Agent s Manual Edition 07-17

Transcription

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2 Office Directory Address Halifax Mutual Insurance Company PO Box SW Railroad Street Enfield, North Carolina Phone Numbers Website Quote Website Telephone Number: Fax Number: Office Staff President / CEO Lori Clay Lori.Clay@halifaxmutualins.com Ext. 159 Marketing Manager Jim Horne Jim.Horne@halifaxmutualins.com Ext. 138 Claims Manager Mary Ann Taylor MaryAnn.Taylor@halifaxmutualins.com Ext. 158 Systems Manager Sherri Bryant Sherri.Bryant@ halifaxmutualins.com Ext. 167 Underwriting Supervisor Brenda Drummond Brenda.Drummond@ halifaxmutualins.com Ext. 165 Underwriting Clerk Dair Shearin Dair.Shearin@ halifaxmutualins.com Ext. 122 Accounting Supervisor Vicky Moore Vicky.Moore@ halifaxmutualins.com Ext. 161 Account Payable and Receivable Kelsey Clay Kelsey.Clay@ halifaxmutualins.com Ext. 160 Agents Licensing Sherri Bryant Sherri.Bryant@ halifaxmutualins.com Ext. 167 Receptionist Nancy Wells Nancy.Wells@halifaxmutualins.com Ext. 120

3 Farmowner 1 Introduction 1 General Instructions and Agent s Responsibility 2 Binding Authority 3 New Business Submissions 3 Risk Ineligible for Coverage 4 Credit Based Scores, Fees and Mail Procedures 5 Endorsements, Renewals, Cancellations, Reinstatements and Claims 6 Dwellings and Other Structures 6 Mobile and Manufactured Homes 7 Rule 1 Eligibility Requirements 8 Rule 2 Program Description 8 Policy Forms (FO2, FO3, FO4) 8 Principal Coverage (FO2, FO3, FO4) 8 Loss Settlement Provisions (FO2, FO3, FO4) 9 Perils Insured Against (FO2, FO3, FO4) 9 Home Systems Protection and Identity Theft 10 Policy Form and Principal Coverage (FO6) 10 Loss Settlement Provisions (FO6) 11 Perils Insured Against (FO6) 11 Equipment Breakdown 11 Personal Liability Coverage - Farm 12 Basic Limits Dwelling Coverage - Property 12 Policy Limits 13 Rule 3 - Policy Writing Instructions/Format

4 Farmowner 14 Additional Interests 14 Property Interests 14 Farm Personal Liability Interests 15 Leased Equipment 15 Restriction of Coverage 15 Cancellation or Reduction in Limits or Coverage 16 Specially Rated Risk 16 Roof Exclusion and Roof Actual Cash Value 16 Ownership of Dogs 17 Rule 4 - Premium Determination 19 Rule 5 - Deductibles 21 Rule 6 - Premium Modifications 21 Protective Devices 21 Fire Protection Other than Dwellings 22 Actual Cash Value Coverage Form FO2 only 22 Limited Perils Form FO6 22 Deletion of Farm Personal Liability Coverage 23 Vacancy Permit 24 Rule 7 Optional Property Coverage - Dwelling 24 Water Damage Sewers, Drains, and Sumps 24 Dwelling Under Construction - Theft 24 Private Structures Increased Limits for Specific Structures 25 Replacement Value Personal Property

5 Farmowner 26 Scheduled Personal Property 27 Scheduled Personal Property - Guns 28 Watercraft Physical Damage 30 Computers 30 Limitations of Certain Property 31 Business Property Business Occupancy on the Premise 31 Replacement Value Well Pump 32 Incidental Coverage Increased Limits Dwelling Coverage 33 Rule 8 Optional Property Coverage - Farm 35 Weight of Ice, Snow or Sleet 35 Vandalism and Other Perils 35 Fire Protection Credits 36 Poultry and Hog Confinement Houses 37 Loss of Income (Poultry and Hog) 39 Farm Machinery Coverage Open Perils 40 Rented or Borrowed Equipment 40 Property in Transit 40 Additional Perils - Livestock 41 Incidental Coverage Increased Limits Farm Coverage 42 Rule 9 Liability Coverage Options 42 Additional Residences Rented to Others 42 Additional Farm Premises Rented to Others 42 Structures Rented to Others 43 Business Activities Business Not Owned by Insured

6 Farmowner 43 Clerical Office Employees 43 Salespersons, Collectors, or Messengers 44 Teachers 44 Office, Professional, Private School, or Studio Occupancy 45 Watercraft 46 Employer s Liability Farm Employees 46 Custom Farming 47 Farm Chemical Limited Liability 48 Rule 10 Additional and Secondary Locations 48 Nonowner - Occupied 48 Non-Farm Locations 49 Rule 11 Individual Risk Premium Modifications 50 Construction Definitions 51 Territorial Definitions 54 Farmowners Premium Group Determinaton 55 Premium Tables Farm Dwellings and Contents

