F

A|B|C|D|E|F|G|H|I|J|K|L|M|N|O|P|R|S|T|U|V|W

F.A.S.

See Free Along Side.

FACE AMOUNT

The amount shown in dollars of the limit(s) of the company’s liability in the event of a covered loss.

FACE SHEET

A transcript of the information shown on the (see) Daily Report, plus claim and loss history information.

FACSIMILE TRANSMISSION

An electronic, electromechanical system for high-speed transmission and reproduction of exact copies of documents of any kind (letters, contracts, engineering drawings, etc.) over telephone lines, microwave or a combination of both. Sometimes referred to as "electronic mail," or "fax," the procedure, as indicated in early court decisions appears to be legally acceptable.

FACTOR

A number (multiplicand) used to multiply base premiums or rates to arrive at the proper premium for a higher (or lower) exposure than the base or norm. Examples are factors to increase limits from basic limits from basic limits shown in the manual, and the "Territorial Factors" (or "Multipliers") used in rating Plate Glass. A Factor is also used in the Revised Classification and Rating Plans (e.g. "217" Plan). In the latter, it is arrived at by the combination of the "Primary" factor and the "Secondary" factor (which adds, subtracts or is 0.00 and therefore has no effect) resulting in the "Final" factor which is used to multiply each Base Premium for the coverages desired. Not to be confused with (see) Increment. In general business use, "Factor" refers to one who acts for another in certain transactions, such as discounting accounts receivable. (See also Increment, and Surcharge.)

FACULTATIVE (BASIS)

A type of reinsurance agreement under which -each risk is specifically reinsured under a separate agreement. Since each item for reinsurance is treated as a separate proposal, subject to acceptance or rejection by the assuming carrier, the method has been largely replaced by "Treaty Basis." (See Reinsurance and Treaty Basis.)

FAIR PLAN

(Fair Access To Insurance Requirements'). A federally funded reinsurance plan designed to increase the availability of property insurance in areas prone to riot damage. Property insurance (not including automobile, farm or manufacturing risks) for home and business owners is made available in eligible urban areas when such coverage is not available through normal channels.

FAMILY AUTOMOBILE POLICY (FAP) OR PERSONAL AUTOMOBILE POLICY (PAP)

Designation of the broad private passenger automobile policy developed from the National Standard Liability Policy which, for example, did not cover the operation of non-owned automobiles except by endorsement or a separate policy. The new policy not only included such operation automatically (with certain exceptions) but is broader in other respects. In order to qualify for the Family (or Personal) Auto Policy, the risk must meet certain eligibility requirements. Excluded are commercial vehicles (except pickup, panel delivery and jeep-type vehicles not customarily used for commercial purposes other than ranching or farming), public or livery conveyances, motorcycles, three-wheeled vehicles, scooters or others not designated for use on public highways. (See also Basic Automobile Policy.)

FAMILY PROTECTION

See Uninsured Motorist Endorsement.

FEDERAL TORT CLAIMS ACT

An act allowing persons to bring legal action against the federal government for injuries or damages in cases where the government could be held liable were it an individual or other legal entity.

FELONY

A crime regarded under the law as especially vicious, punishable by death or imprisonment. (See also Misdemeanor.)

FIDELITY BOND

A bond guaranteeing an employer the honesty of his employee(s). (See Bond.)

class="quest2">FIDUCIARY

A person or corporation appointed in trust to act for another, particularly with regard to monetary or legal matters. A conservator for an incompetent person or an executor or an administrator of an estate are examples of a "Fiduciary." (See also Power of Attorney and Attorney-in-Fact.)

FIELDMAN

See Special Agency.

FILE AND USE

See Deviation.

FINANCED PREMIUM

An agreement by which a lending institution will advance the full premium to the insurance company and accept prearranged periodic payments from the insured. The payment plan is arranged with a down payment and subsequent payments so that premiums paid are always ahead of the cancellation table, and the lender, by contract, has the right to require cancellation.

FINANCIAL RESPONSIBILITY LAWS

All states except Massachusetts and Puerto Rico (which have compulsory automobile insurance) have some form of automobile financial responsibility laws which require that owners and operators of motor vehicles give some proof that they are able to pay for injuries to others or damage done by reason of the operation of the motor vehicle. These laws generally operate after one or more of the following: 1.) an automobile accident involving bodily injury or property damage over a certain minimum; 2.) a conviction for certain offenses (intoxication, etc.) or a series of convictions whether or not they involve an accident; 3.) failure to pay final judgments arising from an automobile accident. Failure to provide Proof of Financial Responsibility will result in license suspension. Proof is usually required for a period of 3 years but can be as long as 5 years. By far the easiest and best evidence of Financial Responsibility is to have an automobile liability insurance policy with adequate limits in force at the time of the accident, or at the time Proof is required. Most states have reciprocal agreements regarding suspension of license for failure to provide Proof of Financial Responsibility in the event of involvement in an out-of-state accident. Proof of Financial Responsibility is often called Evidence of Financial Responsibility.

