Glossary Index

Glossary on General Insurance Terms starting with F


F.A.S. (FREE ALONGSIDE SHIP) : Term within the sale contract under which the seller is responsible for placing the goods on the quay along the vessel until when the cargo is seller's responsibility; transport cost to this point is incurred by the vendor; all further costs and risks are transfered to the buyer beyond this point

F.C.&S CLAUSE : Clause within the marine insurance policy where the insurance company excludes coverage of any loss due to seizure or capture or arrest, restraint, or detriment and consequences thereof or any attempt (except piracy) and from all consequences of hostilities or war-like operations whether prior to or after declaration of the war

F.C.A. ((FREE CARRIER) : Contract sale terminology where the sellers are responsible for delivering the goods to a carrier named by the buyers at locations specified by them; risks until this location remains with the sellers after which it is transferred to the buyers

F.I.R. : First Information Report loged with the police authorities in case of theft, explosion, or fire at the insured premises or road mishaps involving third parties; one of the claim documents required at the time of lodging third party liabilities under the policies

F.O.B. : Related to imports and exports contractual sale agreement; the seller has the responsibility of placing the goods on board the vessel and procuring the bill of lading; all risks prior to this placement is with the vendor; buyer must procure marine insurance for cargo during the journey till it reaches the final destination; in normal practice F.O.B buyers avail insurance on the cargo from warehouse to warehouse

F.O.B. INSURANCE : Insurance coverage procured by the seller to protect his or her interest on goods from the time these are dispatched from his or her location and continues until these are loaded on board the vessel and bill of lading is procured

FACTUAL EXPECTATION : Strong and fair expectation of any occurrence resulting in someone procuring an insurance interest in a property in due course of time; in marine insurance an individual can insure cargo where s/he has no insurable interest while proposing for the policy but has factual expectation of acquiring such interest at some later date

FACULTATIVE OBLIGATORY OPEN COVER : Similar to facultative obligatory treaty with one difference; there is no line limitation in this

FACULTATIVE OBLIGATORY TREATY : Agreement under which the ceding party can cede (but no binding) in case of pure facultative placements but the reinsured must accept under the agreement certain share of the specified underwritten risk by the ceding company; treaty has characteristics of facultative cessions as well as obligatory treaties; normally available after surplus treaties and provide automatic reinsurance covers to ceding company after the exhaustion of the surplus capacity

FACULTATIVE REINSURANCE : Oldest reinsurance method; every risk is separately considered and reinsured; necessary for the insurance company to supply the reinsurer all the material details about the risks to ensure the latter is able to make an appropriate decision to accept reinsurance and the rate thereof

FAILED WELL INSURANCE : Cover providing compensation to the insured in case dug well fails to provide the specific amount of water; compensation is also paid in case the side walls collapse during the digging process; insurance is available for open wells and bore wells (only new ones)

FAILURE OF BRAKES : Consequential damages available under insurance plan in case brakes of an insured vehicle fail to perform the necessary function resulting in a raod mishap

FAILURE OF CONSIDERATION : Occurs in the event the risk for which insurer has accepted premium fails to attach; full premium paid is refunded except in case of any fraud

FAIR MARKET VALUE : The price at which any service or asset passes from willing seller to willing buyer; where both parties are assumed rational with reasonable knowledge of all the relevant facts

FAIR VALUE EXCHANGE ACCOUNT : New account as per the IRDA regulations; listed equities, derivatives, and securities are to be assessed for fair value on date of the Balance Sheet; fair value is lowest of the quotations towards the securities or instruments on the exchanges; insurer must compare fair value with book costs and impairment in the value must be transferred to Fair Value Exchange Account; unrealized losses or gains due to changes in fair value must be taken to the Fair Value Exchange Account and when these are realized the same must be transferred to the Profit and Loss Account

FALL OR DISPLACEMENT OF BUILDING CLAUSE : Provision within the standard fire and special perils policy stating all covers under the plan will be discontinued on the expiry of 7 days of displacement or fall of insured building or part thereof or of the whole or any part of the insured buildings or of any structure that forms part of the insured building; also referred to as "fallen building clause"

FAMILY COVERAGE : Property and/or personal insurance where any addition to the insured, her or his dependants is covered as insured people

FARMERS PACKAGE COVER : Comprehensive package insurance benefiting the farmers for covering individual, her/his family members, property (house, animals, animal driven carts, agricultural tractors, etc.) against all kinds of losses or damages and accidental injuries or demise

