AUSTIN MUTUAL HOMEOWNERS COVERAGE AND HOME-BASED BUSINESS COVERAGE PROGRAM MANUAL. Sec. 2A Homeowners MN 06-16

Transcription

1 AUSTIN MUTUAL HOMEOWNERS COVERAGE AND HOME-BASED BUSINESS COVERAGE PROGRAM MANUAL Sec. 2A Homeowners MN 06-16

2 HOMEOWNERS INDEX Page General Rules All Homeowners Program (II)...H-1 Additional Interests (A)...H-1 Cancellation or Reduction in Limits of Liability of Coverage (C)...H-2 Change Endorsement (D)...H-3 Definitions (B)...H-1 - Approved Central Heat (4)...H-1 - Approved Chimney (1)...H-1 - Approved Swimming and Wading Pools (5)...H-2 - Auxiliary Heating/Cooking Unit (3)...H-1 - Construction (6)...H-2 - Fireplace (2)...H-1 - Fire Protection (7)...H-2 - Manufactured Residential Construction (8)...H-2 Increase in Limits of Liability or Addition of Coverage (E)...H-3 Minimum Additional Premium (F)...H-3 Policy Term (G)...H-3 Whole Dollar Premium (H)...H-3 Homeowners Comparison Chart (Basic Coverage-Standard Form-3, Home-Xtra Form-3, Home-Xtra+ Form-5)...H-A Homeowners Eligibility (quick review)...h-b Homeowners Optional Limits and Coverages - Rules (VIII)...H-17 Liability and Medical Payment (B)...H-24 - Additional Residence Premises - Occupied by an Insured (4)...H-24 - Additional Residence Premises - Rented to Others (5)...H-24 - Animal Liability Exclusion (18)...H-27 - Business Activities - Business Not Owned by the Insured (8)...H-25 - Care Provided for Others (13)...H-26 - Credit for Liability Coverage (17)...H-27 - Domestic Employees (3)...H-24 - Farm Personal Liability (16)...H-27 - Golf Cart Liability (14)...H-26 - Incidental Farming (15)...H-26 - Increase Limits - Coverages L and M (1)...H-24 - Initial Residence Premises in Three and Four Family Dwelling (2)...H-24 - Office, Professional, Private School or Studio Occupancy (9)...H-25 - Owned Snowmobiles and All Terrain Vehicles - Off Premises (10)...H-25 - Personal Injury (12)...H-26 - Private Structures - Rented to Others (6)...H-24 - Water Bed Liability (7)...H-25 - Watercraft (11)...H-25 Property Damage (A)...H-17 - Actual Cash Value (1)...H-17 - Accidental Discharge - Water-filled Furniture (16)...H-19 - Additional and Secondary Locations (46)...H-23 - Additional Coverage Endorsement C-29A (38)...H-22 - Additional Living Costs and Loss of Rents - Increased Limit (28)...H-21 - Association Deductible Coverage - Additional Locations (37)...H-22 - Automatic Adjustment of Limits (6)...H-18 - Business Property - Higher Limit (22)...H-20 - Cosmetic Damage Exclusion (50)...H-24 - Earthquake Coverage (7)...H-18 Sec. 2A Homeowners INDEX-1 MN 06-16

