TABLE OF CONTENTS OVERVIEW...1 BINDING AUTHORITY...1 ELIGIBILITY CRITERIA...2 COVERAGE LIMITS.3 COVERAGES.3-4 LOSS SETTLEMENT 5-7 MID-TERM CHANGES..

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1 Commercial Hurricane Underwriting Manual 2016

3-4 LOSS SETTLEMENT 5-7 MID-TERM CHANGES..8 CANCELLATIONS.

2 TABLE OF CONTENTS OVERVIEW...1 BINDING AUTHORITY...1 ELIGIBILITY CRITERIA...2 COVERAGE LIMITS.3 COVERAGES.3-4 LOSS SETTLEMENT 5-7 MID-TERM CHANGES..8 CANCELLATIONS..8 PREMIUM.8 BILLING 9 FEES.9 CLAIMS..10 ADMINISTRATION...10 APPENDIX A - Hurricane Loss Notice...11

3 Overview This manual addresses Commercial Hurricane only. Hawaiian Hurricane Group, LLC ( HHG or the Manager ) is the appointed manager for White Pine Insurance Company ( WP or the Company ), an AM Best B+ rated insurance company, and its commercial hurricane insurance products in the State of Hawaii. HHG will service WP s commercial hurricane policies with respect to underwriting, administration and billing. HHG will also appoint agents on behalf of the Company. The Company will provide coverage for direct physical loss to covered property only from the peril of Hurricane. Hurricane specifically refers to the wind and/or hail associated with a hurricane, but does not include water damage unless first preceded by direct wind damage that causes an opening in the structure that allows rain, sand, or dust to enter the structure. Damage done by storm surge and Flood is not included in the definition of hurricane. The Company will insure Apartment Complexes, Condominium Complexes, Office Buildings, Hotels, and Structures housing retail businesses, or a combination of these types of structures. Other types of occupancies will be considered on an individual basis, but without Loss of Use Coverage or Extra Expense Coverage (Business Interruption). The building and other structures must be well maintained and in an insurable condition. Coverage may be provided for Structures, Business Personal Property, Extra Expense and Loss of Use/Rents. Business Condo Unit Owners and Renters are eligible for Business Personal Property, Extra Expense and Loss of Use Coverage/Rents. If the customer is a tenant, improvements and betterments are also included in the policy under Business Personal Property. Coverage will only be provided on a primary basis. White Pine will not write Deductible buydowns, and writing excess coverage is not permitted. Binding Authority Producers do not have Binding authority for Commercial Hurricane risks until after they have received a quote from HHG underwriters. Applications and Quotes All quotes must be submitted to Hawaiian Hurricane Group (HHG) with a completed application. HHG will quote the risk, and return a written proposal for coverage to the agent. The quote is good for 90 days. After a written proposal for coverage is received by the agent, the risk may be subsequently bound by the agent. When binding a risk, HHG must receive notification of the binding within 3 business days. Policy Term The policy term for new business and renewal policies is 12 months.

4 Eligibility Criteria a. General Criteria 1. WP only insures Property located in the State of Hawaii. 2. The property shall be in an insurable condition as determined in accordance with rules adopted by WP. 3. WP will write hurricane coverage only on structures that are preferred structures, and have an accompanying AOP policy written with a preferred carrier. 4. Eligibility, minimum valuation, and overall condition of the Structure and roof may be verified via inspection. 5. Properties with mixed construction types shall be rated for the higher factor unless the lesser rating factor can be proven to be at least 50% of the overall occupied area. 6. Policy and underwriting fees apply and are fully earned. 7. An inflationary increase based on annual Hawaii construction cost increases may apply at renewal. 8. All Structures should be submitted with the total square footage of all attached structures, including lanais, decks, balconies, garages and carports. 9. The number of stories on Structures with the additional space between the ceiling of the first floor and the roof directly above ( half-stories ) should be rounded up. 10. On Replacement cost policies, 80% co-insurance clauses apply, and White Pi ne removes the exclusion for "Ordinance or Law. Therefore, on the Structure, Replacement cost must anticipate the cost of code upgrades, Debris removal, and possible demolition required for any code compliance Blanket limits may be written with underwriting approval. 12. Coverage may be restricted due to Company aggregate accumulations in any particular area. b. Risks Requiring Underwriter Approval 1. All risks must be submitted for quoting and underwriting approval. c. Ineligible Risks 1. EIFS (Exterior Insulation and Finish Systems) cladding on all construction classes. 2. Structures on the historical register. 3. Structures over tidal water. 4. Farm and Ranch exposures. 5. Green houses, glass houses, tiki huts, boathouses or similar structures. 6. Risks damaged previously without repairs being completed. 7. Structures with excessive debris on the property of the insured risk. 8. Structures with excessive mold or wood rot which affects the structural integrity of risk. 9. Motor vehicles, aircraft or watercraft. WP Hawaii Hurricane Insurance Manual v1 Page 2