FINISHED STOCK

Merchandise of a manufacturer which has been completely processed and is ready for sale (as opposed to "goods in process.")

FIRE

From an insurance standpoint a fire must be: 1.) the result of actual ignition of the property covered as evidenced by a flame, glow or some kind of light (smoke alone is not sufficient), and 2.) accidental as far as the insured is concerned. Friendly Fire: A fire located in and confined to a place where it is supposed to be, such as in a burner, stove, fireplace or furnace. Hostile Fire: A fire which escapes its intended original container, or which originates elsewhere, and does damage to property.

FIRE INSURANCE POLICY

The Standard Fire Insurance Policy reimburses the insured up to the specified amount for all direct loss by fire, lightening, and by removal from premises property endangered by the perils insured against in the policy. This is of course a simple statement of what the fire insurance policy does. There are standard restrictions and limitations. Briefly, these are as follows: The policy will not pay for: 1.) More than the extent of the actual cash value (ACV) of the property at the time of the loss; 2.) more than the amount which it would cost to repair or replace the property with material of like kind and quality within a reasonable length of time after the loss; 3.) any increased cost of repair or construction required by any ordinance or law (e.g. local building code, etc.) regulation construction or repair; 4.) compensation for loss resulting from interruption of business or manufacture; 5.) more than the insurable interest of the insured. The above is only a brief summary of the provisions and limitations of the Standard Fire Policy. The limitations described here may be covered by endorsements or other insurance by payment of an additional premium.

FIRE WALL

See Division Wall.

FIRE-RESISTIVE

Refers to noncombustible materials used in construction of buildings and parts of buildings to prevent the spread of fire and to minimize its effect. Also refers to items other than buildings, e.g. clothing, drapery material, furniture, etc.

FIRST AID EXPENSE

See Immediate Medical/Surgical Payments.

FIRST PARTY CLAIM

See Claim.

FIXTURES

See Furniture and Fixtures.

FLAT CANCELLATION.

See Cancellation.

FLAT RATE

Term used in fire insurance before any credits for coinsurance are applied. Rate used by insured if he does not want to carry insurance to value or near value, and still avoid becoming a coinsurer in the event of a loss. Most all insurance companies are averse to writing flat rate policies. See also Coinsurance.

FLEET POLICY

A risk having five or more self-propelled vehicles of any type is eligible for the Automobile Fleet Plan. A Fleet Reduction Factor (discount) begins with the sixth vehicle, but does not apply to any vehicles rated under the Long Haul Trucking Rule, nor to any vehicles which are not owned by the insured. Most fleets are written on a "Reporting Form" basis, which automatically covers newly purchased or licensed vehicles, and allows credit for unlicensed or sold vehicles. A premium is estimated (the “Advance” or “Deposit” premium) based on the equipment owned and operated by the insured at the inception of the policy, and at the end of the policy term, the policy is “audited” to determine the actual premium earned for the exposure. Credits for suspension (See “Suspension--Automobile”) are allowed except on vehicles for which a certificate of Financial Responsibility has been filed. (See Reporting Policy.)

FLESCH READING EASE TEST

This test, developed in the early 1950’s by Rudolph Flesch, attempts to measure the relative ease with which material can be read (and presumably understood) as compared to other material. The approach is to convert into mathematical formula, by means of average number of syllables per word, average number of words per sentence and with credits given for so-called "personal" words such as "you", 'we," "they," etc. Random samples of 100 word segments are taken from the text to be rated and scored, and the results are entered into the formula. The test “score” is determined from this equation, and ranges in scale from 100 (the simplest--probably “Da-da” and “ma-ma”) down to 0-- the lower the score being the more difficult to understand (an example of which might be Bill Buckley having a conversation with himself). Following are typical score ranges: Comics: 90-100; Time Magazine: 60-70; scholarly works: 30-50; scientific and professional: 0-30, and many in between. Most legislation has required insurance and other consumer contracts to score a 45 or higher grade to be acceptable. The range (30-50) is described by Flesch as “difficult” or (see above) the academic or scholarly level. At this level, according to Flesch, 33% of the adult population of the U.S. who have completed high school and some college are able to understand--one out of three!

FLOATER

A policy designed to cover personal (as opposed to real) property which is moving or can readily be moved, such as jewelry, musical instruments, coin and stamp collections, etc. These are generally written on an all-risk, world-wide basis, except that some are restricted to the United States and Canada. (See also All-Risk and Inland Marine.)

FLOOR PLAN

Dealers in "high ticket" items such as automobiles or expensive appliances frequently borrow money, using as collateral the items "on the floor," i.e. in stock. Insurance taken out by the bank or finance company for its interest alone or together with the dealer on these items is called "Floor Plan" insurance. This type of insurance is written on a "Reporting Form" basis. (See Reporting Policy.)

FOREIGN COMPANY (OR CARRIER OR INSURER)

An insurance company doing business in a given state whose home office is located in another state or country. (See also Domestic, Admitted and Allen company.)

