Glossary-F

Facultative Reinsurance: Reinsurance for individual, high-risk policies that reinsurers assess and accept on a case-by-case basis.

FAIR Plans: State-mandated insurance pools offering basic property insurance to high-risk individuals who can’t get coverage in the standard market.

Farmowners-Ranchowners Insurance: A bundled policy that insures homes, contents, and farm structures against listed perils.

Federal Funds: Short-term loans between depository institutions, often used to meet reserve requirements.

Federal Insurance Administration (FIA): The federal agency that manages the National Flood Insurance Program (NFIP).

Federal Reserve Board: A seven-member board overseeing U.S. monetary policy and banking regulation.

Fidelity Bond: Insurance protecting a business from employee dishonesty or fraudulent acts.

Fiduciary Bond: A surety bond guaranteeing that a fiduciary, such as an executor, fulfills their legal obligations.

Fiduciary Liability: Insurance for fiduciaries against breaches of duty, such as mismanagement of pension or benefit plans.

File-and-Use States: States where insurers can implement rate changes immediately after filing with regulators.

Financial Guarantee Insurance: Insurance that ensures payment of principal and interest on debt instruments in case of issuer default.

Financial Responsibility Law: Law requiring drivers to prove they can pay for damages from auto accidents, often via insurance.

Finite Risk Reinsurance: A capped reinsurance contract that factors investment income into underwriting results.

Fire Insurance: Coverage that pays for property damage caused by fire or lightning, often part of broader policies.

First-Party Coverage: Insurance that pays for the policyholder’s own losses or injuries, as opposed to liability to others.

Fixed Annuity: An annuity that guarantees a steady, specific return or payout over time.

Floater: An add-on to a homeowners policy that insures valuable movable items like jewelry or instruments, regardless of location.

Flood Insurance: Government-backed coverage for flood damage, sold through private agents but not included in standard homeowners policies.

Forced Place Insurance: Insurance placed by lenders on mortgaged property when the borrower’s own coverage lapses.

Foreign Insurance Company: An insurer licensed in one state but operating in another state, where it’s considered “foreign.”

Fraud: Intentional deception for financial gain, whether by policyholders making false claims or insurers acting dishonestly.

Free-Look Period: A set timeframe (often up to 30 days) to cancel an annuity or life policy without penalty.

Frequency: The number of times a particular type of loss occurs within a given time period.

Fronting: An arrangement where an insurer issues a policy but transfers the risk entirely to a reinsurer.

Futures: Financial contracts to buy or sell an asset at a predetermined price on a future date.

DISCLAIMER: The definitions provided in this glossary are intended to offer a general understanding of common insurance terms used within the industry. They may not apply in all states or to every insurance or financial product. This resource is for informational purposes only and does not constitute an insurance contract. Coverage terms, conditions, and exclusions vary—please consult your actual Parkway Insurance Group policy documents for complete details. In the event of any discrepancies between these definitions and your official policy, the policy provisions will take precedence. This content does not replace or fully explain the rights and obligations of policyholders, insurance agents, or insurance carriers. For questions about your specific coverage, please contact Parkway Insurance Group directly or refer to your policy language.
Glossary information has been adapted from trusted industry sources, including III.org (the Insurance Information Institute).