3 HOMEOWNERS INDEX Page - Earthquake Loss Assessment (35)...H-22 - Earthquake Association Deductible (36)...H-22 - Electronic Devices - Higher Limit (23)...H-20 - Expanded Ordinance or Law Coverage (4)...H-17 - Expanded Replacement Cost Terms (44)...H-23 - Expanded Water Damage (Sewers, Drains and Sumps) - Higher Limit (39)...H-22 - Fire Department Service Charge - Higher Limit (30)...H-21 - Golf Carts (43)...H-23 - Guns - Higher Limit (Loss by Theft) (20)...H-20 - Home Computers (26)...H-20 - Ice Fishing Houses - Higher Limit (25)...H-20 - Identity Recovery Coverage (47)...H-23 - Loss Assessment and Association Deductible - Higher Limit Coverage (33)...H-21 - Loss Assessment Coverage - Additional Locations (34)...H-21 - Money - Higher Limit (17)...H-19 - Motorized Vehicles - Higher Limit (24)...H-20 - Personal Property - Increased Limit (14)...H-19 - Personal Property - Reduced Limit (15)...H-19 - Premium Modification (45)...H-23 - Private Structures (9)...H-18 Increased Limit...H-18 Reduced Limit...H-18 - Private Structures - Away from Premises (13)...H-19 - Private Structures - Care Provided for Others (12)...H-19 - Private Structures - Rented to Others (10)...H-18 - Private Structures - With Incidental Occupancies (11)...H-19 - Refrigerated Food Spoilage - Higher Limit (27)...H-20 - Replacement Value - Personal Property (5)...H-17 - Roof Surfacing Amendment - ACV Wind/Hail (48)...H-24 - Roof Surfacing Amendment - Actual Cash Value (51)...H-24 - Roof Surfacing Buyback Amendment (49)...H-24 - Scheduled Glass (32)...H-21 - Scheduled Personal Property (31)...H-21 - Securities - Higher Limit (18)...H-19 - Silverware, Goldware, Pewterware - Higher Limit (Loss by Theft) (21)...H-20 - Special Personal Property Coverage (40)...H-22 - Tenant's Improvements - Higher Limit (29)...H-21 - Tenant's Personal Property - Special Coverage (2)...H-17 - Theft of Building Materials Coverage (8)...H-18 - Unit-Owner's Coverage A - Increased Limit (41)...H-22 - Unit-Owner's Personal Property - Special Coverage (3)...H-17 - Unit-Owner's Special Coverage (Coverage A) (42)...H-22 - Unscheduled Jewelry, Watches and Furs-Higher Limit (Loss by Theft) (19)...H-20 Homeowners Programs Owner's Policy (IV)...H-7 Home-Xtra Program (A)...H-7 Optional Coverages (C)...H-9 Standard Program (B)...H-8 Sec. 2A Homeowners INDEX-2 MN 06-16

4 HOMEOWNERS INDEX Page Homeowners State Page (IX)...H-29 Experience Rating Plan (C)...H-29 Guideline and Rule - Exception (B)...H-29 Rating Factors (D)...H-31 Rate Calculation (E)...H-33 Table D (Optional Property Coverage)...H-34 Table E (Optional Liability/Medical Payments Coverage)...H-35 Territory Definitions (A)...H-29 Owner's Policy Rating Information (V)...H-10 Deductible Options and Factors (B)...H-10 Premium Determination (A)...H-10 Premium Modifications (C)...H-11 Tenant/Unit-Owners Policy Rating Information (VII)...H-15 Deductible Options and Factors (B)...H-16 Premium Determination (A)...H-15 Premium Modifications (C)...H-16 Underwriting Guidelines All Homeowners Programs (I)...H-1 Application (A)...H-1 Guideline and Rule - Exceptions (B)...H-1 Underwriting Guidelines Homeowners - Owner's Policy (III)...H-3 Basic Coverage (B)...H-3 Basic Forms (C)...H-3 Binding Authority (F)...H-6 Eligibility (D)...H-4 Ineligibility (E)...H-4 Package Policy Minimum Limits (H)...H-6 Recommended Coverage Guide (G)...H-6 Required Coverages (A)...H-3 Underwriting Guidelines Homeowners - Tenant/Unit-Owner's Policy (VI)...H-13 Basic Coverage (B)...H-13 Basic Forms (C)...H-13 Binding Authority (F)...H-14 Eligibility (D)...H-13 Ineligibility (E)...H-13 Optional Coverage (I)...H-15 Package Policy Minimum Limits (G)...H-14 Required Coverages (A)...H-13 Tenant/Unit-Owners Programs (H)...H-15 Sec. 2A Homeowners INDEX-3 MN 06-16

