Auto Insurance Glossary – F Definitions

Fellow Employee Coverage

An endorsement available for a business auto insurance policy which provides personal liability protection for an employee who causes injury to a fellow employee. The endorsement can take the form of named employees or provide blanket coverage to all employees of the employer by removing the fellow employee exclusion which is a standard provision in business auto policies.

Financial Responsibility Clause

A provision in an auto insurance policy which certifies that the policy conforms to the financial responsibility laws of the state in respect of which the policy is issued.

Financial Responsibility Law

Financial responsibility laws are specific to each state. They require the owner of a vehicle to be able to produce evidence of an ability to meet losses which may result from driving in that state. Some states require the evidence to be produced prior to operating a vehicle, while others require it to be produced after the first accident. Evidence of an ability to meet losses generally takes the form of a personal auto insurance policy which contains limits which meet the minimum coverage levels specified for the state.

Fine Print

In regard to insurance, a colloquial term used to describe provisions in a policy which protect or favor the insurer, such as exclusions, conditions and limits on coverage. In a majority of states, laws specify minimum font sizes which may be used in insurance policy documents, and they also provide that exclusions may not be detailed in a font size which is smaller than that used to describe the benefits under the policy.

First-Party Insurance

Insurance coverage which applies to an insured’s own property or person only. For example, if you file an auto insurance claim following an accident involving another driver, then you are the first party in the claim, your insurer is the second party and the other driver is the third party. Your first-party insurance provides coverage for damage to your own car and injuries to yourself, while your third-party insurance provides you with coverage for any damage which you caused to the other driver’s car and any injuries which you caused to the other driver. If the other driver makes a claim on his policy, then (from his perspective) he is the first party, his insurance company is the second party and you are the third party in his claim.

Fleet Policy

An auto insurance policy (commonly a business policy) which provides coverage to a number of vehicles registered to the same owner. Insurers usually require a minimum of five vehicles before they will issue a fleet policy.

Flesch Test

A measure of the degree of difficulty of comprehension when reading a document or tract of contemporary English. The Flesch Reading Ease Test is used in state laws to specify minimum levels of readability of personal auto and other types of consumer insurance policies. The test is represented by a formula in which the variables are the total number of words, sentences and syllables in the document tested, and it calculates a total readability score.

Force Majeure

A common clause in contracts, including insurance policies, which releases one or more parties from obligations specified in a contract if an extraordinary and unexpected event occurs which is beyond the control of the parties. Examples of such events include war, riot, civil commotion and strikes, and natural events such as earthquakes and volcanic eruptions.

Foreign Insurer

From the perspective of any US state, an insurer which writes insurance business in that state but which is domiciled in another state.

Form

With respect to insurance, a document which comprises part or all of an insurance policy, such as an application, a rider, an endorsement or the entire contract of insurance.

Four Corners Test

A legal test which seeks to determine an insurer’s duty to defend an insured against a lawsuit against the insured. The Four Corners Test was initiated in the case of Ledford v. Gutoski, 319 Or 397 (1994), which found that an insurer has a duty to defend an insured against a lawsuit if the statement of claim against the insured could, on its face, result in the insured being found liable for an act committed by the insured which is covered under the provisions of the policy.

Fractional Premium

An evenly divisible part of an annual premium, such as monthly, quarterly or semiannually, offered by an insurer as an option for the frequency of payment of premiums under a policy.

Full Coverage

Any insurance policy which provides for payment of claims by an insured in full, without deduction of any amount such as a deductible or co-payment.