer uses the investigation and evaluation of the financial data on a risk under consideration in order to determine the acceptability of that risk for insurance coverage. Financial indicators, such as profitability and liquidity provide the insurer with information on the stability and quality of management of the potential insured.
Financially impaired company
This term refers to an insurer that may not be insolvent, but may suffer from difficulties that cause insurance regulators to begin action. A common triggering event may be evidence that the insurer has inadequate capital (surplus).
[F041]
Fine arts insurance
A personal lines coverage on works of arts, usually written by inland marine underwriters on an "all-risk" and a "valued" basis. The commercial lines equivalent is most often covered under a commercial articles floater which combines not only fine arts coverage, but also camera and musical instruments in one coverage form.
[F042]
Finished stock
Merchandise of a manufacturer which has been completely processed and is ready for sale.
[F154]
Finite reinsurance
Basically refers to any reinsurance contract that is designed to transfer a limited/specified amount of loss exposure. Such agreements typically use accounting or other financial methods to handle the specific exposure (rather than an insurance risk transfer).
[F043]
Fire
Combustion manifested in light, flame and heat for useful purposes (known as friendly fire), or for destructive purposes (called hostile fire). Insurance covers loss only from the latter.
[F044]
Fire clause
A condition in a lease which provides that in case fire should damage the property to some agreed extent, certain agreed modifications in the lease automatically take place.
[F045]
Fire department service clause
Sometimes when property is located outside the boundaries of a city or town, the fire department will agree to come to a fire, but a charge is made for it. This clause extends the policy to pay such charges in the event of loss.
[F046]
Fire insurance
1) Covers losses caused by fire, lightning and removal of insured property from the premises to avoid further loss. All resultant damage such as that done by water and smoke is also covered. Usually supplemented by extended coverage. Currently, this insurance is referred to as property insurance.
2) A type or line of insurance, as opposed to marine, casualty or fidelity bonding. The term fire insurance is now referred to as property insurance when denoting a line of insurance.
[F047]
Fire insurance company
An insurance company chartered and licensed under the fire insurance provisions of the laws of its home state, as opposed to one under the casualty section. Since the term fire insurance has been replaced in many state laws with property insurance, its legal use is limited; but fire insurance is still applied in a colloquial sense to describe those companies engaged principally in the property insurance business.
[F144]
Fire mark
A small sign or a medallion placed on a building by the company that provided fire insurance. It is commonly believed that the signs were proof to private fire departments that such buildings were insured. Therefore, they would be paid if they handled the fire call. It is more likely that such signs were merely an early form of advertising.
[F049]
Fire marshal
A public official involved in fire prevention and investigation of fires, particularly where arson is suspected.
[F050]
Fire prevention
Loss control methods used to prevent fire from occurring.
[F051]
Fire protection
The combination of loss control methods to prevent fire from occurring, to detect a fire that has occurred as quickly as possible and, should fire occur, to extinguish it immediately while reducing the severity of the potential injury to persons or damage to property.
[F051a]
Fire Protection Class
A 10-category ranking or schedule of public fire protection of cities and towns established in 1916. The grading is currently maintained by the Insurance Services Office for use in making fire insurance rates and to encourage local governments to maintain better fire fighting equipment and personnel. A city or town is ranked in one of the categories by receiving deficiency points for failing to meet established standards under each of these major headings: water supply, fire department, fire service communications, fire safety control, climate, and divergence between fire department and water supply. Fire Protection Class 1 is the best class (a city or town having fewer than 501 points), and Fire Protection Class 10 is the worst (more than 4,500 points). Also known as town class or town grading.
[F052]
Fire resistive
The construction of a building with steel and concrete or other noncombustible materials designed to prevent the frequency of fire or to reduce its effect once started. A better term than fireproof, since few materials are not subject to damage or destruction by fire.
(See fireproof.)
[F053]
Fire retardant
Chemical treatments applied to a variety of items, such as clothing, furniture, carpets, and curtains in order to prevent or reduce the possibility of the item's catching fire and burning.
[F054]
Fire wall
A wall designed to prevent the spread of a hostile fire.
(See division wall.)
[F055]
Fireproof
The construction of a building with steel and concrete or other noncombustible materials designed to prevent the frequency of fire or to reduce its effect once started.
