See Protection Amount.
Reinsurance on an individual policy basis wherein each risk
which an insurance company wishes to reinsure is reviewed
by the reinsurer, which has the “faculty” or option
to accept or decline all or part of each risk offered to it.
FAIR (Fair Access to Insurance Requirements)
A facility, operating under a government-insurance industry
cooperative program, to make fire insurance and other forms
of property insurance readily available to persons who have
difficulty obtaining such coverage.
Family Auto Insurance:
The automobile policy (most common in the industry) which
provides protection for the insured and resident relatives
in the same household.
Family Plan Insurance:
This is insurance in which the head of the household has one
master policy on his/her life (usually whole life) and term
coverage for wife/husband and children in lesser amounts.
Package policy that protects the policyholder against named
perils and liabilities and usually covers homes and their
contents, along with barns, stables, and other structures.
Federal Crime Insurance:
Insurance against burglary, larceny and robbery losses offered
by the federal government where the Federal Insurance Administration
has determined that such insurance is not otherwise readily
Federal Insurance Administration:
Federal agency in charge of administering the National Flood
Insurance Program. It does not regulate the insurance industry.
Federal Reserve Board:
Seven-member board that supervises the banking system by issuing
regulations controlling bank holding companies and federal
laws over the banking industry. It also controls and oversees
the U.S. monetary system and credit supply.
Fee For Service (FFS):
Formerly a standard health insurance policy. Now a form of
health insurance that allows the insured to go to any doctor,
hospital or other provider which would bill for each service
given, and the insurer and the patient share in the cost of
the services provided.
A form of protection that covers policyholders for losses
that they incur as a result of fraudulent acts by specified
individuals. It usually insures a business for losses caused
by the dishonest acts of its employees.
A type of surety bond, sometimes called a probate bond, which
is required of certain fiduciaries, such as executors and
trustees, that guarantees the performance of their responsibilities.
Legal responsibility of a fiduciary to safeguard assets of
beneficiaries. A fiduciary, for example a pension fund manager,
is required to manage investments held in trust in the best
interest of beneficiaries. Fiduciary liability insurance covers
breaches of fiduciary duty such as misstatements or misleading
statements, errors and omissions.
States where insurers must file rate changes with their regulators,
but don’t have to wait for approval to put them into
Covers losses from specific financial transactions and guarantees
that investors in debt instruments, such as municipal bonds,
receive timely payment of principal and interest if there
is a default. Raises the credit rating of debt to which the
guarantee is attached. Investment bankers who sell asset-backed
securities, securities backed by loan portfolios, use this
insurance to enhance marketability. (See Municipal
Financial Responsibility Law:
A state law which may require motorists to furnish evidence,
either before or after involvement in an auto accident (depending
on the individual state’s law), of ability to pay for
damages up to certain minimum dollar limits. These requirements
commonly are met by carrying auto liability insurance with
specified minimum limits or more.
Finite Risk Reinsurance:
Contract under which the ultimate liability of the reinsurer
is capped and on which anticipated investment income is expressly
acknowledged as an underwriting component. Also known as Financial
Reinsurance because this type of coverage is often bought
to improve the balance sheet effects of statutory accounting
Coverage protecting property against losses caused by a fire
or lightning that is usually included in homeowners or commercial
multiple peril policies.
Coverage for the policyholder’s own property or person.
In no-fault auto insurance it pays for the cost of injuries.
In no-fault states with the broadest coverage, the personal
injury protection (PIP) part of the policy pays for medical
care, lost income, funeral expenses and, where the injured
person is not able to provide services such as child care,
for substitute services. (See No-Fault;
An auto policy covering a number of vehicles owned by a single
A form of insurance that applies to movable property, whatever
its location, within the territorial limits imposed by the
contract. The coverage “floats” with the property.
Coverage against loss resulting from the flood peril, widely
available under a program developed in 1968 by the private
insurance industry and the federal government.
Forced Place Insurance:
Insurance purchased by a bank or creditor on an uninsured
debtor’s behalf so if the property is damaged, funding
is available to repair it.
Foreign Insurance Company:
In a given state, an insurer domiciled in another state.
Fraternal Benefit Society:
An organization that exists to provide social and insurance
benefits to its members. In such a society, members often
share a common religious, ethnic or vocational background,
although some fraternals are open to the general public.
Intentional concealment or misrepresentation with the objective
of forcing an insurer to provide a benefit (such as paying
a claim) which otherwise would not be provided.
Number of times a loss occurs. One of the criteria used in
calculating premium rates.
A procedure in which a primary insurer acts as the insurer
of record by issuing a policy, but then passes the entire
risk to a reinsurer in exchange for a commission. Often, the
fronting insurer is licensed to do business in a state or
country where the risk is located, but the reinsurer is not.
The reinsurer in this scenario is often a captive or an independent
insurance company that cannot sell insurance directly in a
Bookkeeping account of sums set aside periodically by a business
for the purpose of paying for losses as they occur. Usually,
the sums are invested conservatively.