5 HOME-BASED BUSINESS COVERAGE INDEX Page Coverage Options (IV)...H-39 Liability and Medical Payment Options (B)...H-40 - Additional Insured - Controlling Interests (9)...H-41 - Additional Insured - Landlords (8)...H-41 - Additional Insured - Lessor of Leased Equipment (10)...H-42 - Additional Insured - Newly Acquired Organizations (7)...H-41 - Cosmetologists' Liability (6)...H-41 - Damage to Property of Others - Higher Limit (2)...H-40 - Expanded Contractual Liability (4)...H-41 - Fire Legal Liability - Higher Limit (1)...H-40 - Non-Owner Auto Liability and Hired Auto Liability (5)...H-41 - Personal Injury and Advertising Injury Liability (3)...H-41 Property Damage Options (A)...H-39 - Accounts Receivable (2)...H-39 - Business Property Away From Premises (7)...H-40 - Guests' Personal Property (Bed and Breakfast Operations) (8)...H-40 - Loss of Income (3)...H-39 - Related Private Structures (1)...H-39 - Signs - Higher Limit (6)...H-40 - Spoilage (4)...H-40 - Valuable Papers and Records - Higher Limit (5)...H-40 General Rules (II)...H-37 Aggregate Limits (C)...H-37 Policy Format (D)...H-38 Principal Liability Coverages (B)...H-37 Principal Property Coverages (A)...H-37 Home-Based Business Classifications (V)...H-42 Bed and Breakfast (E)...H-44 Crafts (D)...H-43 Office (A)...H-42 Retail (C)...H-43 Service (B)...H-42 Home-Based Business Coverage Premium Tables Base Coverage Table - F...H-46 Liability Coverage Options Table - H...H-47 Property Coverage Options Table - G...H-46 Rating Information Rule (III)...H-39 Premium Determination (A)...H-39 Underwriting Guidelines (I)...H-36 Application (A)...H-36 Eligible Risks (B)...H-36 Ineligible Risks (C)...H-36 Sec. 2A Homeowners INDEX-4 MN 06-16

6 HOMEOWNERS COMPARISON CHART Standard Home-Xtra Home-Xtra + Basic Coverage Form - 3 Form - 3 Form 5 A - Residence (minimum limit) $125,000 $200,000 $250,000 B - Private Structures 10% of Cov. A 10% of Cov. A 10% of Cov. A C - Personal Property 60% of Cov. A 70% of Cov. A 70% of Cov. A D - Additional Living Costs and Loss of Rent 20% of Cov. A Actual Loss Sus- Actual Loss Sustained in 12 mo. tained in 12 mo. L - Liability $100,000 $100,000 $100,000 M - Medical Payments $1,000 $1,000 $1,000 BASIC DEDUCTIBLE $500 $500 $500 OTHER COVERAGES Expanded Replacement Cost - Cov. A Optional Included Included Replacement Value - Cov. C Optional Included Included Risk of Direct Physical Loss - Cov. C N/A Optional Included Special Limits on Unsched. Personal Property Money $250 $250 $250 Securities $1,500 $2,500 $2,500 Electronic Devices, Accessories & Antennas $1,500 $1,500 $2,500 Watercraft $1,500 $2,500 $2,500 Trailers N.O.C. $1,500 $2,500 $2,500 Jewelry (theft) $2,500 $2,500 $2,500 Silverware (theft) $2,500 $2,500 $2,500 Guns (theft) $2,500 $2,500 $2,500 Misplaced or Lost Jewelry, Silverware or Guns N/A Optional Included Business Property -On Premises $2,500 $2,500 $2,500 -Off Premises $250 $250 $500 Fire Department Service Charge $500 $500 $1,000 Credit Card $1,500 $1,500 $5,000 Grave Markers $1,500 $1,500 $2,500 Refrigerated Food Spoilage $500 $500 $1,000 Motorized Vehicle to Service Premises $5,000 $5,000 $5,000 Ice Fishing Houses $1,500 $1,500 $1,500 Automatic Adjustment of Limits Included Included Included Lock & Garage Door Transmitter Replacement N/A N/A $500 Water Damage (sewer, drains & sumps) Optional Optional $2,500 Identity Recovery Coverage $15,000 $15,000 $15,000 Bldg. Increase Cost Ordinance or Law Limited Cov. ** Included Included Included Watercraft Liability (outboard motors up to 50 h.p.) Included Included Included Personal Injury Liability Optional Included Included Note: All owners forms provide ACV coverage on asphalt roofs that are damaged by wind or hail when over 15 years old at the time of loss. See Form C380. ** Exception: Minnesota and Wisconsin coverage unlimited Sec. 2A Homeowners H-A MN 02-14