(See fire resistive.)
[F056]
First class mail insurance
"All-risk" coverage on bonds, stock certificates and other securities shipped first class mail by banks, trust companies, investment corporations, and other firms engaged in security transactions.
[F057]
First dollar coverage
Insurance coverages or benefits that pay the entire covered amount without subtraction of or use of a deductible.
[F058]
First loss insurance
An insurance policy which is called upon to pay a loss before others covering the same loss, or a contract written to cover only the insured's expected loss during the policy period with no other insurance in force.
[F145]
First loss retention
The limit or amount at which reinsurance attaches or comes into play. The limit or amount below that point is retained by the ceding company.
[F059]
First named insured
The party named first in the Declarations of an insurance policy. The first named insured has become significant in commercial insurance because the terms and conditions of the policy itself detail that many of the duties and obligations to the contract must be performed by, or are the responsibility of, the first named insured versus any or all named insureds. Additionally, the insurer has obligations, such as proper notice of cancellation or nonrenewal and return premium refund, that need go only to the first named insured.
First party benefits
Any insurance payments that are received by policyholders (and others eligible as insureds) under a policy in the event of injury, regardless of fault. The benefits may include medical expenses, loss of income, funeral and death benefits. This may also be called personal injury protection.
[F142]
First party insurance
Insurance that pays for loss to an insured who is considered the first party to an insurance contract. The second party is the insurance company and other persons claiming injury are called third parties.
[F060]
First surplus (reinsurance) treaty
As a reinsurance term, first surplus means the amount of liability assumed on a certain risk, which is in addition to the amount which the primary company cares to hold for its net account. A treaty or contract which reinsures this "surplus" on a pro rata basis is called a first surplus treaty. Since there usually is a limit on the amount which may be ceded, there may be second or third surplus treaties to permit the writing of larger direct lines.
[F146]
FISCAA (Flood Insurance Servicing Companies Association of America, Inc.)
An organization of insurers who provide flood insurance under the National Flood Insurance Program's Write Your Own (WYO) program. Its goal is to educate the public about the protection available from the NFIP. It was established in 1992. Headquarters: Orlando, FL.
[F061]
Fitness for a particular purpose
A product warranty affirming not only the fitness of the product for its intended use, but also for any known use the purchaser has expressed to the seller or manufacturer and for which that seller or manufacturer has affirmed the fitness for the specified use.
[F062]
Fixed amount option
A life insurance option which allows the beneficiary to select to receive the proceeds in monthly installments of fixed amounts instead of a lump sum. The remaining principal will continue to earn interest until such time as the payouts exhaust both the principal and the interest earned.
[F063]
Fixed annuity
A life insurance annuity providing guaranteed or fixed benefit payments for the term of the annuity.
[F064]
Fixed benefit
A life insurance benefit or annuity benefit paid on a regular basis that does not vary.
[F065]
Fixed charges
1) Costs of transacting business, e.g., rents, which are incurred regardless of the amount of business transacted.
2) A term used in business interruption insurance.
[F066]
Fixed period option
A life insurance benefit option that allows the beneficiary to receive the settlement in periodic payments for a fixed period of time or specified number of years instead of a lump sum. The unused portion of the principal sum will continue to earn interest during that period of time.
[F067]
Fixtures
Something attached to real estate which is removable.
(See furniture and fixtures.)
[F068]
Flat benefit
A life insurance benefit in which the amount does not fluctuate.
[F069]
Flat cancellation
The cancellation of a policy as of the time it attached, with all of the premium refunded to the policyholder.
[F070]
Flat commission
A fee for selling and servicing insurance, payable to an agent or broker, which is the same percentage of the premium regardless of the size of the premium.
(See graded commission.)
[F071]
Flat deductible
A flat deductible is a set amount that will be subtracted from each claim or loss, as indicated in the policy, for that coverage. It does not vary with each loss.
[F132]
Flat extra premium method
In life insurance, if a person does not meet health or other qualifications, insurance can be declined or rated. The flat extra premium method of rating the life insurance policy charges an extra flat dollar amount per $1,000 of policy value.