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8 Farmowner 1 Introduction Halifax Mutual Insurance Company offers most types of personal lines and farm related insurance protection through agents appointed by the company. Applications of insurance is to be written only on properties of quality construction, well maintained with good housekeeping, and not exposed to serious hazards of vice and crime. Solicitation of business should be directed toward select customers who are characterized by personal and employment stability who have a concern for the conservation of life and property and who have a responsible attitude toward the use of alcohol and drugs. They should have a high regard for law enforcement as evidenced by freedom from violations of law and arrests and should have favorable moral and financial reputations. This Property and Liability Manual is designed to be brief, simple, and easy to use. Each section of this manual contains rules, rates, etc., for the most frequently written risks. It is our intent to write good risks be it Fire and Extended Coverage, Homeowner, Farmowner, Farm Property or Farm Personal Liability. We will not consider substandard risks. General Instructions The Farmowner section contains the rules, classifications, rates and premiums governing the writing of policies hereinafter referred to as farmowner policies using the forms and endorsements specified herein. The rules, forms and endorsements filed by AAIS on behalf of the Company for each coverage shall govern in all cases not specifically provided for herein. The pages of this manual contain premiums and any exceptions and supplements to the general rules. Refer to the Company for coverages, rating, etc. not included. The Farmowner policy is to be written on properties of quality construction, well maintained with good housekeeping, and not exposed to serious hazards of vice and crime. We require each farmowner submission to include, a clear photograph of the property, a diagram of the farm property with buildings labeled as covered or uncovered, and a minimum payment equal to the first installment. A fully completed application is to be kept on file at the producing agent s local office. Although not required, a replacement cost worksheet is encouraged to be submitted with each new business. New business applications which are escrow and/or mortgagee billed will not require a minimum payment with the application. Agents It is the responsibility of our company to provide the public with the best possible protection utilizing independent agents. Our company supports its agents to the fullest extent where those agents have shown that they are deserving of such support. The agent has a responsibility to the company and to the public. The agent s personal knowledge of his insured and his personal inspection of each and every risk is the key to sound underwriting and risk selection. The agent should use every effort towards keeping the loss ratios at a minimum, and at all times should act in a way to create and maintain trust and goodwill of the public. Each agent and solicitor should become familiar with this manual and particularly with the underwriting rules and binding authority. Your agency agreement with the Company gives you binding authority on most risks. Exceptions will be noted in appropriate sections of this manual. When you bind coverage on a risk, it is imperative that we (the Company) be notified within five (5) days of the date coverage was bound. The information for application of insurance should be entered into the Britecore Policy Processing system immediately and the policy effective date shall not precede the receipt of the application by Halifax Mutual by more than five (5) days. Each application should be submitted with a minimum payment equal to the first installment (including policy fee). New business applications which are escrow and/or mortgagee billed will not require a minimum payment with the application. From time to time, you may encounter a risk which presents a higher than normal exposure. Even though it may be of a type normally acceptable, this risk should not be bound. It may however be considered on a submit basis. Any risk canceled, declined, or non-renewed for reason of increased hazard or for non-payment of premium within the last three (3) years may not be bound.

9 Farmowner 2 Agents, cont d Property to be insured must be in the name of the owner(s) of record. Every road maintained by the state is numbered or named. The road number or name and mailing address on which the property is located must be shown on application. For in town property, the name of the street and the house number must be shown. The location and/or driving directions furnished must be adequate for our inspector and/or adjuster to easily locate the property. A policy can only be changed by the agent submitting an endorsement through Britecore and approved by the Company. These endorsements should be completed in full when submitted to the Company. Insurance can be canceled by the named insured by surrender of the original policy, signing a Lost Policy Release, or signing other documentation approved by the Company. If the Company cancels a policy for any reason, proper notice will be mailed to the insured, mortgagee(s) and any additional applicable parties, with stamped verification of mailing from the post office. Agents will receive notice through an transmission. Return premiums must be calculated based on date the Company is no longer bearing the risk. Binding Authority Farmowners Coverage may be bound only after the property has been personally inspected by the agent. Maximum binding authority is $500,000 Coverage A for FO-2 and FO-3 s. Maximum binding authority is $350,000 for FO2 with FO15 s attached. This authority is limited to those risks which are considered acceptable under the underwriting guidelines outlined in this manual. For higher limits, contact your underwriter for prior approval. Binding Authority During Adverse Conditions All agents and producers statewide must refrain from binding coverage, increasing coverages, or writing policies of insurance when the following conditions exist: 1. When a storm, tropical depression or hurricane, moves into the area bounded by Longitudes 65 and 85 Degrees West and Latitudes 20 and 37 Degrees North. This is consistent with the NCJUA and NCIUA hurricane restriction map. 2. When a storm is in progress. 3. When there are definite indications or general knowledge by the public and/or producer that a civil disorder, disturbance, civil commotion, or riot is imminent or may be expected in the immediate future within the vicinity or area of the risk in question. 4. When a civil disorder, disturbance, civil commotion, or riot is in progress. 5. Without obtaining prior approval from the company: any risk in any area, subdivision, municipality, city, or county under curfew or martial law because of civil unrest.