7 GUIDELINES MINIMUM LIMIT COVERAGE A DWELLING Primary Secondary COVERAGE C PER PROP. COVERAGE D ADDITIONAL LIVING COSTS AND LOSS OR RENTS MAXIMUM BINDING LIMITS PROPERTY COVERAGE Primary (Prot./Part. Prot.) (Unprotected) Secondary (Prot./Part. Prot.) (Unprotected) LIAB. & MED. PAY COVERAGE STANDARD FORMS - 2, 3 $125,000 $75,000 60% of Coverage A 20% of Coverage A AUSTIN HOMEOWNERS PROGRAM ELIGIBILITY $750,000 $250,000 $500,000 $250,000 HOME-XTRA FORM - 3 $200,000 N/A 70% of Coverage A Actual loss sustained in 12 month period $1,000,000 $250,000 N/A N/A HOME-XTRA + FORM - 5 $250,000 N/A 70% of Coverage A Actual loss sustained in 12 month period. $1,000,000 $250,000 N/A N/A TENANTS FORM - 4 N/A (with Std. Forms 2 & 3) $20,000 40% of Coverage C LIABILITY $500,000 PER OCCURRENCE/ MED PAY - $5,000 PER PERSON $25,000 PER ACCIDENT $100,000* $50,000 N/A N/A UNIT-OWNERS FORM - 6 N/A (with Std. Forms 2 & 3) $20,000 40% of Coverage C $250,000 $100,000 N/A N/A DWELLING AGE LIMIT and/or components updated by years indicated. HEATING & ELECTRICAL SERVICE REQUIRES FAMILY UNITS IN BUILDING INSURANCE TO VALUE FOR COVERAGE A DWELLING FIRE PROTECTION AUXILIARY HEATING/COOKING UNIT (Inside or Outside) SOLID FUEL BINDING AUTHORITY FOR HIGHER LIMITS REQUIRE PRIOR APPROVAL NONE NONE NONE NONE NONE Plumbing - 40 years Plumbing - 40 years Plumbing - 40 years Heating - 30 years Heating - 30 years Heating - 30 years Roof - 20 years Roof - 20 years Roof - 20 years CENTRAL HEATING SYSTEM MINIMUM 100 AMP WIRING ONE TO FOUR FAMILY & ONE FAMILY ONE FAMILY NO LIMIT NO LIMIT TOWN OR ROW HOUSE MINIMUM - 90% OF 100% OF 100% OF N/A N/A REPLACEMENT COST REPLACEMENT COST REPLACEMENT COST DWELLING MUST BE LOCATED WITHIN 8 MILES OF FIRE PROTECTION SERVICE YES WITH SURCHARGE PROTECTED ONLY YES WITH SURCHARGE PROTECTED ONLY YES WITH SURCHARGE PROTECTED ONLY MOBILE MANUFACTURED HOMES NO NO NO NO NO RECREATIONAL VEHICLES SNOWMOBILES NOT MORE THAN 650 CCS. FOR SNOWMOBILES OVER 650 CCS, REFER TO THE UNDERWRITING DEPARTMENT. PERSONAL WATERCRAFT (JET SKIS, ETC.) NOT MORE THAN 100 HP/900 CC FOR 1-2 PASSENGER DESIGNED JET SKIS, OR 120 HP/1,000 CC FOR 3-4 PASSENGER DESIGNED JET SKIS. * If Tenants coverage for the applicant is being rewritten from an existing homeowners (owner's form) policy, binding authority is $500,000 for Coverage C limit. N/A N/A Sec. 2A Homeowners H-B MN 06-16