5 Coverage Limits Coverage Maximum Limit TIV per Policy $4,000,000 Higher limits are available upon request. Please allow more time for quotes to be processed. Coverages If at any time our general description of coverage is in conflict with the policy provisions, the policy provisions will always prevail. Structures Defined as a structure used principally for one of the allowed businesses including additions and extensions permanently attached. Coverage does not apply to materials or supplies pertaining to the service, upkeep and maintenance of the building and other structures on the covered location unless they are totally enclosed in an insured structure with a roof, with non-permeable sides. Business Personal Property Defined as property usual or incidental to the business occupancy that is owned by the named insured or in the named insured s care, custody or control while located at a covered insured location. Only property enclosed within a structure with a roof and non-permeable siding is covered. Extra Expense & Loss of Use/rents Extra Expense is defined as a covered loss resulting in damage to that part of the Structure in which an insured's business normally occupies such that it is no longer fit to occupy. Coverage applies for the additional business expense incurred by the insured to maintain their normal standard of operations. Loss of Use/Loss of Rents If a loss that is covered results in damage to that part of the Structure the insured normally rents to others, coverage applies for the fair rental value as it pertains to the damaged structure less any nonrecurring expenses incurred as a result of the damage. 3

6 Additional Coverages a. Debris removal; (does not increase the limits to covered property) b. Fire Department Service Charge ($1,000); c. Pollutant Clean up ($10,000); d. Loss assessment; ($1,000 is included, with additional limits up to $20,000 available); e. Reasonable repairs; f. Collapse; g. Preservation of Property; h. Fungi, Mold or dry rot, or bacteria. $10,000 maximum limit per Structure, and $50,000 per policy. Deductible Option a. WP offers percentage deductibles. The percentage deductible applies to the total policy limit with regard to hurricane coverage. Total policy limit is defined as the sum of limits for the coverages chosen and listed on the Declarations Page including Structures, Business Personal Property, Extra Expense and Loss of Use. The available percentage deductibles are: 1%, 2%, 3%, 4%, 5%, 10%, 15% and 20%. b. Once a deductible percentage has been selected, it may not be changed until the policy renews. The only change allowed to a deductible during the policy term is when the policy limits are adjusted and the corresponding deductible percentage option previously selected causes the dollar amount of the deductible to change. HHG will send the insured an amended declarations page showing the change.? 4

7 Loss Settlement (see policy for actual wording) Structures Replacement Cost Basis, Market Value, or Agreed Amount. Business Personal Property- Replacement Cost Basis or Market Value. Extra Expense and Loss of Use/Rents o Actual Expense Incurred o Rental Net Rental Income Lost (Rental Income less nonrecurring expenses). In no event will the loss settlement exceed the limit shown on the Declarations Page or the amount actually spent repairing or replacing the damaged property. Loss Settlement Option (See policy for actual wording) Structures a. Replacement cost using Like Kind and Quality Materials. When replacement cost loss settlement option is chosen and the insured Structure has an effective year built, or year built, of 1994 or later as shown on the Tax Map Key report, WP will pay, after the applicable deductible, the cost to repair or replace with Like Kind and Quality Materials. WP will not deduct for depreciation. Note: choosing this loss settlement option will automatically remove the exclusion for Ordinance or Law. All other terms of the policy remain in force including the exclusion regarding foundations. b. Replacement Cost using Common Construction Materials. When replacement cost loss settlement option is chosen and the insured Structure was built prior to 1994 as shown on the Tax Map Key report, WP will pay, after the applicable deductible, the actual cost to repair or replace the loss or damage, but no more than the cost of using Common Construction Materials and methods where functionally equivalent to and less costly than obsolete, antique, or custom construction materials and methods. WP will not deduct for depreciation. Note: choosing this loss settlement option will automatically remove the exclusion for Ordinance or Law. All other terms of the policy remain in force including the exclusion regarding foundations. c. Market Value. When this loss settlement option is chosen, WP will pay the lesser of the following: 1. The amount actually spent to repair or replace the loss or damage, but no more than the cost of using common construction materials and methods where functionally equivalent to and less costly than obsolete, antique, or custom construction materials; or 2. The limit you have chosen for a particular "Structure" on the Declarations page, or if a Blanket limit is chosen, than this is the limit for all structures combined. Note: under this loss settlement option, WP will not remove the Ordinance or Law exclusion, and will not include the cost of bringing the repaired or replaced "Structure" up to current code as required by your county. 5