FATAL ACCIDENTS ACT, 1855 : An Act providing in case of demise of an individual due to wrongful act, negligence, or default, an action for damages can be maintained by legal heirs of the deceased person against the party causing the injury; the act abolished the rule of common laws as per the civil action for damages died with the individual to whom or by whom tort was committed

FATHOM : Measurement used for assessing the sea depth based on one fathom being equal to 1.8288 meters

FIELD STAFF : Company personnel whose work is primarily done outdoors and comprises procuring or soliciting insurance business either directly or through agents; remuneration is through monthly salary and allowances but are also paid profit and growth incentives for business procured by them; they enjoy additional benefits and perks; exist only in 4 national insurance companies and governed by special scheme known as Development Officers Scheme

FILE AND USE PROCEDURE : Formally submitting insurance product along with complete details of rates and covers, terms and conditions that apply to the Regulator prior to marketing the product; in case of no response within the specified time period; plan is deemed as approved

FINANCIAL REINSURANCE : Substitute to conventional reinsurance where funds are used as a method for spreading losses or profits over a period of years after discounting handling costs, commissions, fees, and other related expenses; complementary arrangement for traditional reinsurance where the full capacity is unavailable

FINANCIAL RISKS : Risks associated solely with finance received or extended; in various forms by an enterprise or individual resulting in the beneficiary of finance not carrying out or unable to carry out the financial obligation/s under the agreement; certain types of financial risks are covered under insurance policies

FINANCIAL UNDERWRITING : Method to evaluate results of reinsurance treaty whereby factors like loss or gain due to foreign exchange or premium earned are considered

FINISHED GOODS : Goods or products that are completely manufactured, built, assembled and ready for selling

FIRE : Combustion accompanied by glow or flame escaping the normal confines to cause damages

FIRE & THEFT RISKS : Related to motor insurance it refers to restricted coverage provided to a vehicle in the garage and not in use; All India Motor Tariff provides policies can be issued for covering risks of Fire including riot, earthquake, strike, flood, and other perils; theft while the vehicle is in the garage and not in use at specialized decreased premium rates

FIRE AND ALLIED PERILS : Term that conventionally is used for denoting additional perils with fire; lighting, storm, cyclone, tempest, flood, hurricane, innudation, tornado, typhoon, aircraft damage, impact damage, earthquake, implosion or explosion, bush fire, riot, terrorism, strike, malicious, missile testing operations, subsidence and landslide (includes rock slides), and leakage from automatic sprinkler installations

FIRE BRIGADE : Group of special professionals trained in extinguishing fires

FAULT TREE ANALYSIS : Diagramatic representation of cause and effect when specific actions are continued or taken; such analytical method is being used to understand engineering prevention and cause

FAULTY DESIGN : Terminology related to builders risk insurance; relevant clause when attached to the policy offers cover for damage or loss to insured property due to faulty design of any part/s but not exceeding coverage for repair, modifcation, replacement, or renewal of such part/s; nor expenses or costs incurred for alteration or betterment of design

FAVOURED REINSURANCE TERMS : Reinsurers at times insist reinsurance treaty terms to be standard for all reinsurers of a treaty in non-reciprocal trading; there must be no discrimination or concessions to few; reinsurers accept share subject to favored reinsurer's terms

FEA DISCOUNT : Discount available for the installation of Fire Extinguishing Appliances within the insured premises; ranges from 2.5% to 10% of the premium amount and depend on the installations

FEASIBILITY STUDY : Studies undertaken to determine workability of proposed project due to various factors related to economical, political, physical, and environmental aspects; normally conducted by experts in the specific field

FGU LOSSES : "From Ground Up" losses used in relation to excess of loss reinsurance that refers to incurred losses of protected portfolio of an extra-large coverage that also is the ultimate net loss within this cover

FIDELITY EXCLUSION : Provision for burglary and money insurance plans that exclude losses resulting from infidelity of the insured's employees; provision within professional and liability indemnity policies excluding coverage for the dishonest acts of insured

FIDELITY GUARANTEE POLICY : Insurance plan that reimburses employers from losses resulting due to dishonest or fraudulent acts committed by the employees

FIDUCIARY : Individual holding something in trust on behalf of another person

FIDUCIARY RELATIONSHIP : Relationship resulting when an individual holds something in trust for another individual

FIRE ENGINE : Motor truck equipped with pipes and water tank to spray chemicals and water on fires for extinguishing these; when the fire engines are maintained by insured discount is provided on the fire premium rate to recognize said feature as risk improvement

FIRE EXTINGUISHER : Instrument using non-combustible substances such as carbon dioxide for putting off fires through deprivation of oxygen