10 Farmowner 3 Submission of New Business New business submissions must meet the following requirements: 1. The property has been personally inspected by the agent. 2. A clear current photo showing the overall condition of the front and rear of the property, including the roof. 3. A diagram or plat is also required, showing and properly identifying all buildings on the farm, whether covered or not, and indicating the location and size of each building and the distance in feet between all buildings. 4. The application must be complete, including social security #, and signed by the agent and insured. Although not required, a replacement cost worksheet is encouraged to be submitted with each new business. The agent will be responsible for keeping the signed application on file at their office. Halifax Mutual reserves the right to audit any and all policy applications, at any time, and/or for any audit required by any State or Federal regulation. 5. A minimum payment equal to the first installment. New business submissions which are escrow and/or mortgagee billed will not require a minimum payment with the application. Minimum Premium A policy writing minimum premium of $ applies. During the first year of coverage there is a minimum retained premium of $50.00 unless otherwise indicated. Risk Ineligible for Coverage 1. Unsatisfactory loss history. All prior losses are to be reported and evaluated on the basis of type, number, and whether or not they are indicative of future losses. 2. Dwellings below average maintenance. e.g., roof is worn out; siding is in need of repair, etc. 3. Exposure to adjacent properties or surrounding physical environment of high hazard. 4. Abnormal liability exposure. e.g., horse farms (breeding, boarding, or riding), vicious dogs, dangerous animals, broken, sagging, or unsupported steps or stairs, poor maintenance of sidewalks and other areas. 5. Dog Breeds: Akita, American Pit Bull Terrier, American Staffordshire, Bull Terrier, Bull Mastiff, Chow, Doberman Pinscher, Rottweiler, Staffordshire Bull Terrier, Wolf or Wolf Breed, German Shepherd, or mixed breeds which include any of the above breeds. 6. Dwellings not equipped with central heat. 7. Dwellings using coal or wood burning units as a primary heat source are unacceptable. Coal or wood burning units, UL, C. S. A., and F.M.L. approved and professionally installed are acceptable when used only as a supplemental heat source. Non-vented portable heaters are unacceptable. 8. Dwellings not built on a continuous masonry or concrete foundation under all outside walls. 9. Dwellings without approved roofing. 10. Dwellings not equipped with an approved electrical system of at least 200 AMPS. Aluminum or knob and tube wiring are not approved electrical systems. 11. Basement dwellings. 12. Rooming or boarding houses. 13. Dwellings that do not conform to local building codes. 14. Dwellings which are unusually unique in exterior or interior architectural design or constructed for purposes other than a dwelling. Such as: log cabins, earth sheltered homes, and dome structures. 15. Known moral hazard. 16. Risk not classified as farm property, as hereby defined Farm property definition: Dwelling situated on land used for truck, fruit, livestock, dairy, or other farming purposes whether located inside or outside the corporate limits of cities, towns, and villages.

11 Farmowner Vacant farms. 18. Seasonal risks as follows: (see Non-Farm Locations on page 48) a. Used primarily as rooming or boarding houses during vacation season. b. Not of sound construction and well maintained. 19. Home Day Care business will be excluded from all policies. 20. Dwellings over 30 years old, unless modernized as follows: Roof - 15 years Heat - 20 years Electrical - 30 years Plumbing - 30 years 21. Unprotected risks in ISO protection classes 9, 9E, 9S and 10 may be written only if the following guidelines are met: a. The dwelling is visible and accessible from a paved road year round. b. The dwelling is visible from two or more occupied houses. c. No coal or woodstove heat is in use or contemplated as a primary source of heat. d. Photographs are required. Credit Based Scores It is the Agent s responsibility to obtain the insured s permission prior to running the insured s credit score. 1. The Agent will run the insured s credit score prior to submitting the application to Halifax Mutual. You will receive one of the following responses: a) Pass will allow you to continue the application process. b) Prior Approval Required will allow you to continue the application process but coverage cannot be bound. This is for insured s that do not have enough credit history to establish a score. c) Fail will not allow you to continue the application process. Direct Billing Procedure Premiums for new business, renewals, and endorsements will be direct billed by the Company. Policy Fee Homeowner and Dwelling Fire policies have a policy fee of $75.00 new and renewal. Farmowner, Farm Property, Farm Liability and Farm Personal Liability policies have a policy fee of $ new and renewal. Policy fees are non-refundable. Reinstatement Fee The Company will charge a $25 reinstatement fee on all policies that have to be reinstated. If a statement of No-Losses has to be provided to the Company, a reinstatement fee will be added to the insured s balance due. Non-Sufficient Fund Fee The Company will charge a $25 NSF fee for all checks returned for non-sufficient funds. Mail Procedures The Company will mail hard copy documents to insured s for new business, endorsements, renewals, cancellations, and reinstatements. Mortgagee(s) will receive notices through the mail or via an transmission. Agents will receive notice through an transmission.

12 Farmowner 5 New Business When a policy has been issued, the bill will allow an option to pay annually, semi-annually, or quarterly with a $3 charge per installment. Policy fees will be paid in the first installment. Each application should be submitted with a minimum payment equal to the first installment plus the policy fee. New business applications which are escrow and/or mortgagee billed will not require a minimum payment with the application. Endorsements Request for endorsements which involve premium and/or coverage changes should be submitted through the Britecore Policy Processing system. Those endorsements will be reviewed, approved and issued by the Company. Endorsement premiums exceeding $5 will generate a bill for the entire amount of the endorsement premium. Renewals It is the Company s intent to get renewals to the insured at least forty-five (45) days prior to renewal date. This gives insured s adequate time to note any changes such as rates, deductibles, etc., and to get answers to any questions they may have prior to the actual renewal date. Billing Cycle The first bill will be generated by the issuance of a new policy, by an endorsement, or by monthly renewal as described above. If the new policy or renewal premium is paid by installments the policy fee will be paid in the first installment. If the premium is not received within the original due date a Notice of Cancellation Non-Payment of Premium will be issued giving the insured an additional 18 days to pay to avoid cancellation. Second installments will be billed approximately 160 days after the effective date of the policy giving the insured 18 days to pay the premium. If the second installment premium is not paid, a Notice of Cancellation Non-Payment of Premium will be generated giving the insured 18 more days to pay to avoid cancellation. Cancellations Cancellations due to non-payment of premium will generate neither an earned premium nor a commission for the agent. Cancellation during the policy period after premium payment has been received by the Company will generate a refund check issued to the insured unless otherwise requested by the agent. The check will be mailed to the payee listed on the check. Daily, the home office will determine all accounts that have not been paid by the Notice of Cancellation Non-Payment of Premium due date. A Confirmation of Cancellation will be generated. The notice will be sent to all applicable parties via the mailing procedures noted above. Reinstatements Anytime a Notice of Cancellation Non-Payment of Premium is issued and payment is received by the noted time in the Enfield office, a Continuation of Coverage NonPay will be generated. The notice will be sent to all applicable parties via the mailing procedures noted above. Claims Reporting: All claims must be reported through the Britecore Claims Module. Our claims department, located in the Enfield office, will either handle the loss or assign it to an independent adjuster in your area. No direct assignments are authorized. Severe losses should be called in immediately after agent becomes aware of the loss. Payments: Claims will be paid promptly to the insured with a copy to the agent unless otherwise required.

