In automobile insurance, a provision in the policy stating that the insured has the minimum amount of liability insurance coverage required by the state’s financial responsibility law. Each state has some form of financial responsibility law.
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The clause in an auto policy stating that, when the policy is certified as future proof of financial responsibility, the policy will comply with the financial responsibility laws to the extent required.
Insurance Encyclopedia
Financial responsibility clause (Vehicle Insurance)
A clause stipulating that the policy adheres to the laws of the state the vehicle is being operated in.
Financial responsibility law
US: A statutory provision requiring owners of automobiles to provide evidence of their ability to pay damages arising out of the ownership, maintenance, or use of an automobile.
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Financial responsibility law (particularly applicable to Automobile Insurance in various States in USA) is a law which requires an individual to prove that he or she is able to pay for damages resulting from an accident. A financial responsibility law does not specifically require the individual to have insurance coverage; instead, the law requires the individual to be able to demonstrate the financial capacity to pay, even if the individual is not at fault. This type of law is commonly associated with automobiles. Financial responsibility laws exist because not all states have a compulsory insurance law. However, many states consider an individual with an insurance policy to be compliant with a financial responsibility law, since most insurance policies have a minimum coverage that meets the state standard.
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When applied to automobile operations, this term signifies the minimum statutory limits of an operator’s responsibility for bodily injury and property damage caused by negligent operation of the vehicle.
FINANCIAL RESPONSIBILITY LAW
A state law that requires all automobile drivers to show proof that they can pay damages up to a minimum amount if involved in an automobile accident or convicted of a moving violation. The proof of ability to pay can be in the form of liability insurance or a cash bond. Fault is not an issue as all parties to an accident must show financial responsibility. (See SR-22).
Financial responsibility law (Vehicle Insurance)
A state law requiring the policyholder to prove he or she can pay for losses. Depending on the state, this may be required before any accidents or after the first accident. This evidence is usually an insurance policy.
Financial responsible party
Individual who accepts liability for payment of the patient’s bill to the provider of service.
Financial Risk
Possibility that a project may fail for lack of adequate capital. This is a speculative risk, not normally within the scope of risk management unless potential suppliers of capital are reluctant to venture their funds because the project involves excessive pure risk.
Financial Risk Control
Plans and provisions to pay for losses when they occur.
Financial Services and Markets Act 2000 (FISMA or FSMA)
the Act which created a unified regulatory framework in the UK for financial services, including insurance, under which functions and powers are conferred on the Financial Services Authority.
Financial Services and Markets Act Tribunal
Statutory tribunal, within the Court Service, operating as a court of first instance. Persons disciplined by the FSA have the right to go to the Tribunal. The burden of proof attaches to the FSA. Usually there is an oral hearing on the substantive issues. The Tribunal’s decision on fact is final but points of law may be appealed. The Tribunal can award costs against the applicant or the FSA. The Tribunal consists of a legally qualified chairman and two industry members.