Failure to perform

See Efficacy risk.

Fidelity guarantee insurance

An insurance policy that provides financial compensation in the event of measurable financial loss arising from the dishonesty of named persons or defined groups.

Financial loss insurance

An extension of cover to a public or products liability insurance that provides indemnity for certain pure financial losses rather than the usual cover limitation of losses directly flowing from injury or damage.

Financial Services Authority (FSA)

The organisation that has succeeded the Securities and Investments Board and other organisations to become the single body to regulate the conduct of the UK financial services sector including banking, securities, insurance and investments.

Fire

Actual ignition of something that should not be on fire. In an insurance policy the peril of fire must be of fortuitous origin.

Fire and theft cover

Also known as laid-up cover. A restricted form of motor insurance cover provided when a vehicle is laid up and out of use for a period of at least one month. The vehicle must be off a public road and the certificate of motor insurance returned to the insurer.

Fire detection equipment

Devices designed to warn of the outbreak of fire or presence of smoke.

Fire doors and shutters

Closing devices in fire break walls, the effectiveness of which is measured in terms of the number of hours resistance that they provide before a serious fire will penetrate them.

Fire load

The total risk presented by all the combustible elements of a risk, including the building itself, machinery, plant and stock.

Fire mark

An identification plaque, issued by an insurer in the very early days of fire insurance, that had to be affixed prominently to the insured building. This was so that in the event of a fire the insurer's fire brigade would know that the risk was insured with them and would attempt to extinguish the fire.

Fire prevention

Measures taken to prevent the outbreak of a fire.

Fire protection

Measures taken to minimise damage to property from fire.

Fire Protection Association (FPA)

See Loss Prevention Council.

Fire resistance

(a) A general term used to describe building construction standards that are defined with reference to likely loss and fire spread limitation.

(b) A measure (usually expressed in hours) of the extent to which a door or other communicating device between areas of a building will withstand a fire.

Fire separation

Within a building this refers to an unbroken fire wall of at least three hour capacity, from the floor and through the roof by at least 50 cm.

First loss

A term used in property insurance, where the sum insured is accepted as less than the full value of the property but the insurer agrees to pay all claims up to the sum insured, without imposing average.

Fixed costs (overheads)

Those items of expenditure that do not vary in direct proportion to changes in turnover.

Flashpoint

The temperature at which flammable vapour is produced by a liquid. An external ignition source is required for actual ignition, and removal of the ignition source causes the fire to cease. See Ignition temperature.

Fleet policy

A single policy that covers a number of hulls or motor vehicles in one ownership; rating is often closely linked to the claims experience of the policy.

Floating policy

(a) A policy where the sum insured covers different situations or persons with no division of the sum insured among them.

(b) A cargo policy expressed in general terms, with a sum insured intended to cover several shipments; this is now generally replaced by an open cover.

Flood

An additional peril that may be added to a fire insurance policy covering damage caused by the escape of water from normal confines or inundation from the sea. It is not granted in isolation but as an extension of storm and tempest cover because of the obvious difficulty of separating the effects of these perils. Cover is always subject to an excess.

Force majeure

Irresistible compulsion or coercion.

Forcible and violent entry

See Theft insurance.

Foreign use

In motor insurance, the use of a vehicle outside the home state. EU directives require minimum levels of cover for vehicles while in the EU but outside these territorial limits practice varies. There is usually an additional premium payable if full policy cover is required for such use, though some insurers grant free cover. See Green card, Motor Insurers' Bureau.

Foundations clause

A clause used in fire insurance when a sum insured has been reduced because cover is restricted to apply only to the structure of a building above ground, not its foundations.

Franchise

An amount, percentage or time period that if exceeded will result in a valid claim being paid in full but that if not reached will result in no claim payment being made at all. A time franchise is commonly found in sickness policies.

Free alongside (FAS)

A contract term for the sale of goods whereby the seller carries the goods to the loading port at his own expense but once alongside the ship the seller's responsibility ends.

Free from particular average

A term in marine insurance — approximating now to Institute Cargo Clauses (C) — that describes an insurance that does not cover most types of partial loss.

Free On Board (FOB)

A contract term for the sale of goods whereby the seller is responsible for the goods until they are loaded on the vessel after which the seller's responsibility ends.

Freight

The sum paid for transporting goods or the hire of a ship.

Fundamental risks

Risks that affect society as a whole or a large part of it, such as war and famine, and are generally uninsurable. See Particular risks.

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