[F072]
Flat rate
1) In reinsurance, the rate agreed upon between the reinsurer and ceding company to be charged the insured for the coverage, which is a final rate and not adjusted for loss experience, size of the risk, or any other credits or debits.
2) A rate set for a coverage that remains unchanged throughout the policy period, even if the insured suffers unexpected losses.
3) A property insurance rate used when no coinsurance applies to the policy.
[F073]
Fleet
1) A group of ships, aircraft, or automobiles under common ownership or insured as if they were.
2) A group of companies under common ownership or management.
[F074]
Fleet policy
In automobile insurance, coverage for a number of cars for one owner. In marine insurance, coverage for a number of ships for one owner or manager.
[F075]
Flexible benefit plan
Benefit plans offered by employers to employees that allow the employee some choices in the benefits, coverages, and limits selected. For example, a health insurance package that allows the employee the option to choose between vision benefits or dental benefits or to select both if the employee wishes to bear the burden of the additional costs. Other options are higher or lower deductibles, coinsurance, whether or not to make the benefits pretax, and so forth.
(See flexible spending accounts.)
[F076]
Flexible premium life insurance
A variable life insurance where the insured has the flexibility to choose the amount and timing of the premium payments, as well as the ability to change those options after inception.
[F077]
Flexible spending accounts
Amounts set aside by employees or employers to provide a choice of taxable or taxfree benefits to employees at their option, as allowed under Section 125 of the Internal Revenue Code, for health expenses otherwise not covered by insurance, such as dental care, deductibles, co-payments, vision and orthodontic care, and legal expenses.
(See flexible benefit plan.)
[F133]
FLMI
Fellow, Life Management Institute designation sponsored by the Life Office Management Association. Headquarters: Atlanta, GA.
[F078]
Floater
A policy which covers property at many locations, even worldwide and in the course of transit, i.e., the protection "floats around" with the objects insured.
[F079]
Flood
Overflow of water from its natural boundaries. More specifically defined by the National Flood Act of 1968 as "a general and temporary condition of partial or complete inundation of normally dry land areas from the overflow of inland or tidal waters, or the unusual and rapid accumulation or runoff of surface waters from any source."
[F080]
Flood insurance
Coverage against damage done by the rising or overflowing of bodies of water.
[F081]
Flood Insurance Rate Map
A map published by the Federal Insurance Administration to plot the layout of communities in flood prone areas, based upon comprehensive study and used as the actuarial basis for the promulgation of flood rates. Once a community has been charted and the map completed, that community becomes eligible for the National Flood Insurance Program.
[F147]
Flood Insurance Servicing Companies Association of America, Inc. (FISCAA)
An organization of insurers that provide flood insurance under the National Flood Insurance Program's Write Your Own (WYO) program. Its goal is to educate the public about the protection available from the NFIP. It was established in 1992. Headquarters: Orlando, FL.
[F082]
Floor plan insurance
Coverage acquired by the financier, whether finance company or bank, to protect either its interest alone or its joint interest with the merchant, in which a special form is used. Merchants of high valued articles, such as automobiles and expensive household equipment such as refrigerators, often borrow money from finance companies or banks on the collateral of their stock of specifically identified property "on the floor" for sale.
(See single interest cover (or insurance) and credit insurance.)
[F083]
FOB--free on board
When goods are shipped FOB, the shipper is responsible only until the goods have been placed on board the vessel, freight car, truck, or other means of transport. After that the risk belongs to the consignee.
[F084]
Following form excess liability insurance
An excess liability policy which extends an additional limit of insurance above the primary policy and provides exactly the same coverage as the underlying primary liability policy.
[F085]
Following form excess property insurance
An excess property policy which extends an additional limit of insurance above the primary policy and provides exactly the same coverage as the underlying primary property policy.
[F086]
Following the fortunes
A reinsurance principle stipulating that whatever the reinsured may find necessary to do in good faith, in connection with ceded business, is expected to be followed by the reinsurer. Reinsurance is strictly an honorable undertaking, from either side to the other.
[F087]
For account of whom it may concern
A phrase used to protect the interests of others than the "named insureds," that is, other than the persons actually named in the policy.
[F153]
Force majeure
(See Act of God.)
