Insurance Handbook - Alaska Department of Community and ...

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ing 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. (See No-fault; Third-party coverage) 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. *FLEXIBLE PREMIUM A premium payment method sometimes offered in connection with annuities and with some types of life insurance that allows the contract owner or policy owner to alter the amount and the frequency of payments, within specified boundaries defined by the insurer and the law. 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 Glossary 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. (See Adverse selection) 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. *FRATERNAL BENEFIT SOCIETY See Fraternal insurer. *FRATERNAL INSURER A nonprofit organization that is operated solely for the benefit of its members and that provides its members with social and insurance benefits. Also known as fraternal benefit society. FREE-LOOK PERIOD A period of up to one month during which the purchaser of an annuity can cancel the I.I.I. Insurance Handbook www.iii.org/insurancehandbook 97
Glossary 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. G GAP INSURANCE An automobile insurance option, available in some states, that covers the difference between a car’s actual cash value when it is stolen or wrecked and the amount the consumer owes the leasing or finance company. Mainly used for leased cars. (See Actual cash value) *GENERAL ACCOUNT An undivided investment account in which insurers maintain funds that support contractual obligations for guaranteed insurance products such as whole life insurance or fixed-rate annuities. Contrast with Separate account. 98 I.I.I. Insurance Handbook www.iii.org/insurancehandbook GENERALLY ACCEPTED ACCOUNTING PRINCIPLES/GAAP Generally accepted accounting principles (GAAP) accounting is used in financial statements that publicly held companies prepare for the Securities and Exchange Commission. (See Statutory accounting principles/SAP) GENERIC AUTO PARTS Auto crash parts produced by firms that are not associated with car manufacturers. Insurers consider these parts, when certified, at least as good as those that come from the original equipment manufacturer (OEM). They are often cheaper than the identical part produced by the OEM. (See Crash parts; Aftermarket parts; Competitive replacement parts; Original equipment manufacturer parts/OEM) GLASS INSURANCE Coverage for glass breakage caused by all risks; fire and war are sometimes excluded. Insurance can be bought for windows, structural glass, leaded glass and mirrors. Available with or without a deductible. *GRACE PERIOD (1) For insurance premium payments, a specified length of time following a premium due date within which the renewal premium may be paid without penalty. The length of the grace period is specified in a grace period provision that is found in a life insurance, health insurance, or annuity policy. (2) For purchases made on credit, a period of time between the date of a purchase and the date the lender begins to charge interest during which no interest accrues. *GRADED PREMIUM POLICY A type of modified-premium whole life policy that calls for three or more levels of annual premium payment amounts,
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Page 85 and 86: Glossary 401(K) PLAN An employer-sp
Page 87 and 88: Glossary ADJUSTER An individual emp
Page 89 and 90: Glossary ANNUITY DEATH BENEFITS The
Page 91 and 92: Glossary BALANCE SHEET Provides a s
Page 93 and 94: Glossary larger cushion of capital
Page 95 and 96: Glossary receive full payment on a
Page 97 and 98: Glossary *CONVERTIBLE TERM INSURANC
Page 99 and 100: Glossary savings and loan associati
Page 101 and 102: Glossary EMPLOYMENT PRACTICES LIABI
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Page 107 and 108: Glossary GUARANTY FUND The mechanis
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Page 111 and 112: Glossary INTERNET INSURER An insure
Page 113 and 114: Glossary LIMITS Maximum amount of i
Page 115 and 116: Glossary the states for people whos
Page 117 and 118: N Glossary NAMED PERIL Peril specif
Page 119 and 120: Glossary ORIGINAL EQUIPMENT MANUFAC
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Page 125 and 126: Glossary price. Repurchase agreemen
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Page 131 and 132: Glossary a preexisting condition. (
Page 133 and 134: Glossary VANDALISM The malicious an
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Page 137 and 138: Directories ISO 545 Washington Blvd
Page 139 and 140: Directories PCI - WASHINGTON, DC 44
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Page 143 and 144: Directories COMMODITY FUTURES TRADI
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Page 147 and 148: Directories NATIONAL ASSOCIATION OF
Page 149 and 150: Directories THE COUNCIL OF INSURANC
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Directories INSURANCE COMMITTEE FOR
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Directories INSURANCE SERVICES NETW
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Directories Legal Issues and Servic
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Directories INSURANCE REGULATORY EX
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Directories INSURANCE INSTITUTE FOR
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Directories Title Insurance AMERICA
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Directories INSURANCE ADVISORY BOAR
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Alphabetical Index State specific a
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Alphabetical Index Intermediaries a
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State Organizations State Organizat
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State Organizations Pacific Associa
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State Organizations Florida State A
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State Organizations Illinois State
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State Organizations Kentucky Insura
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State Organizations Association Hea
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State Organizations Montana State A
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State Organizations Monmouth Juncti
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State Organizations Agent Associati
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State Organizations Other Organizat
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State Organizations Texas Coalition
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State Organizations Agent Associati
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Alphabetical Index YEAR EVENT 1601
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Brief Alphabetical History Index YE
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I.I.l. Resources COMMERCIAL INSURAN
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I.I.I. Member Companies Lockton Com
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The I.I.I. Insurance Handbook • C
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