Glossary

Forum shopping is a term used to describe a search by legal counsel for the best venue or jurisdiction for a particular lawsuit.

A forward is an agreement (other than a future) to make or take delivery in the future of one or more underlying interests, or effect a cash settlement, based on the actual or expected price, level, performance, or value of such underlying interests. The expression does not mean or include spot transactions effected within customary settlement periods, when issued purchases, or other similar cash market transactions.

A forward contract is an options contract that permits a seller to fix the price of a commodity to be sold on a future date. The benefit to the seller is that it locks in a buyer and a price. The buyer is betting that the market price of the commodity at the specified future date will be greater than that which they were contracted to pay, thus creating value.

The four-corners test is a legal principle to establish whether an insurer owes a duty of defense to its insured. The insurer owes a duty of defense to its insured if the formal allegations of a claim or suit match the literal provisions of the insurance policy, regardless of any differing or contradictory facts known or knowable to the insurer.

A fractional premium is one that is paid over time—for example, monthly, quarterly, or semiannually during the policy period.

Fracture types pertain to bone fracture claims. When assessing insurance claims for bone fractures, claims adjusters need to specify what type of fracture it is. The following are common categories. Comminuted fractures occur when the bone fragments into a number of pieces. Compound fractures involve extension of one or both bone fragments piercing the skin or damaging internal organs (such as a fractured rib piercing a lung). Compression fractures occur when bone tissue is driven together. This type of fracture often occurs with falls in which individuals use their arms to break the fall, resulting in compression of the wrist or elbow bones. Depressed fractures are frequently seen in skull injuries, in which the bone is pushed into a concave position, often resulting in brain contusions, concussions, or trauma. Fissure fractures are commonly referred to as hairline fractures. The bone is cracked but not completely broken through—also called an incomplete fracture. Greenstick fractures are aptly named since the bone is not broken but, rather, bent and is still in one piece. This type of fracture is often seen in children whose bones are not yet hardened. Pathological fractures are caused by disease, weakness in bone tissue, or for some other nontraumatic reason. These types of fractures may occur without any unusual force, such as the deterioration and collapse of bone tissue due to osteoporosis. When pathological conditions exist, trauma to the bone may lead to more damage than might have been expected if the secondary condition did not exist. Pathological conditions may also slow or delay the healing process.

Frame construction is one of six building construction categories established by Insurance Services Office, Inc. (ISO), in its Commercial Lines Manual (CLM) for purposes of developing rates for insuring commercial property, based on susceptibility to damage by fire. The CLM description of frame construction, followed by the associated ISO construction code, is exterior walls of wood, brick veneer, stone veneer, wood ironclad, or stucco on wood (Construction Code 1). The construction code indicates the ranking of this building construction category within the six categories, with 1 as the least fire-resistive and 6 as the most fire-resistive.

Franchise deductible refers to a minimum amount of loss that must be incurred before insurance coverage applies. A franchise deductible differs from an ordinary deductible in that, once it is met, the entire amount of the loss is paid, subject to the policy limit. A franchise deductible differs from an ordinary deductible in that, once it is met, the entire amount of the loss is paid, subject to the policy limit. Franchise deductibles can be stated either as a dollar amount or as a percentage of the policy limit.

Franchise insurance is insurance for groups too small to qualify for true group coverage. It is also known as wholesale insurance.

A fraternal benefit society is an organization of people who usually share a common ethnic, religious, or vocational affiliation. This type of society may provide insurance to its members. Fraternal insurers are primarily life insurance providers, and many are church-related. Their insureds are typically members of the society or religious body.