-F-
FG- Finished Goods
FIFO- First in, First out; an accounting methods used to value inventory where sales are considered to be made against the earliest-purchased merchandise or inventory. During times of increasing prices, the FIFO methods tends to overstate profits.
FOB - Free On Board. The term has special significance in Marine Insurance, where it is vital to determine when title passes from the seller to the buyer. If the materials are shipped FOB point of destination, the seller is liable for damage caused during the course of transportation. If the material is shipped FOB point of departure, then the buyer becomes liable for it.
Facultative- Reinsurance of individual risks by offer and acceptance wherein the reinsurer retains the "faculty" to accept or reject each risk offered.
Fair Credit Reporting Act - Public Law 91-508 requires that an applicant be advised if a consumer report may be requested and be told the scope of the possible investigation. Should his request for insurance be declined because of information contained in that report, the applicant must be given the name and address of the reporting agency.
Fidelity Bond - A bond that will reimburse an employer, the insured, for loss due to the dishonest acts of a covered employee.
Fiduciary- A person or organization holding value of another in a position of trust.
Fiduciary Bond - A bond which guarantees the faithful performance of a fiduciary.
Financed Insurance - Payment of insurance premiums, in whole or in part, with funds derived from borrowing, usually from the case value of the policy. Also known as Minimum Deposit Insurance, the Bank Loan Plan, and the Chicago Plan.
Financed Premium - The payment of insurance premiums with funds borrowed outside the contract itself.
Financial Guarantee Bond - A guarantee that others will pay sums of money due. A Sales Tax Bond, for instance guarantees the state that the merchant will pay his sales taxes on time and in full.
Fire - Combustion which is rapid enough to produce a flame or glow. A fire, for purposes of Property Insurance, must be "hostile", which means it is not in a place in which it is intended to be. Fires in their proper contained area are called "friendly fires" and are not covered under most basic Property Insurance policies.
Fire Resistive Construction - A building which has exterior walls, floor, and roof constructed of masonry or other fire-resistive materials.
Fire Wall - A structure (wall) which is designed to seal off fires within a building.
Fireproof - A term used in describing building construction. It refers to buildings which are of such construction as to be practically undamageable by fire. However, the term is a misnomer, since no building is completely undamageable by fire, and it is gradually being replaced by the words "fire resistive."
"First" Named Insured - The first named insured appearing on a commercial policy. The latest forms permit the insurer to satisfy contractual duties by giving notice to the "first" named insured rather than requiring notice to all named insureds.
First Party Insurance - Insurance which applies to coverage for the insured's own property or person.
Fixed Asset- A capital asset, especially a permanent or immovable one, required for use in the operations of a business.
Fixed Cost- Costs that do not vary with the level of output, especially fixed financial costs such as interest, lease payments, and sinking fund payments.
Fixture: Personal property that is attached to land or a building and that is regarded as an irremovable part of the real property, such as a fireplace built into a home. Historically, personal property becomes a fixture when it is physically fastened to or connected with the land or building. If personal property has been attached to the land or building and enhances only the chattel's utility, it is not a fixture. For example, if bricks are purposely stacked to form a wall, a fixture results. But if the bricks are merely stacked for convenience until used for some purpose, they do not form a fixture. Also termed, permanent fixture; immovable fixture.
Flat Cancellation -A policy which is canceled upon its effective date. Usually under a flat cancellation no premium charge is made.
Floater -A form of insurance that applies to moveable property, whatever its location, if it is within the territorial limits imposed by the contract. The coverage "floats" with the property.
Flood - A general and temporary condition of partial or complete inundation of normally dry land areas from (1) overflow of inland or tidal waters, (2) the unusual accumulation and runoff of surface waters from any source, or (3) abnormal, flood-related erosion and undermining of shorelines. Flood also means inundation from mud flows caused by accumulations of water on or under the ground, as long as the mud flow and not a landslide is the proximate cause of loss.
Following Form - A term for a form written exactly under the same terms and coverages as other insurance on the same property.
Force majeure- in the law of insurance, superior or irresistible force. Also common to construction contracts to protect parties in the event that a part of the contract cannot be performed due to causes that are outside the control of the parties and could not be avoided by the exercise of due care. Also referred to as "Act of God" or "Vis major."
Foreign Insurer - An insurer domiciled in a state of the United States other than the one in which the insured's insurance is written.
Forgery - The false and fraudulent making or altering of a written instrument.
Form - An insurance document which, when attached to a policy, makes it complete.
Fortuitous Event- An event subject to chance without the implication of suddenness.
Foundering - This refers to a ship which is sinking.
Frame - A type of construction. A frame building is primarily made with wood frames and joists.
Fraud - Dishonesty.
Free Along Side (FAS) - A Marine shipping agreement which requires the seller to place the goods alongside a named vessel or a designated dock. The seller is responsible for insuring goods up to the time they are alongside.
Frequency and Severity-
Frequency: Number of times an incident occurs
Severity: Monetary impact of a loss
Fronting- The use of an insurer or reinsurer to issue "paper," i.e., an insurance policy, on behalf of a self-insured organization or captive insurer without the intention of bearing any of the risk.
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 2 functional floors.
Funded Reserves- Setting aside sufficient sums of money to meet future liabilities.
Future Value- The value in the future of a payment or payments made in the present.
-G-
GIGO - Garbage in, garbage out
Garage Keepers Legal Liability Insurance - An insurance contract that protects a garage keeper against liability for damage to vehicles in his care, custody, or control caused by specific perils.
Garage Liability Insurance - Insurance to protect garage owners or automobile dealers for liabilities arising out of their business operations.
General Liability Insurance - A form of insurance designed to protect owners and operators of businesses from a wide variety of liability exposures. These exposures could include liability arising out of accidents resulting from the premises or the operations of an insured, products sold by the insured, operations completed by the insured, and contractual liability.
Generally Accepted Accounting Principles (GAAP) - These principles have substantial authoritative support for use in the insurance business. They are intended to produce financial results consistent with those of other industries and to assure consistency in financial reporting. Contrast with Statutory Accounting Principles.
Geographical (or Territorial) Limitation - A contractual provision which specifically names geographical areas outside of which the insurance is not effective.
Good Student Discount- A discount granted to students with high scholastic ratings. There is a proven relationship between good grades and safe driving.
Grace Period - A prescribed period, usually 30 to 31 days from the premium due date, during which an insurance contract is in force and the premium may be paid.
Gross Negligence - Willful and wanton negligence or misconduct.
Gross Premium - The net premium plus operating expenses, commissions and other expenses.
Group Captive - jointly owned by a number of non0related companies or organizations and designed to insure the risks of these different entities
Guaranteed Cost- Premiums charged on a prospective basis, but never on the basis of loss experience during the policy period.
Guarantor - One who guarantees or promises to back up another's actions or debts. It is a term used in surety bonds; usually the surety company is the guarantor.