[F088]
Foreign company
In insurance, a company doing business in one state but incorporated in another. A company incorporated in another country is an alien company. Some insurance codes (Florida, for example) define foreign company to include alien companies unless the contrary is stated. Each specific law should be checked for its particular meaning.
(See domestic company.)
[F089]
Foreign Credit Insurance Association (FCIA)
A group of insurance companies cooperating with the Export-Import Bank of Washington (Exim-bank) to provide foreign credit insurance for American exporters, thus assisting United States business to become more competitive in foreign trade. Coverage provides for credit and political risks. Headquarters: New York, NY.
[F148]
Foreign reinsurer
In insurance, a company doing business in one state but incorporated in another. A company incorporated in another country is an alien company. Some insurance codes (Florida, for example) define foreign company to include alien companies unless the contrary is stated. Each specific law should be checked for its particular meaning.
[F134]
Forfeiture
In a pension or profit sharing plan, the participant has vested (owned) and unvested (not yet owned) benefits. If an employee leaves before the benefits vest, the unvested benefits are called a forfeiture.
[F090]
Forgery
False or fraudulent making or altering of a written instrument. Also, the illegal signing of another's name to a document such as a check.
[F091]
Form
A document providing the specifics of the insurance issued, either separate unto itself or attached to other descriptive language.
[F135]
Form 5500
The form that must be filed annually to the IRS for any pension plan. It contains details about the plan's finances and plan participant funding levels, vesting and other information.
[F092]
Fortuitous cause
An accidental and unexpected cause of loss. A happening by chance.
[F093]
Foundation exclusion clause
A clause in a fire policy which states that it does not insure foundations; hence, their value may not be used to determine the proper amount of insurance under a coinsurance clause.
[F094]
Foundation wall
A masonry wall below the surface which supports a building.
[F095]
Foundering
Sinking below the surface of water.
[F096]
FPA--free of particular average
A clause which exempts the company insuring cargo from partial losses, usually limited to apply only if the amount is less than an agreed sum, or if some other described condition exists.
[F097]
Frame building
A type of construction in which the outer walls are made of lumber.
(See brick building, and brick veneer.)
[F098]
Franchise clause
A provision in marine policies that no loss shall be paid by the insurer unless the damage exceeds an agreed amount called the franchise; but if the damage equals or exceeds the franchise, the company pays the entire amount.
(See deductible.)
[F149]
Franchise deductible
A provision in marine policies that no loss shall be paid by the insurer unless the damage exceeds an agreed amount called the franchise; but if the damage equals or exceeds the franchise, the company pays the entire amount.
[F099]
Franchise insurance
A form of mass merchandising of insurance where policies are sold to members of some common group or association individually on the basis of individual rates, but with some discount based on expense savings. Franchise insurance should be contrasted with group or true group, where premiums are determined for the group on the basis of its own expenses and losses and where all or most of the group are insured.
(See group merchandising.)
[F136]
Fraternal benefit society
Any incorporated society, order or supreme lodge. In order to purchase the insurance of a fraternal benefit society, a person must first become a member of the organization. Only members and their families can be covered by a fraternal benefit society insurance plan.
[F100]
Fraternal insurance
A form of cooperative life or disability insurance sold by certain fraternal organizations, usually as legal reserve insurers, to their members.
[F101]
Fraud
Dishonesty.
[F102]
Free along side (FAS)
A marine insurance term indicating that when goods are shipped FAS, the shipper agrees to assume all costs and liabilities for loss until the goods are safely on the pier or dock alongside the vessel.
[F103]
Free-look period
The time period allowed a new insured to look over the terms and conditions of the final policy after delivery, during which the insured may cancel the policy with full premium refund. The free-look period is often 10 days after delivery of the policy for life and health, or up to 30 days on property and liability.
[F104]
Free of capture and seizure (FC&S)
A clause which exempts the marine insurance company from paying losses caused by capture or seizure by enemies of a country.
[F105]
Free of particular average (FPA)
A clause which exempts the company insuring cargo from partial losses, usually limited to apply only if the amount is less than an agreed sum, or if some other described condition exists.
[F106]
Free on board (FOB)
When goods are shipped FOB, the shipper is responsible only until the goods have been placed on board the vessel, freight car, truck, or other means of transport. After that the risk belongs to the consignee.
