BULLETIN OREGON MUTUAL INSURANCE COMPANY TO: February 23, California Regional Office. Commercial Auto Changes. All OMI California Agents

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1 DEPT: SUBJECT: DATE: BULLETIN NO: 1855 February 23, 2004 California Regional Office TO: All OMI California Agents Commercial Auto Changes Early in 2003 we began writing Commercial Auto coverage in California on a restricted basis. We now feel that we have sufficient experience with the program to expand it to all of our agencies. Although we will consider making exceptions upon referral, our intention is primarily to offer a market for risks: operating in local and intermediate ranges not operating Heavy Truck-Tractors or Extra-Heavy Trucks not operating Specialized Delivery classifications such as armored cars, auto dismantlers, junk dealers, etc. not having other high hazard exposures for which we have the collateral commercial business. We are using ISO manual rules and loss costs. Current Oregon Mutual exceptions are in the Oregon Mutual manual on pages CA-E-1 and CA-E-2 dated December, Those pages are effective until May 1, Effective May 1, 2004 for new and renewal business we will have a new filing in place for our Commercial Auto Program. We will continue using ISO manual rules and loss costs. Oregon Mutual exceptions starting then are in the Oregon Mutual manual pages CA-E-1 and CA-E-2 dated May, The referenced Oregon Mutual pages are attached to this Bulletin. The new filing implements newer ISO rules and loss costs but does not call for an overall rate increase. Changes to the Oregon Mutual pages are: Rule 1. We have added a rule to show our loss cost multipliers; and Rule 31. We have added an exception to increase the factors used for operators licensed less than five years. Should you have any questions or need additional information, please contact your Commercial Lines Underwriter or Agency Marketing Manager. Thank you for your continued support of Oregon Mutual. Katana Forbes California Commercial Lines Business Unit Manager BULLETIN

2 DIVISION ONE - AUTOMOBILE CALIFORNIA (04) EXCEPTION PAGE 1. APPLICATION OF THIS DIVISION D.3. Loss Cost Conversion To convert the loss costs shown in this division to Oregon Mutual Insurance Company rates, multiply by the appropriate Loss Cost Multiplier as shown below: Liability Physical Damage POLICY WRITING MINIMUM PREMIUM No Minimum 9. ADDITIONAL PREMIUM CHANGES B. Waiver of Premium No additional premiums will be waived. 10. RETURN PREMIUM CHANGES B. Waiver of Premium No return premiums will be waived. 11. POLICY CANCELLATIONS Paragraphs B.1., B.2., and B.3. are replaced with the following: B.1. Continuous And Annual Premium Payment Policies Compute the return premium pro rata of the unearned premium for the one year or annual installment period and round to the next higher whole dollar. B.2. Prepaid Policies If cancelled during the first year, compute the return premium pro rata of the unearned premium for the first year, plus the full annual premium for the subsequent years and round to the next higher whole dollar. B.3. Policies With Term Less Than One Year Compute the return premium pro rata of the unearned premium and round to the next higher whole dollar. 31. ELIGIBILITY Paragraph C.2.d. is amended as follows: The Operator Experience Factor to use for an operator licensed less than 5 years who is not the owner or principal operator, is The Operator Experience Factor to use for an operator licensed less than 5 years who is the owner or principal operator, is TOWING AND LABOR COSTS Paragraph B is replaced with the following: B. The limit for this coverage is $100 for each disablement. 50. AUTO DEALERS - ADDITIONAL PROVISIONS Paragraphs C.6. and C.7. are replaced with the following: C.6. Additional Insured - Grantor Of Franchise Use Additional Insured - Garages - Grantor Of Franchise Endorsement CA There is no charge for this C.7. Additional Insured - Lessor Of Leased Equipment Use Additional Insured - Lessor Of Leased Equipment Endorsement CA There is no charge for this May 2004 California CA-E-1

3 DIVISION ONE - AUTOMOBILE CALIFORNIA (04) EXCEPTION PAGE 52. AUTO SERVICE OPERATIONS OR TRAILER SALES - PREMIUM DEVELOPMENT Paragraph A.2. replaced with the following: The payroll for each employee, including the payroll or remuneration of any off-premises employees, must be the actual salary subject to an average maximum of $100 per week. All active proprietors or officers must be included at a fixed amount of $100 per week. Do not include the payroll of inactive proprietors or officers, or clerical office employees. Clerical office employees are those employees whose duties are strictly limited to keeping the insured s books or records or conducting correspondence. 53. AUTO SERVICE OPERATIONS OR TRAILER SALES - ADDITIONAL PROVISIONS Paragraphs C.6. and C.7. are replaced with the following: C.6. Additional Insured - Grantor Of Franchise Use Additional Insured - Garages - Grantor Of Franchise Endorsement CA There is no charge for this C.7. Additional Insured - Lessor Of Leased Equipment Use Additional Insured - Lessor Of Leased Equipment Endorsement CA There is no charge for this 57. YEAR 2000 COMPUTER-RELATED ENDORSEMENTS Paragraph A.1.c. is replaced with the following: A.1.c. Exclusion - Year 2000 Computer-Related And Other Electronic Problems - With Exception For Bodily Injury On Your Premises Endorsement To exclude coverage for risks associated with the change to the year 2000, other than bodily injury on the named insured's premises, attach Exclusion - Year 2000 Computer-Related And Other Electronic Problems - With Exception For Bodily Injury On Your Premises Endorsement CA There is no charge for this 76. MOBILE HOMES Use endorsement M0263A for autos rated under this rule to clarify coverages being provided. 79. REPOSSESSED AUTOS (Class Code 7925) Paragraph B.1.d. is replaced with the following: The minimum premium is $50 bodily injury and property for $25,000 limit. 89. NON-OWNERSHIP LIABILITY The following is added to Paragraph C.2.b.: For Social Service Agency Risks (Class Code 6670) the minimum premium for bodily injury and property damage liability is $25 bodily injury and property for $25,000 limit. The following is added to Paragraph C.2.d.: For Social Service Agency Risks (Class Code 6672) the minimum premium for bodily injury and property damage liability is $5 bodily injury and property for $25,000 limit. 90. HIRED AUTOS The following is added to Paragraph B.3.d. (Cost of Hire Basis - Liability Coverages): The minimum premium for bodily injury and property damage liability is $70 bodily injury and property for $25,000 limit. The following is added to Paragraph C.3. (Hired Auto Physical Damage Class Code 6614): The minimum premium for hired auto physical damage is $ LIMITED MEXICO COVERAGE Paragraph B. is replaced with the following: B. Premium Computation There is no charge for this CA-E-2 California May 2004