13 Farmowner 6 Dwellings Primary dwellings must: 1. Be in excellent condition showing evidence of proper maintenance and good housekeeping and with roof in excellent repair. 2. Have a modern thermostatically controlled heating system (not space heaters or stoves). 3. Have a continuous enclosed masonry foundation. 4. Have a modern interior plumbing system. 5. Have a modern electrical system of 200 amps or more, in good condition and properly installed in compliance with local building code requirements. Other Structures The Farmowner policy covers structures on the residence premises not attached to the dwelling which are used solely for the service and maintenance of the dwelling. Structures used for commercial, manufacturing, or farming purposes are not covered, unless scheduled. Mobile and Manufactured Homes A Farmowner policy may be written on a double wide mobile home/manufactured home only after prior approval has been obtained from the Company. In order to be considered the mobile home must: 1. The home must have a solid masonry foundation (no imitation). Unless the house is a brand new model, no coverage shall be bound without a picture showing the solid masonry foundation. The notation that the foundation will be installed soon shall not be adequate for the policy issuance. The foundation must be in place at the time of the application. 2. If the home is a brand new model and is newly installed on the insured s premises, then we will consider the coverage with the understanding that the policy shall be cancelled if, at the end of 60 days, the agent has not forwarded a new picture of the installed foundation. It shall not be the responsibility of Halifax Mutual to request the new picture. 3. Agents do not have binding authority. Binding authority rests solely with the Company. 4. The home must have no less than an asphalt shingle roof with adequate pitch. 5. Have central heat with wall thermostat. 6. Have no fireplace or other supplemental heat source. 7. The wall structure and siding must be comparable to conventional built houses. If coverage is authorized, the following will apply: Form FO-2 only.

14 Farmowner 7 Rules Rule 1 Eligibility 1.1 Eligibility Requirements A policy that includes coverage for the principal farm residence and farm personal liability exposures may be issued to the owner of the farm when the following requirements are met: Number of Families The principal farm residence must contain facilities for housing no more than four families and no more than two roomers or boarders per family. If the principal farm residence is a mobile home, it must contain facilities for housing no more than two families and no more than two roomers or boarders per family. Residential Use Except for those incidental business occupancies that are permitted by this manual, the principal farm residence must be used exclusively for residential purposes. When a permitted incidental business occupancy exists, it must be declared and the appropriate premium charge must be made. Occupancy The principal farm residence must be either: Occupied by the farmowner Occupied by a farm tenant if the farm is operated under the farmowner s direct management or under the terms of a management contract; or Occupied by a co-owner of the farm if that co-owner has an equal or controlling financial interest in the farming venture and is primarily responsible for the farm operations. Refer to the company if a partnership or corporation is shown as the named insured on the declarations. When all other eligibility requirements have been met, a tenant farmowners policy may be issued to a tenant who occupies the principal farm residence and is engaged in the farming operation. 1.2 Submit to Company The eligibility of the following risks must be determined by the company: Farms where business pursuits other than farming are conducted; Farms where horses are raised, boarded, or maintained; Vacant or unoccupied farms; Farms that are operated to supply agricultural commodities for manufacturing or processing by the insured for sale to others. Farms involving the retail sale of farm products or farms that permits the picking of fruits and vegetables by the public. Incorporated farms Mobile Homes and Mobile Home types - Doublewide or Modular.

15 Farmowner 8 Rule 2 Program Description The following is a general description of the coverage provided by the Farmowner policy forms. The policy forms state the complete conditions. 2.1 Dwelling Coverage Property Policy Forms The following forms are used to provide the dwelling coverage for the principal farm residence: FO-2 Dwelling Coverage Broad Form FO-3 Dwelling Coverage Special Form FO-4 Dwelling Coverage Renters Form Principal Coverage Forms FO-2 and FO-3 provide the principal coverage described below. Form FO-4 includes only Coverage C and Coverage D. Coverage A - Residence Coverage A covers the residence on the insured premises, including additions and built-in components. Coverage B - Related Private Structures Coverage B covers unattached structures related to the residence, other than structures designed or used for farming or other business purposes. Coverage also applies to fences, driveways, sidewalks, and other permanently installed outdoor fixtures that are within 250 feet of the residence covered under Coverage A. Coverage C - Personal Property Coverage C covers personal property other than farm property, owned by or in the care of the insured. Coverage D - Additional Living Costs and Loss of Rent Coverage D covers increased living costs and loss of rent of fair rental value that occurs when an insured loss makes the insured premises unfit for use Loss Settlement Provisions An 80% insurance-to-value requirement triggers replacement cost loss settlement provisions for covered buildings. Mobile Home losses and other covered losses are settled on an actual cash value basis.