8 HOMEOWNERS Homeowners provides a package of property and liability coverages, with the flexibility to add various optional coverages, enabling you to tailor a policy to fit the individual needs of your clients. I. UNDERWRITING GUIDELINES ALL HOMEOWNERS PROGRAMS The following underwriting guideline applies, in addition to guidelines provided later. A. APPLICATION The application must be submitted electronically through the Austin Rating Tool (ART) - on or before the effective date of coverage for each residence. The agent must keep and retain all original signed applications including but not limited to the signed Fair Credit Reporting Act compliance notice. Failure to furnish all of the information requested in the application may jeopardize coverage and delay issuance of the policy. A copy of the Austin Mutual "Notice of Insurance Information Practices" must be given to the applicant at this time. All new business will be inspected and photos obtained by an inspection company contracted by Austin Mutual. However, agents play a vital part in field underwriting, and your personal knowledge of the risk together with sound underwriting judgment, are essential to the success of this program. B. GUIDELINE AND RULE EXCEPTIONS When noted refer to State Page. II. GENERAL RULES ALL HOMEOWNERS PROGRAMS A. ADDITIONAL INTERESTS A homeowners policy can be endorsed to cover the interests of co-owners, executors, administrators, trustees, loss payee or beneficiaries in the insured premises or other interests of other residents of the insured premises. Interests in Coverage A and B and premises liability. Attach Endorsement ML-41 Other interest - refer to Company for eligibility. B. DEFINITIONS 1. Approved chimney means: For liquid or gas fuels - A prefabricated UL approved chimney, or a masonry chimney constructed from the ground up with a flue liner. Sec. 2A Homeowners H-1 For solid fuels (coal, wood or pellets): Auxiliary heating/cooking unit - (a) masonry chimney constructed from the ground up with a flue liner; (b) Class A, UL approved steel or prefabricated chimney. (Auxiliary heating/cooking unit surcharge applies.) APPROVED MANUFACTURED CHIMNEYS a. Security Chimney-Security S-2100 b. Security Chimney-Security ASHT c. Selkirk Metalbestos-Sentinel CF d. Selkirk Metalbestos-Model SSII e. Oliver Macleod-Pro Jet 3103 f. Oliver Macleod-Pro Jet 3000 g. Jackes Evans-Super 21 h. Interpace Corp.-Hart & Cooley Metlvent i. Simpson Dura Vent-Dura Plus System j. American Metal Prod. Co.-Ameri Tec 2100HS k. Condensation Engineering-Vitroliner HS-HT l. Standex Energy Systems-Super Flue 2100 m. Kemstone Mfg.-Kemstone Safety Flue n. Metal Fab Inc.-Temp/Guard o. Van-Packer Refractory Lined Chimney Model RC p. ISO-Kaern-All Purpose Chimney q. Air-Jet 2100 All Fuel Chimney 2. Fireplace means: A masonry chimney constructed from the ground up with a flue liner, or UL approved steel or prefabricated chimney. (Fireplace inserts - refer to Company for prior approval.) 3. Auxiliary heating/cooking unit means: In addition to the standard central heating and cooking appliances, another appliance for heating or cooking (solid fuel - wood, coal or pellets) connected to an approved chimney. Such auxiliary heating/cooking unit will only be considered in the residence dwelling. Heating unit also includes outdoor woodburning appliances such as: Forced air heating system, or Hot water heating system. (An auxiliary heating/cooking unit is subject to a premium surcharge.) 4. Approved central heat means: A central heating unit thermostatically controlled, designed and maintained to circulate heat through ducts or plumbing to all living areas of the dwelling. The heating must be a hot air or hot water furnace system fueled by gas or oil and vented to an approved chimney (refer to Definitions). This includes a total electric heating system designed and maintained to completely heat all living areas of the dwelling. MN 10-12

