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Insurance Definitions and Insurance Terms
Insurance Terms By Alphabet
Insurance Glossary and Insurance Terms Definitions are below.

Choose the letter of the alphabet that your Insurance question or term falls under. You may browse the
definitions to obtain an understanding of the product you have. These definitions are not limited to just car
Insurance. Thank you for visiting our site.
A reinsurance policy that provides an insurer with Coverage for specific individual risks that are unusual or
so large that they aren’t covered In the Insurance company's reinsurance treaties. This can include policies
for jumbo jets or oil rigs. Reinsurers have no obligation to take on facultative reinsurance, but can assess
each risk individually. By contrast, under treaty reinsurance, the reinsurer agrees to assume a certain
percentage of entire classes of business, such as various kinds of auto, up to preset limits.

FAIR ACCESS TO Insurance REQUIREMENTS PLANS / FAIR PLANS
Insurance pools that sell property Insurance to people who can’t buy it In the voluntary market because of
high risk over which they may have no control. FAIR Plans, which exist In 28 states and the District of
Columbia, insure fire, vandalism, riot, and windstorm losses, and some sell homeowners Insurance which
includes liability. Plans vary by state, but all require property insurers licensed In a state to participate In the
pool and share In the profits and losses.

FARMOWNERS-RANCHOWNERS Insurance
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 FUNDS
Reserve balances that depository institutions lend each other, usually on an overnight basis. In addition,
Federal funds include certain other kinds of borrowings by depository institutions from each other and from
federal agencies.

FEDERAL Insurance ADMINISTRATION / FIA
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.

FIDELITY BOND
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.

FIDUCIARY BOND
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.

FIDUCIARY LIABILITY
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.

FILE-AND-USE STATES
States where insurers must file rate changes with their regulators, but don’t have to wait for approval to put
them into effect.

FINANCIAL GUARANTEE Insurance
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.

FINANCIAL RESPONSIBILITY LAW
A state law requiring that all automobile drivers show proof that they can pay damages up to a minimum
amount if involved In an auto accident. Varies from state to state but can be met by carrying a minimum
amount of auto liability Insurance.

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
principles.

FIRE Insurance
Coverage protecting property against losses caused by a fire or lightning that is usually included In
homeowners or commercial multiple peril policies.

FIRST-PARTY Coverage
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.

FIXED ANNUITY
An annuity that guarantees a specific rate of return. In the case of a deferred annuity, a minimum rate of
interest is guaranteed during the savings phase. During the payment phase, a fixed amount of income, paid
on a regular schedule, is guaranteed.

FLOATER
Attached to a homeowners policy, a floater insures movable property, covering losses wherever they may
occur. Among the items often insured with a floater are expensive jewelry, musical instruments, and furs. It
provides broader Coverage than a regular homeowners policy for these items.

FLOOD Insurance
Coverage for flood damage is available from the federal government under the National Flood Insurance
Program but is sold by licensed Insurance agents. Flood Coverage is excluded under homeowners policies
and many commercial property policies. However, flood damage is covered under the comprehensive portion
of an auto Insurance policy

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
Name given to an Insurance company based In one state by the other states In which it does business.

FRAUD
Intentional lying or concealment by policyholders to obtain payment of an Insurance claim that would
otherwise not be paid, or lying or misrepresentation by the Insurance company managers, employees,
agents, and brokers for financial gain.

FREE-LOOK PERIOD
A period of up to one month during which the purchaser of an annuity can cancel the contract with no
penalty. Rules vary by state.

FREQUENCY
Number of times a loss occurs. One of the criteria used In calculating premium rates.

FRONTING
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 particular country.

FUTURES
Agreement to buy a security for a set price At a certain date. Futures contracts usually involve commodities,
indexes or financial futures.




NOTICE: These glossary definitions provide a brief description of the terms and phrases used within the
Insurance industry. These definitions are not applicable In all states or for all Insurance and financial
products. This is not an Insurance contract. Other terms, conditions and exclusions apply. Please read your
official policy for full details about coverages. These definitions do not alter or modify the terms of any
Insurance contract. If there is any conflict between these definitions and the provisions of the applicable
Insurance policy, the terms of the policy control. Additionally, this informational resource is not intended to
fully set out your rights and obligations or the rights and obligations of the Insurance company, agent or
agency. If you have questions about your Insurance, you should contact your Insurance agent, the
Insurance company, or the language of the Insurance policy.
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