16 Farmowner Perils Insured Against Form FO-2 insures property covered under Coverage A, B, and C and the related costs covered under Coverage D against risks of direct physical loss by the perils indicated below. Perils Covered FO-2 Fire or Lightning Smoke Weight of Ice, Snow, or Sleet Windstorm or Hail Sinkhole Collapse Sudden and Accidental Tearing Apart, Burning, or Bulging Explosion Volcanic Action Accidental Discharge of Liquids or Steam Riot or Civil Commotion Vandalism Freezing Aircraft Theft Sudden and Accidental Damage from Electrical Currents Vehicles Falling Objects Perils Covered FO-3 Form FO-3 insures property covered under Coverage A and B and the related cost covered under Coverage D against all risk of direct physical loss, with certain exceptions. Property covered under Coverage C is insured against risks of direct physical loss by the perils shown for Form FO-2. Perils Covered FO-4 Form FO-4 insures property covered under Coverage C, the insured s interest in building improvements and betterment, and the related costs covered under Coverage D against risks of direct physical loss by the perils shown for Form FO Home System Protection Form HAL-FO-HSP 2017 The policy provides Home System Breakdown coverage for equipment breakdown to covered home equipment. Equipment breakdown means a sudden and accidental mechanical breakdown, electrical breakdown, or bursting, cracking or splitting of covered home equipment that results in direct physical damage. Covered home equipment includes property covered under Coverage A, Coverage B, or Coverage C that generates, transmits or utilizes energy; or which, during normal usage, operates under vacuum or pressure, other than the weight of its contents. Coverage also includes Electronic Circuitry impairment. Coverage is provided up to a limit of $50,000 (coverage effective ). This endorsement is not eligible for any IRPM credit. Charge per policy - $25. Coverage is subject to a $500 deductible Identity Theft Form HAL-FO-IDR 2017 The policy provides Identity Theft case management service and cost coverage up to a limit of $25,000. Coverage will pay for the total of all loss or expense, subject to the policy limit, arising out of all identity thefts to any one insured during the policy period (coverage effective ). This endorsement is not eligible for any IRPM credit. Charge per policy - $15. Case Management Service is not subject to a deductible. Cost Coverage is subject to a $100 deductible.

17 Farmowner Farm Coverage Property Policy Form and Principal Coverage Form FO-6 provides the principal coverage described below. Coverage E - Farm Barns, Buildings, and Structures - Coverage E covers additional farm dwellings, barns, portable buildings and structures, other farm buildings and structures, and tenant s improvements in farm buildings for which a limit is shown on the declarations page or a schedule. The limit shown on the declarations or schedule for each covered item includes attached sheds and fixtures. However, silos are covered only when specifically listed on the declarations or schedule. Coverage F All Terrain Vehicles (ATV)-Farm Use Only; Farm Products and Supplies; Hay, Straw, Fodder and Silage in Barn (and in the Open) - Coverage F covers these classes or items for which a limit is shown on the declarations page or a schedule. Form FO-560 provides the principal coverage for Farm Machinery as listed on page Loss Settlement Provisions Coverage E - Scheduled buildings and structures are covered on an actual cash value basis. Coverage F - The coverage provided under Coverage F applies on an actual cash value basis. The following classes of scheduled property are also subject to a coinsurance clause or a pro rata distribution clause: Machinery Not Described Farm Products and Supplies Hay in the Open Hay in Barns The Coverage F coinsurance percentage (80%) will be shown on the declarations when the Coverage F coinsurance clause applies. Coverage G - The coverage provided under Coverage G applies on an actual cash value basis, subject to an 80% coinsurance requirement.

18 Farmowner Perils Insured Against Form FO-6 insures covered property against risks of direct physical loss caused by the following perils: Fire or Lightning Explosion Aircraft Smoke Theft Volcanic Action Flood (Livestock Only) Electrocution (Livestock only) Windstorm or Hail Riot or Civil Commotion Vehicles Vandalism Sinkhole Collapse Earthquake (Livestock Only) Collision Loading or Unloading Accidents (Livestock Only) Equipment Breakdown Form HAL-FO-EB 2017 The policy provides Farm Equipment Breakdown coverage for covered farm equipment. Equipment breakdown means a sudden and accidental mechanical breakdown, electrical breakdown, or bursting, cracking or splitting of covered farm equipment that results in direct physical damage. Covered farm equipment includes Farm Barns, Buildings and Structures; Barns, Outbuildings and Other Farm Structures; Farm Buildings/Structures Other Than Dwellings; Farm Buildings Coverage; or Scheduled Farm Personal Property or Unscheduled Farm Personal Property that generates, transmits or utilizes energy; or which, during normal usage, operates under vacuum or pressure, other than the weight of its contents. Coverage also includes Electronic Circuitry impairment. Coverage follows property limit up to $25,000 ($100,000 for hog & poultry confinement) (coverage effective ). This endorsement is not eligible for any IRPM credit. Minimum charge per policy is $50 or $15 per confinement house, whichever is greater. Coverage is subject to a $500 minimum deductible ($1,000 minimum hog & poultry confinement). 2.3 Liability Coverage Personal Liability Coverage - Farm Form GL-2 covers liability exposures that arise out of the insured premises and the personal activities of the insured. It includes the principal coverage described below: Coverage L- Liability - Coverage L pays on behalf of the insured for damages due to bodily injury or property damage caused by an occurrence that involves the insured premises and related operations or the insured s personal activities. Coverage M- Medical Payments to Others - Coverage M pays medical expenses incurred by persons who are not insured if bodily injury occurs in connection with the insured premises or the insured s activities.