4 M8524A (4-04) IMPORTANT NOTICE TO POLICYHOLDERS This notice is a summary of the major changes in your Commercial Auto Coverage. It does not reference every editorial change. The major areas within the policy that reduce, broaden, or clarify coverage are highlighted below. Not all changes affect all policies and no policy will have all the forms attached. Refer to your own policy to determine what coverages you have. CA CA CA CA War Exclusion War Exclusion - Garage Coverage Form Washington War Exclusion Washington War Exclusion - Garage Coverage Form When any of these forms is attached to your policy coverage for liability (bodily injury, property damage and personal and advertising injury liability*), loss or damage arising out of war, warlike action and similar events is excluded under all coverage forms and policies. The War exclusion previously applied only to contractually assumed liability arising out of such events. With respect to Physical Damage Coverage and Trailer Interchange Coverage, the War and Military Action exclusion continues to apply. * Personal and advertising injury liability references apply to the Garage Coverage Form only. CA Washington Changes Previously, paragraph B.2. of the endorsement provided that the "Diminution In Value" exclusion found in the Commercial Auto Coverage Forms did not apply in Washington. We have revised the endorsement by deleting paragraph B.2. With this revision, Commercial Auto Coverage Forms do not provide for the payment of any loss in market value, as loss in market value is not a component of direct and accidental loss or damage as provided in the definition of "loss". CA Oregon Changes Previously, paragraph B.3. of the endorsement provided in general that when there were two policies covering a rental car, under a written agreement holding the person receiving the car liable for damages and; one policy provided coverage to a rental car company and; the other provided coverage to the person renting the car and; at the time of the accident, the renter is operating the rental car; then any insurance available to the renter is primary and the insurance issued to the rental company is excess. This paragraph has been rewritten to comply with 2003 Or. Laws (former Senate Bill 602), revised OR. REV. STAT to delete that primacy provision. Now coverage available to the renter is primary and any insurance available to the car rental company is excess. If the rental car is used in the person s employment, any insurance that is available to the employer is primary and any insurance available to the rental company is excess insurance. CA Oregon Uninsured Motorists Coverage - Bodily Injury CA Oregon Uninsured Motorists Coverage - Property Damage Private Passenger Types Previously in these endorsements "uninsured motor vehicle" was defined, in part, as a land motor vehicle or trailer for which no liability bond or policy at the time of an accident provides at least the amounts required by the applicable law where a covered auto is principally garaged. We have amended our definitions to comply with 2003 Or. Laws (former Senate Bill 247), which revised various sections of Oregon Law to delete the term "or bond" from the definition of "[un]insured vehicle". CA Washington Underinsured Motorists Coverage The Conditions are amended in Paragraph E.3. - Legal Action Against Us to indicate that any legal action against us under this Coverage Form must be brought within 1 year after the date on which the cause of action accrues. Includes Copyrighted Material of ISO Properties, Inc., 2003 M8524A (4-04) Page 1 of FRM

5 CA Washington Personal Injury Protection We have revised this endorsement in response to 2003 Washington Laws (Former HB 1084). The limitation for Essential Services in the Basic Personal Injury Protection Benefits Coverage has been changed from $40 per day to a maximum of $40 per day. The limitation for Essential Services in the Increased Personal Injury Protection Benefits Coverage has been changed from $40 per day to $14,600. Previously the endorsement, under income continuation benefits, provided for a 15% reduction of the insured's work income. We have deleted the language in paragraph A.2. which tied the 15% work income reduction solely to income continuation benefits and replaced it with language at the end of that section to show that the 15% reduction applies to the combined weekly payment for loss of income under: any workers compensation benefits; personal Injury Protection Coverage provided under this policy; and any other disability or loss of income benefits. CA Pollution Liability - Broadened Coverage For Covered Autos - Business Auto, Motor Carrier And Truckers Coverage Forms CA Pollution Liability - Broadened Coverage For Covered Autos - Garage Coverage Form An editorial revision has been made to indicate that the care, custody or control exclusion provided for in paragraph B.6. of the applicable Coverage Form does not apply to the coverage provided by these endorsements. This IMPORTANT NOTICE TO POLICYHOLDERS is not intended as a substitute for the policy provisions. The policy alone determines the scope of your insurance protection. It is very important that you read your policy carefully. If you have any questions regarding your policy or this notice, please contact your agent. Thank you for insuring with the Oregon Mutual Insurance Company. Includes Copyrighted Material of ISO Properties, Inc., 2003 M8524A (4-04) Page 2 of FRM