Glossary F - I

First Party

The policy holder (insured) in an insurance contract.

Flat Cancellation

Cancellation that takes place on the policy effective date. No premium charge is made; however, other charges such as service may apply.

Fraud

An intentionally deceptive act committed to obtain an unfair or unlawful advantage. Fraud usually involves monetary gain.

Frequency

The number of times a loss occurs.

Hazard

A circumstance that increases the likelihood or potential severity of a loss.

Indemnity

In a property and casualty contract, the objective is to restore and insured to the same financial position after the loss that the insured had prior to the loss. In the most basic sense, indemnity is compensation for a loss.

Independent Adjuster

A person or organization that provides claim adjusting services to different insurers on a contract basis.

Insurable Interest

Any interest (most commonly ownership) that a person, company, or corporation has in a subject of insurance such as a business, building, or auto which can be damaged and may cause the person, company, or corporation financial loss or other tangible deprivation. Generally, an insurable interest must be demonstrated when a policy is issued and must exist at the time of loss.

Insurance

A method of shifting risk from a person, business, or organization to an insurance company in exchange for the payment of premium. The insurance company commits to be responsible for covered losses.

Insured

The policyholder(s) entitled to coverage under an insurance policy.

Insurer

The insurance company who issues insurance and agrees to pay for losses and provide covered benefits.

Insuring Agreement

The portion of an insurance contract that describes what is covered. The insuring agreement usually states the perils insured against, the person(s) and/or property covered, the property locations, and the period of the contract.

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