8 d. Agreed Amount. When Agreed Amount is chosen WP will pay the lesser of the following: 1. The amount actually spent to repair or replace the loss or damage, but no more than the cost of using common construction materials and methods where functionally equivalent to and less costly than obsolete, antique, or custom construction materials; or 2. The limit you have chosen for a particular "Structure" on the Declarations page, or if a Blanket limit is chosen, than this is the limit for all structures combined. The Additional Condition, Coinsurance, does not apply to Covered Property to which "Agreed Amount" applies. We will pay no more for loss of or damage to that property than the proportion that the Limit of Insurance under this Coverage Part for the property bears to the Agreed Value shown for it in the Declarations. Note: under this loss settlement option, WP will not remove the Ordinance or Law exclusion, and will not include the cost of bringing the repaired or replaced "Structure" up to current code as required by your county. Structure Valuations a. Valuation for a Replacement Cost loss settlement option requires the insured to insure their Structure to at least 80% of its value (the Co-insurance clause remains in effect). The insured must anticipate not only any alterations, additions and renovations affecting the value of the Structure, but must also anticipate the value of upgrading their Structure to meet today s codes, as well as the cost of debris removal and demolition associated with meeting these codes. WP suggests a reputable source be used to verify the true replacement cost of any Structure at the time of writing a new policy, and then periodically update this value upon renewal. b. Valuation for Market Value loss settlement option requires the insured to utilize the Market Value of the structure prior to the loss as a guide for the insured value. Note the Market Value loss clause does not have a co-insurance clause. WP will review the TMK tax report as a guide to establish the Market Value, and WP suggests agents utilize a reputable source to establish the Market Value of the Structure at the time of writing a new policy, and then periodically update this value upon renewal. Business Personal Property a. Replacement Cost When Replacement Cost is chosen, WP will pay, after the applicable deductible, the cost to repair or replace with Like Kind and Quality, and without deducting for depreciation. In order to qualify for Replacement cost using Like Kind and Quality Replacement Cost Valuation, the insured must carry prior to the loss, at least 80% of the replacement cost value of the Business Personal Property. 6

9 If the insured does not carry 80% of the replacement cost value of the Business Personal Property insured, WP will settle the loss at the lesser of the following: 1. Market Value basis as described below; or 2. The limit the insured has chosen as shown on the Declarations Page for Business Personal Property. b. Market Value When Market Value is chosen, WP will pay to the insured, after applicable deductible, the cost to repair their Business Personal Property item. If the cost to repair is greater than the market value, or if the Business Personal Property was functionally destroyed and cannot be used for its intended purpose, WP will pay the market value of the item as valued prior to the loss, but not more than a functionally equivalent item was valued prior to the loss. To value an item, WP will attempt to compare the type and quality of the item damaged or destroyed to the value of a similar used item sold by a retail store or over the internet as priced prior to the hurricane. 7

10 Mid-term Changes a. Requests to reduce or remove limits specified shall be honored automatically only if the effective date of the requested change is also the next renewal effective date of the policy. b. Mid-term reduction or removal of coverage will only be allowed if there was a sale of the property or loss due to an insured peril in the WP or other insurance policy such that the Structure insured is rendered totally and permanently uninhabitable. c. Increases or decreases in coverage must be communicated to HHG in writing and be at the direction of an insured. For all changes in coverage, HHG will send the insured an amended declarations page showing the changes. Cancellations a. All procedures and policies regarding cancellations shall follow the cancellation requirements provided in the WP policy, and/or Hawaiian insurance law. b. Cancelations may be backdated by the insured, but require written notice to HHG, that the insured no longer has an insurable interest in the property as of the specified date. An example of this would be when an insured sells his property and neglects to notify HHG until after the sale is completed. HHG will review individually other requests to back date a policy. c. When an insured has canceled a policy, in limited circumstances, a premium refund may be due. The refunded premium shall be calculated pro-rata over the policy period. d. Premiums shall be refunded on a cancelled policy only due to: 1. Sale of insured property; or 2. Loss due to an insured peril in the WP or other insurance policy such that the Structure insured is rendered totally and permanently uninhabitable. e. A pro rata portion of the final premium (excluding the policy fee and underwriting fee) will be returned to the insured only for the reasons stated under paragraph d. In all cases in which the policy is canceled flat, the entire policy fee and underwriting fee will be retained to cover expenses of HHG. Premium a. Please refer to HHG for premium calculation. b. If there are premium overpayment and underpayment of less than $100, the over or underpayment will be applied to the next installment or next policy period. c. If premium overpayment is greater than $100, the overpayment will be refunded to the insured. d. If premium underpayment is greater than $100, the policy will not become effective until the additional premium amount has been received by HHG or it may result in a non-payment cancellation. e. Premiums are fully earned at the inception of the policy term and can only be cancelled with return premium as defined in Cancellations above. 8