FORGERY

The falsifying of any writing with fraudulent intent. Alteration--Changing the amount or the name of a payee or an endorse ment on a negotable instrument (check, etc.) with intent to defraud--is considered forgery.

FORM

A printed endorsement attached to a policy which restricts, broadens, clarifies or otherwise modifies policy coverage. Term is also used to refer to the basic policy, its type and the "Declarations" made a part thereof.

FORTUITOUS

Happening by chance as opposed to design; accidental; apparently without cause.

FRANCHISE CLAUSE

A marine concept providing that no payment shall be made unless a loss exceeds an agreed amount (the "Franchise"), in which case the company pays the full amount of the loss from the first dollar on. This differs from "Deductible" where only the excess of the agreed amount is paid by the company in the event of a loss. It differs also from the "Disappearing Deductible" in that it makes no payment at all until the "Franchise" is reached, and then the company pays the full amount. (See Deductible and Disappearing Deductible.)

FRAUD

Deception with the purpose of gain at another’s expense. Proof of fraud voids an insurance policy. In order to establish fraud, the following elements must be proven: 1) misrepresentation or concealment of material fact. (See Concealment.) 2) knowledge by the maker that the statement was not true; deliberate concealment or positive statement(s) by the maker when the truth or falsity of such statement(s) is known to him; 3) intention to deceive; 4) actions must result in inducement of the victim, and 5) there must have been reliance in good faith by the victim on the statement(s) made by the maker which resulted in loss (measurable in terms of money), such loss being traceable directly to such reliance.

FREE ALONG SIDE (F.A.S.)

An Ocean Marine term referring to an agreement under which the seller is responsible for goods sold until goods are at ("along side") the transporting vessel.

FREE OF PARTICULAR AVERAGE (F.P.A.)

American Conditions. Under the terms of this Ocean Marine agreement, total destruction of a cargo would be covered no matter the cause, but partial losses would not be covered unless caused by one of the designated perils of the sea. American Conditions usually relate to on-deck cargo. English Conditions: Basically the same as American Conditions, but broader in that the policy will pay partial losses whether caused by designated perils of the sea or losses after such occurrence even if they are in no way directly traceable to whatever peril of the sea might have caused the loss. English Conditions generally have to do with below-deck cargo.

FREE ON BOARD (F.O.B.)

Originally an ocean marine term, now meaning any condition of sale of goods where the seller is responsible until the merchandise is placed "on board" the truck, ship, freight car, aircraft or other conveyance, at which time the burden of risk shifts to the purchaser. Also means that the purchaser is responsible for the cost of transportation from that point. "F.O.B. Destination" holds the seller responsible until the goods are safely at the designated location specified by the purchaser, and the seller pays the cost of transportation to that place.

FRIENDLY FIRE

See Fire.

FULL COVERAGE

Term indicating policy pays in full for all losses caused by perils insured against from the first dollar. Also used to describe a policy which includes all coverages against all hazards possible to insure (even though it may include "deductible" or coinsurance features). An automobile policy, for example, with every available coverage (regardless of any deductible or limit) is referred to as having "Full Coverage," since there is no other coverage which can be written on it. Despite the use of this term, there is no such animal as a "Full Coverage" policy. Some are broader in scope than others (see "Comprehensive" and "All-Risk"), but there is no insurance policy written which can be made to cover all possibilities of all losses, having no restrictions or conditions whatsoever.

FULL REPORTING CLAUSE

A condition in most reporting form policies whereby the insured is penalized in the event of a loss if it is determined that the insured has reported lower values than actually existed. (See Reporting Policy.)

FUR FLOATER

An inland marine form covering all-risks worldwide for scheduled personal furs, including garments trimmed with fur (representing their principal value). Other common "floaters" cover such things as jewelry, cameras, musical instruments, silverware and the like. (See also All Risk, Floater and Inland Marine.)

FURNITURE AND FIXTURES

From an insurance standpoint, the contents of a building except machinery, goods in the process of manufacture, goods held as a bailee or merchandise for sale or held for sale. "Fixtures" refer to personal property of a tenant which can be removed without damage to the building.

FURRIERS’ BLOCK POLICY

This insurance is designed to cover wholesale and retail dealers whose stock consists of furs and garments trimmed with fur. It does not cover those who deal exclusively in raw or dressed skins or those who manufacture for the wholesale or retail trade. Department stores with fur departments are eligible for this coverage, however. Exclusions are property of others accepted for storage, or property rented or leased or sold on the installment plan; after delivery, or generally in transit until they arrive at the insured’s premises, nor mysterious disappearance, unexplained loss or inventory shortage. Many of the above exclusions may be removed by endorsement for additional premium.

FURRIERS’ CUSTOMERS POLICY

This insurance offers all-risk protection for the furrier who (as bailee) accepts furs and garments trimmed with fur for storage, alteration, repairing, cleaning or remodeling, including pickup and delivery, against loss or damage to customer’s goods caused by negligence of the furrier or his employees. It does not cover furs or fur items which are the property of the furrier. (See "Furriers’ Block Policy.")