19 Farmowner Personal Liability Coverage Farm, cont d The following basic limits apply to the farm personal liability coverage provided by the Farmowner policy: Principal Coverage Coverage L Coverage M Form GL-2 $100,000 Each Occurrence $1,000 Per Person Higher limits are available. See Farm Personal Liability at Basic Limits Dwelling Coverage Property The following basic limits apply to the property coverage provided by the Farmowner policy: Principal Coverage Forms FO-2 and FO-3 Form FO-4 Coverage A See Rule Coverage B 10% of limit on residence Coverage C 50%* of limit on residence See Rule Coverage D 20%** of limit on residence 40% of limit personal property * 30% for dwellings occupied by three or four families ** 10% for dwellings occupied by three or four families Policy Limits Form # Minimum Policy Limit Maximum Binding Authority FO-2 $50,000 $500,000 FO-3 $50,000 $500,000 FO-4 $10,000 $75,000 FCPL $100,000 $1,000,000 Med Pay $1,000 $5,000

20 Farmowner 13 Rule 3 Policy Writing Instructions 3.1 Policy Format A Farmowner package policy (property and liability coverage) consists of the following sections: Coverage Part Form Number Dwelling Coverage FO-2, FO-3, or FO-4 Farm Coverage FO-6 Additional Conditions and Property Coverage Terms FO-20 Personal Liability Coverage GL-2 Optional Endorsements State Amendatory Endorsements Declarations and Schedules 3.2 Endorsements Information called for as entries on endorsements can be shown on the declarations page or a supplemental schedule instead. 3.3 Inception Time The policy will be issued to take effect at 12:01 A.M. standard time. 3.4 Policy Term Policy will be issued for a term of one year. Unless otherwise advised, the policy may be continued for successive terms by payment of the required premium.

21 Farmowner Additional Interests The Farmowner policy can be endorsed to cover the interests of co-owners, farm partners, farm corporations, executors, administrators, trustees, or beneficiaries in the farm premises and operations or the interest of other residents of the insured premises. Limits of Liability Med Pay Coverage Option $100,000 $300,000 $500,000 $1,000,000 $2,000 $5,000 Occupying Separate Residence $15.00 $20.00 $22.00 $27.00 $ 6.00 $23.00 (includes $1,000 medpay) Endorsement GL-71 Limits of Liability Med Pay Coverage Option $100,000 $300,000 $500,000 $1,000,000 $2,000 $5,000 Other Residents $5.00 $6.00 $7.00 $9.00 $ 2.00 $8.00 Endorsement GL Property Interests The property coverage provided by the Farmowner policy can be endorsed at no additional premium charge to cover the insurable interests of others in the covered property. Attach Endorsement FO-41 and show the location of the premises, the names of the additional insured, and the extent of their interests Farm Personal Liability Interests When the Farmowners policy includes farm personal liability coverage, liability coverage for additional interests can be provided as follows: Not Occupying a Residence on the Farm Premises The policy can be endorsed at no additional premium charge to cover the premises-related liability exposures of additional insureds who do not occupy a residence on the farm. Use Endorsement GL-70 and show the location of the premises, the names and addresses of the additional insured, and the extent of their interests. Occupying a Separate Residence on the Farm Premises The policy can be endorsed to cover both the personal liability exposures of co-owners or partners who reside in a separate residence on the farm, as well as their interest in the farm premises and operations. Use the rating information in this manual to determine the personal liability charge for each additional partner or co-owner. Use Endorsement GL-71 and make entries to show the location of the premises, the names and addresses of the additional insureds, and the extent of their interests.

22 Farmowner Farm Personal Liability Interests, cont d Other Residents of the Named Insured s Household The policy can be endorsed to provide personal liability coverage for other residents of the named Insured s household who are not related to the named insured and who would not otherwise be covered as an insured under the policy. Show names and use the rating information below. Use Endorsement GL-72. Initial Farm Exposure - including all additional farm locations without farm buildings. Limits of Liability Med Pay Coverage Option $100,000 $300,000 $500,000 $1,000,000 $2,000 $5, Acres - $11.00 $16.00 $28.00 $ 6.00 $ Acres $12.00 $27.00 $35.00 $50.00 $ 6.00 $23.00 Over 500 Acres $24.00 $43.00 $53.00 $73.00 $ 6.00 $ Family $15.00 $20.00 $22.00 $27.00 $ 2.00 $ Family $23.00 $31.00 $34.00 $42.00 $ 2.00 $ 8.00 Each Additional Farm Premises with buildings $20.00 $26.00 $29.00 $36.00 $ 2.00 $ 8.00 (excluding dwellings) Domestic Employees $ 5.00 $ 6.00 $ 7.00 $ 9.00 $ 2.00 $ 8.00 Additional Residence Premises Occupied by Insured $ 6.00 $ 7.00 $ 8.00 $10.00 $ 2.00 $ 8.00 (includes $1,000 medpay) Leased Equipment Per Item $25.00 Flat Fully Earned Endorsement GL Restriction of Coverage If a policy would not be issued because of unusual exposures, the applicant may request a restriction of coverage at no reduction in premium. The request, signed by the applicant, must be referred to the company. Endorsement FO-304. Describe the restrictions that apply. 3.7 Cancellation or Reduction in Limits or Coverage If the policy is canceled or the limits are reduced, the amount of any return premium due is calculated on a pro rata basis.