FIRE HAZARDS : Chemical or physical properties of any matter in whatever state that makes it susceptible to fires in different degrees

FACULTATIVE REINSURANCE : Kind of reinsurance whereby reinsurer can reject or accept any risk presented by insurance companies seeking reinsurance

F.O.R. FREE ON RAIL : Similar to free on board except it being primarily related to internal trade transactions

FIRST PARTY CLAIM : Claims made by the policy holder to her/his own insurance service provider; contractual claims arising through the insurance contract betweent the insured and the insurer

FACE AMOUNT : Amount stated on the face of the insurance policy payable in the event of death or on maturity; does not include any additional amounts payable under accidental demise or special provisions or acquired through application of policy dividends

FACILITY : Pooling mechanism for insured unable to procure insurance in the voluntary market; insurers write and issue policies but cede the premium and losses on these to central pool shared by all insurers

FACILITY OF PAYMENT : Contractual provision allowing insurance company under certain conditions to pay insurance benefits up to a certain amount to an individual/s other than the insured who is designated beneficiary or insured estate

FACTORY MUTUAL : Mutual insurance company that insures only those properties that meet higher underwriting standards; emphasize loss prevention

FAIR PLAN : Facility operating under government-insurance cooperative program to make fire insurance and other kinds of covers easily available for indivudals and businesses that cannot avail or afford such coverage

FAIR PREMIUM : Premium level that is adequate for funding an insurance company's expected costs and provides owners fair return on the invested capital amount

FAIR RENTAL VALUE : Amount payable to insured homeowners for loss in rental income resulting from damage making the property inhabitable

FAMILY EXPENSE POLICY : Policy whereby policyholder and her/his immediate dependants often children and spouse are insured

FAMILY INCOME POLICY : Special kind of life insurance policy that combines decreasing term and whole life insurance and pays monthly income of a certain amount for every Rs 1000 covered in the event of the insured's death; monthly income is paid until the end of the period when the face amount of the insurance policy is paid

FAMILY POLICY : Life insurance policy offering cover to all or several members of the family under one contract; generally whole life insurance on principal earner and minor amounts of term insurance on the other spouse and kids includes those born after the issuance of the policy

FAMILY PURPOSE DOCTRINE : Concept imputing negligence committed by immediate members of the family while driving family car to the car's owner

FARM MUTUAL : Local mutual insurer that provides insurance cover for farm properties within a limited geographical area often through assessable plans

FARMOWNERS-RANCHOWNERS POLICY : Package cover for ranch or farm providing the property and liability covers against business and personal losses

FEDERAL CRIME INSURANCE : Protection against larceny, robbery, burglary offered by the federal government where the Federal Insurance Administration determines the existence of insurance availability

FEDERAL CROP INSURANCE : Comprehensive cover available at subsidized rate by government for crop losses that cannot be avoided; including the losses resulting from wind, hail, freezes, draughts, snow, plant disease, earthquake, and floods

FEDERAL FLOOD INSURANCE : Insurance sold by private service providers at reduced rates by federal government for people residing in flood zones and community joins programs and agrees for the establishment and enforcement of flood control and land use measures

FEDERAL SURETY BOND : Kind of surety bond required by federal agencies regulating action of businesses; guarantees that the bonded party complies with federal standards; pays all taxes or accured duties, pays any penalty if bondholder fails to make the payment

FEDERAL-SERVANT DOCTRINE : Common law defense to block injured employee from collecting workers compensation benefits if s/he has been injured due to negligence of fellow worker/s

FIDELITY BOND : Form of protection that reimburses employer for losses caused due to dishonest or fraudulent acts of the employees

FAS : Inco-term meaning free alongside ship

FAC : Inco-term implying free carrier

FOB : Inco-term that means free on board

FPA : Free of particular average

FIRE INSURANCE : Insurance contract indemnifying insured for losses caused due to destruction of insured property due to fire; field of insurance providing cover to insured's property for several perils that includes fire

FIRST NAMED INSURED : First named insured on the commercial plans; latest forms allow the insurer to satisfy contractual duties by providing notice to the first named insured instead of requiring notice to all insured names

FLAT CANCELLATION : Cancellation of policy coverage as of the date of its commencement with no premium charged

FLOATER POLICY : Policy under terms of which protection follows moveable properties, covering wherever it may be

FRANCHISE : Provision within freight insurance conditions exempting insurer from particular average losses in one accident less than 3%; provision is waived if loss is due to fire or stranding of ship, collision, or sinking

FREIGHT : Goods moved on behalf of another; remuneration earned by vessel owner or manager for carrying the goods that includes profits derived from carrying own cargo