11 Billing a. WP provides the following billing options: 1. Mortgagee Billing At the insured s request, the Primary Mortgagee Company will be billed. The full premium is due no later than the effective date of the policy, and will be cancelled to policy inception if payment is not received. 2. Full Pay Direct Bill (Direct Bill Amounts billed under this method will be invoiced directly to the insured). The full premium is due no later than the effective date of the policy and will be cancelled to policy inception if payment is not received. The full premium can be paid by check; electronic funds transfer (EFT) or credit card. 3. Quarterly Payment Plan - Direct Bill. The first installment will include 25% of policy premium plus policy and underwriting fees. The first installment is due on policy effective date. The remaining balance will be invoiced to the insured in three (3) equal installments. These installments will be due 90 days, 180 days and 270 days from policy effective date. Each installment will include a $6 installment fee. b. If a mid-term change is made on the policy resulting in additional premium due, the premium due will be invoiced to the insured. c. The premium due from policy changes will be waived if the amount due or payable is $5.00 or less. Refunds of return premium amounts less than $5 are available upon request. d. All premium checks must be made payable to White Pine Insurance Company. Fees d. Policy Fee: $50 per policy for policies with one or two Structures. $75 for 3-5 Structures, and $100 for over 5 Structures. b. Underwriting Fee: $10 per policy for policies with one or two Structures. $20 for 3-5 Structures. $30 for over 5 Structures. c. Installment Fee: $6 for each installment d. NSF Fee: $50 each incident All fees are fully earned and non-refundable. 9

12 Claims An insured can report a claim in three ways: a. Call WP s Catastrophe claim reporting phone number ; b. Go to click on Report a Claim, fill out the requested information (Appendix B), and then click submit; or c. Call their agent to submit the claim. Administration a. Moratorium During a Hurricane Watch or Warning 1. New policies or increases in policy limits are prohibited for all Hawaiian Islands (we do this by specific Island as each receive the warning) during times when the Central Pacific Hurricane Center of the National Weather Services declares a hurricane watch or warning to any of the Hawaiian Islands, and extends until 72 hours after cancellation of the watch or warning by the National Weather Services. 2. Any eligible application with payment received prior to watch/warning will be issued as if no watch or warning were in effect. 3. This moratorium is designed to protect the financial integrity of WP by preventing policyholders from buying a WP policy only when a Hurricane is approaching the Hawaiian Islands. Under no circumstances shall an agent bind coverage for a WP policy while the waiting period is in effect. WP reserves the right to direct that all marketing and underwriting operations be suspended at any time. Under no circumstances should an application for a WP policy be backdated during or after a Hurricane. b. Documentation WP may require adequate proof of certain items. c. Agency Questions Hawaiian Hurricane Group, LLC Kuakini Hwy, #202 Kailua-Kona, HI Phone: Fax Page 10

13 Appendix A HURRICANE LOSS NOTICE An Insured can make a claim 3 ways. a. Call WP s Catastrophe claim reporting phone number ; b. Go to click on Report a Claim, fill out the requested information (Appendix B), and then click submit; or c. Call their agent to submit the claim. This loss notice form is only used to notify White Pine Insurance Company that you have incurred a hurricane loss. A representative from White Pine Insurance Company will contact you to help begin the process of claim settlement. (time date report) Date of Loss: Name: Location Address: Business phone #: Cell phone #: address: Preferred method to be contacted: Home phone Cell phone Text Best time to contact you: AM PM Are you able to continue to use the Building? Y/N Indicated Level of Damage: (Severe, Heavy, Moderate, Light) (circle appropriate letter) Structure: S / H / M / L Business Personal Property: S / H / M / L Extra Expenses & Loss of use/rents: S / H / M / L Comment: Page 11

Coastal Select Insurance Company Residential Windstorm-Hurricane (Form Number CS HU D003) Common Coverage Questions for Hurricane Losses

Coastal Select Insurance Company Residential Windstorm-Hurricane (Form Number CS HU D003) Common Coverage Questions for Hurricane Losses Special Note Please Read This information is for general information only. The insurance policy and endorsement forms, not this document, define the terms of coverage. All claims have unique facts and