23 Farmowner Specially Rated Risks For the purpose of this rule, specially rated risks are defined as those risks which are specifically rated because of special construction, occupancy, location or exposure features, and those risks which are subject to additional charges because of special hazards. Refer to the company for instructions. 3.9 Roof Exclusion Form (HAL-RE-FO) The Company reserves the right to attach Form HAL-RE-FO to any new or renewal business for which the roof cover is in less than good condition. The endorsement restricts coverage for damage to the dwelling s roof resulting from wind and/or hail or for water damage to the interior of the dwelling resulting from the condition of the roof. The restriction and exclusion of property coverage also applies to personal property located within the dwelling damaged as a result of the condition of the roof Roof - Actual Cash Value Form (FO ) The Company reserves the right to attach Form FO to any new or renewal business for which the roof cover is in less than good condition. The endorsement changes the policy coverage for damage to the roof surfacing resulting from a covered peril to Actual Cash Value loss settlement. (Endorsement effective ). Premium credit factor of 3% applies Ownership of Dogs Mandatory Exclusion - Form (HAL-PET-FO 07 16) The policy will be endorsed to exclude any property coverage for or damage resulting therefrom and there will be no liability coverage for bodily injury or property damage which results directly or indirectly from the ownership, use, breeding, care, custody or control for any of the breed of dogs listed in the policy form. Note: The Company does not write new business for where there is ownership of any breed of dog listed on the exclusion form. This endorsement is strictly for the purpose where these type breeds are obtained at a future date from the effective date of the policy without the knowledge of the Company or the agent. (effective )

24 Farmowner 17 Rule 4 Premium Determination The basic policy rating information shown in this manual contemplates coverage for the principal farm residence and farm personal liability exposures. Coverage for the following exposures is required if they exist. Use the rating information shown in this manual. All additional or secondary residence premises where the named insured or spouse maintains a residence or farm. All domestic employees of the named insured or spouse not covered or not required to be covered by Worker s Compensation Insurance. A charge is required for each domestic employee in excess of two. Incidental office, professional, private school, or studio occupancies by the named insured on residential premises of the named insured. Total farm acreage in excess of 160 acres. Each separate set of farm buildings. Three or four family dwellings. (The rating information for three or four family dwellings applies in addition to any adjustments made to reflect changes to the Coverage L limit.) The initial farm exposure includes. The initial farm premises. All additional farm premises without buildings maintained by the named insured or spouse which are operated in conjunction with the initial farm premises. Rate other dwellings located on the initial farm premises as additional residence premises. Each additional farm includes any additional farm location with outbuildings, whether owned and operated by the insured or rented to others, and all vacant farm land used in conjunction with it. Rate other dwellings located on the additional farm as additional residence premises. 4.1 Calculation of Premium 4.2 Dwelling and Farm Personal Liability Coverage 1. Determine premium group from Farmowner Premium Group Determination chart in this section. 2. Obtain premium from appropriate premium group in the Calculation of Premium Tables in this section. 3. Result of the above is Base Premium. 4. All other credits and/or debits are to be developed from the base premium. 5. Add to or deduct from the base premium premiums for any other endorsements applicable. 6. IRPM credits may be considered in accordance with Rule 11 in this section, but may not be given without company approval. 4.3 Farm Coverage If the deductible option, premium modifications, or coverage options vary by item or class of property, calculate the premium for each item or class separately. Step 1 Multiply the blanket limit and/or the amount of insurance for each scheduled item by the appropriate rate. Step 2 Multiply the result of Step 1 by the deductible factor. Step 3 Multiply the result of Step 2 by any premium modification factors that apply. Step 4 Multiply the result of Step 3 by the factors for any other mandatory or optional coverage that apply. Step 5 Add the result of Step 4 to the premiums or charges for any other mandatory or optional coverage that apply.

25 Farmowner Supplemental Insurance Contracts Determine the premium for other applicable coverage written by endorsement to this policy which is not otherwise provided for in this manual. Classify and rate such coverage in accordance with the company manual for other lines of insurance. 4.5 Total Farmowner Policy Premium The total Farmowner policy premium is determined by adding the amounts calculated in Rules 4.1.1, and Changes in Limits or Addition of Coverage Policy limits may be increased or coverage added during the policy term. Compute the additional premium on a pro rata basis using the same forms, endorsements, and rating information in effect when the current policy premiums were calculated.

26 Farmowner 19 Rule 5 Deductibles A deductible amount is subtracted from all covered property losses, except the Incidental Property Coverage provided for Emergency Removal, Fire Department Service Charge, and if applicable, Refrigerated Food Spoilage, Extra Expense, Signs, Glass Breakage in Cabs, and Farm Operations Record Expense. The deductible amount is subtracted only once per occurrence at each location, regardless of the number of covered items affected. However, two deductibles may apply in the event of a windstorm/hail claim. See Rule 5.3 Windstorm or Hail Deductibles for details. 5.1 Minimum Deductible Flat Deductibles All Perils/All Coverage Zone 1 Territories 105, 106, 142, and 143 $500 Zone 2 Tier 1 which includes the following: Territory 141 and the $500 Counties of Gates, Hertford, Bertie, Martin, Pitt, Greene, Lenoir, Wayne, Duplin and Sampson. Zone 2 Tier 2 which includes the rest of Zone 2. (All counties not $500 noted in Tier 1 of Zone 2) Zone 3 All Territories $500 The policy may be issued with a single deductible amount that applies to all perils and all coverage that is subject to the deductible provision. Use the rating factors shown below under Minimum Deductible and Split Deductible Rating Factors to adjust the premium. 5.2 Split Deductible Amounts The policy may be issued with a split deductible. This means the deductible option selected for property covered under Coverage A, B, C and D differs from that selected for property covered under Coverage E, F, and G. When an occurrence, other than windstorm or hail, affects two or more items at the same location with different deductible amounts, only the highest deductible applies. If the occurrence results from windstorm or hail see Rule 5.3 Windstorm or Hail Deductibles for details. Apply the deductible factors shown below for the selected options. Minimum Deductible and Split Deductible - See 5.1 above for Minimum Deductibles. Use the following factors for all territories without Windstorm or Hail Deductibles. Deductible $ $1,000 10% $2,500 18%