[F107]
Free on board destination
When applying to cargo insurance, this is a provision in the term of sale making the shipper responsible for the cargo until the consignee accepts it.
[F108]
Free Trade Zone
A special section of the New York State Insurance Law that exempts from rate regulation certain risks which develop property-liability policy premiums in excess of $100,000 annually, as well as certain other classes of unusual or exotic risks.
[F109]
Friendly fire
A visible flame or glow started voluntarily, under control, and in its intended place.
(See hostile fire.)
[F137]
Front-loaded policy
Universal and variable universal life insurance plans may either be front-loaded or back-loaded. Front load means that the expense charges are taken out of the policy when premiums are paid. Back-loaded policies take the expense charges out when cash is withdrawn from the policy or the policy is surrendered.
[F110]
Fronting
Typically involves an admitted insurance company that, for a fee, serves as a policy issuer and primary insurer for an unlicensed firm that reinsures the liability it placed with the issuing carrier. The fronting company performs a variety of functions, including product/rate filings and handling required assessments and fees.
[F111]
Frustration clause
In an ocean marine policy that has been endorsed or extended to cover the peril of war, the frustration clause is a provision which clarifies that the cargo or goods must experience a direct physical loss or actual property damage to be covered. The delay of a voyage or termination of the voyage is not grounds for a claim even if that delay or termination occurred due to the outbreak of war, as otherwise covered.
[F138]
FSA
Fellow of the Society of Actuaries designation sponsored by the Society of Actuaries. Headquarters: Shaumburg, IL.
[F139]
FSPA
Fellow, Society of Pension Actuaries designation sponsored by the American Society of Pension Actuaries. Headquarters: Fairfax, VA.
FTCA
(See Federal Torts Claims Act.)
[F112]
Full coverage
The use of this terminology usually refers to a coverage that has been written without a deductible. The entire amount of loss is covered, up to the state policy limit.
Full family direct
Refers to the process of determining all sources of Social Security payments and using that amount to reduce (offset) any payments an injured worker receives from a disability policy.
[F113]
Full interest admitted (F.I.A)
An agreement in a policy of marine insurance that the named insured's ownership or right to collect the proceeds of the insurance is agreed to at the inception of risk without further proof of an insurable interest at time of loss.
[F114]
Full reporting clause
A clause in many reporting policies that provides for a penalty in the event of loss if the insured has reported less value than required by the policy. Formerly called honesty clause.
[F115]
Full value declared
An ocean and inland marine insurance provision which requires the shipper to declare the full value of the cargo to the carrier when shipped.
[F116]
Functional replacement cost
An endorsement available for property policies which provides for replacement of the operation or function portion of a building or property, even if the replacement is for a building of less size or the more modern equipment is of less value. To illustrate, an insured owns an aged, four-story building in which only two floors are currently used. The remaining floors have been closed and are unused. Should the building suffer a total loss, functional replacement cost would provide for the rebuild of the square footage of the two functional floors.
[F150]
Funds control
Refers to a party who takes the place of a contractor that can't secure a bond for a building project. the fund controller gets the bond and handles responsibilities in the contractor's place.
[F151]
Funds held account
Money that a ceding company holds for use to pay losses under a reinsurance agreement. The held funds would normally be paid to a reinsurer and the money represents either an unearned premium or outstanding loss reserve.
[F152]
Funds withheld
Money that a ceding company holds for use to pay losses under a reinsurance agreement. The held funds would normally be paid to a reinsurer and the money represents either an unearned premium or outstanding loss reserve.
[F117]
Fur floater
An inland marine policy insuring furs and garments containing fur on a scheduled item basis against all risks, wherever the furs may be.
[F118]
Furnace explosion
A bursting in the fire box of a furnace or boiler, as distinguished from one in the water bearing part. Usually, boiler explosion policies cover the latter, while extended coverage endorsements issued by fire insurance companies cover the former.
[F119]
Furniture and fixtures
In insurance language, usually the contents of a building, excepting merchandise for sale or in the course of manufacture (stock) and excepting machinery. Fixtures are the items fixed, that is, attached to the building.
(See fixtures.)
[F120]
Furriers customers insurance
An inland marine form of insurance in which the customer of a furrier who stores fur garments is insured under a policy arranged by the furrier.