27 Farmowner Windstorm or Hail Deductibles The policy may be issued with a deductible applicable to loss caused by windstorm or hail that is higher than the deductible that applies to all other perils. When a higher windstorm or hail deductible applies, use the appropriate credit shown in the Windstorm/Hail Deductible rating factors below for proper credits. Coverage A: Farmowner policies covering property in territories 141, 142, and 143 will be issued with a mandatory 2% windstorm or hail deductible. A minimum deductible of $2,000 will apply for Coverage A limits that are less than $100,000. Farmowner policies covering property in territory 135 (Tier 1) or the counties of Gates, Hertford, Bertie, Martin, Pitt, Greene, Lenoir, Wayne, Sampson and Duplin will be issued with a mandatory 1% windstorm or hail deductible on Coverage A in excess of $100,000. A minimum deductible of $1,000 will apply for Coverage A limits that are less than $100,000. The deductible applies per occurrence, and separately at each covered location. Only one deductible applies at each location, except when Coverage A, B, C, D, E, F, and G are at the same location. In this event, two deductibles will apply. Coverage A, B, C, D will apply the percentage or flat limit to Coverage A. Coverage E, F, G will apply the highest deductible as shown in the declarations of the policy. Form HAL-405 (3.0) See Rule 5.3 Windstorm or Hail Deductibles above for additional information. Use the following factors for all territories with Windstorm or Hail Deductibles. Use this table for Coverage A limits between $50,000 - $100,000 All Perils Deductible Increased Wind Or Hail Deductible Amount $500 $1,000 $2,000 $5,000 $ 500 N/A 5% 9% 13% $1,000 N/A N/A 17% 21% $2,500 N/A N/A N/A 26% Use this table when Coverage A limits exceed $100,000 All Perils Deductible Wind or Hail Percentage Deductible Coverage A Limit $100,001-$125,000 $125,001-$250,000 $250,001 And Up $500 $1,000 $2,500 1% 5% 7% 9% 2% 9% 11% 12% 1% 13% 15% 17% 2% 17% 19% 20% 1% N/A N/A 22% 2% N/A 22% 25%

28 Farmowner 21 Rule 6 Premium Modifications 6.1 Protective Devices Primary Dwelling Use the protective device factors shown below to adjust the premium for the installation of the following approved and properly maintained alarm and/or sprinkler systems: Central Station Burglary and/or Fire Alarms (Copy of Certification Required) Fire Department and/or Police Department Alarms (Copy of Certification Required) Local Alarms Including Smoke and/or gas detection Sprinkler Systems Endorsement FO-216 These credits apply to Fire Protection Classes 1-9, in all territories Central Station Fire or Burglary Alarm System 5% Central Station Fire and Burglary Alarm System 10% Fire Department Alarm Systems 2% Police Department Alarm Systems 3% Local Alarm Systems 2% Sprinkler Systems 3% 6.2 Fire Protection Other Than Dwellings The location of the building(s) determines its fire protection classification as defined below: Protected PC 1-8 Partially PC 9 Unprotected PC 10 Building is located within 1,000 feet of a fire hydrant and within five road miles of a responding fire department. Building is located over 1,000 feet from a fire hydrant but within five road miles of a responding fire department. All others For other than dwellings, use the fire protection factors shown in this manual to adjust the premium for the appropriate protection location. Other Than Dwellings Factors Partially Protected (PC-9) 5% Protected (PC 1-8) 10% Fire Protection - Mobile Homes only Coverage Factors Partially Protected (PC-9) Mobile Homes 10% Protected (PC 1-8) Mobile Homes 20%

29 Farmowner Actual Cash Value Coverage Form FO-2 Only At the option of the company, the loss settlement provisions that apply to buildings covered under Coverage A and B can be converted from replacement cost coverage to actual cash value coverage. Establish the limit for Coverage A on an actual cash value basis. Use the factor shown below to adjust the premium. Endorsement FO-15 Rating Factor Form FO-2 with FO-15 endorsement Limited Perils Form FO-6 The coverage provided for selected farm buildings and farm personal property under Coverage E, F and G can be limited to risks of direct physical loss caused by specific perils. Use the limited perils rates shown below to adjust the premium. Endorsement FO-340. Describe the property subject to the limited perils coverage and show which perils apply. In addition to the perils of Fire or Lighting, Wind or Hail and Extended Coverage, Additional Named Perils are covered under form FO-6 (Rule 2.2.3). When permissible (prior approval required) coverage for these additional perils may be included. Rate as follows : Per $1,000 coverage Vandalism 0.17 Other Perils 0.36 When perils are limited (all perils included under Form FO-6 are not being provided). Form FO-340 must be attached showing perils covered. 6.5 Deletion of Farm Personal Liability Coverage Use the credit shown below to adjust the premium for the deletion of farm personal liability coverage when: Coverage for farm personal liability is included under another policy or is not provided by the company. Rating Factor Credit $21.00