9 5. Approved swimming and wading pools means: A swimming or wading pool above or below ground with water depth less than two feet; or, if water depth is more than two feet, pool and adjacent area must be completely enclosed by a fence at least four feet high, constructed in a manner that will prevent children from crawling through or under it. The fenced area must have a security gate that is closed and locked when the pool is not in use. 6. Construction Fire Resistive - A dwelling with exterior walls, floors and roof constructed entirely of masonry or incombustible materials on incombustible supports and having a Fire Resistance Rating of at least one hour. Masonry - A dwelling with walls of masonry or masonry-veneered construction. Frame - A dwelling with walls of frame or metalsheathed or stuccoed-framed construction, or with walls of metal or metal lath and plaster on combustible supports. Mixed - A dwelling shall be classed as frame construction when the wall area of frame construction (including gables) exceeds 33 1/3 percent of the total wall area. 7. Fire Protection a. Protected Building is located - within 1,000 feet of a fire hydrant, and - within five road miles of a responding fire department, or Building is located within a partially protected area and not more than three road miles of a city limits or protected area. b. Partially protected Building is located - over 1,000 feet of a fire hydrant, and - within five road miles of a responding fire department. c. Unprotected All other locations 8. Manufactured Residential Construction a. Modular housing Complete sections are fabricated in an offsite manufacturing facility, and are shipped to the site for set-down on permanent foundation. At the site two or more modules are joined and finished by a contractor. Water, electricity and other required utilities are then connected and stick-build additions or attached garage may be added. Are built to state specific code and bear a label of construction in compliance with a state's code. b. Mobile-manufactured housing (previously called mobile home) Similar to modular construction but are designed and build as complete units, with no further site construction necessary. Are built to federal standards and inspected by federally certified agencies. (With red metal HUD construction code label) Manufactured homes are built on a non-removable steel chassis. c. Paneled or fabricated housing Similar to modular construction but is completed from two-dimensional wall units that are assembled on-site. C. CANCELLATION OR REDUCTION IN LIMITS OF LIABILITY OR COVERAGE It is not permissible to cancel any of the required coverages in the policy unless the entire policy is canceled. The policy must be canceled in accordance with the terms of applicable cancellation provisions. The return premium, if any, is computed on a pro rata basis. In order to obtain a flat cancellation, the original of the current declarations page or a properly signed release must be received in the Home Office within 30 days of the effective date. Sec. 2A Homeowners H-2 MN 01-06

10 D. CHANGE ENDORSEMENT Whenever a policy is changed, a revised policy declarations page will be issued. The premium adjustment information, along with the effective date of change, will be shown on the declarations page. E. INCREASE IN LIMITS OF LIABILITY OR ADDITION OF COVERAGE The limits of liability may be increased or coverages may be added during the term of the policy and the additional premium shall be computed on a pro rata basis, subject to all rules of this Manual. F. MINIMUM ADDITIONAL PREMIUM When an endorsement requiring an additional premium is issued subsequent to the inception date of the policy, such total additional premium shall be the actual premium developed. G. POLICY TERM Policies are issued on a one-year basis. All policies are issued on a continuous renewal plan, retaining the same master policy number as long as the policy remains in force. The renewal premium is based upon the premiums in effect on renewal date. A new declarations page is issued each renewal date. If form edition dates have changed, the then current forms and endorsements are made a part of the policy. A complete new policy contract is issued on the sixth anniversary date. H. WHOLE DOLLAR PREMIUM Premiums will be rounded to the nearest dollar. III. UNDERWRITING GUIDELINES HOMEOWNERS - OWNER'S POLICY A. REQUIRED COVERAGES 1. Principal Coverages - A, B, C, D, L, and M All principal coverages for a residence premises must be included under a homeowners policy. 2. Risk Conditions The following exposures must be included for Coverage L, Liability; and Coverage M, Medical Payments to Others, and the additional premium developed from the Premium Section of the Manual must be charged. All additional residence premises where the named insured or spouse maintains a residence other than business or farm properties. Additional residence property acquired during the policy term. When additional residence property occupied by the insured is acquired or disposed of during the term of the policy, additional or return premiums will be computed pro rata from the date of acquisition to the date of disposition. All residence employees of the named insured or spouse not covered or not required to be covered by Worker's Compensation Insurance (charge required for residence employees in excess of two.) Incidental office, professional, private school or studio occupancies by the insured on residential premises of the insured. B. BASIC COVERAGE 1. Principal Property Coverages Coverage A - Residence Coverage B - Related Private Structures Coverage C - Personal Property Coverage D - Additional Living Costs and Loss of Rent 2. Principal Liability Coverages Coverage L - Liability Coverage M - Medical Payments to Others 3. Incidental Property and Liability Coverages Varies by coverage form. (Refer to Company) C. BASIC FORM 1. Home-Xtra Program Home-Xtra Special Form - 3 Home-Xtra+ Special Building and Contents Form Standard Program Broad Form - 2 Special Form - 3 Sec. 2A Homeowners H-3 MN 02-06

11 D. ELIGIBILITY 1. Home-Xtra or Standard Program A policy may be issued to an owner-occupant of a dwelling used only for private residential purposes and no more than two boarders or roomers per family (except as indicated); and dwelling is equipped with standard central heating and cooking appliances, however, may include an auxiliary heating/cooking (solid fuel) unit. This condition is subject to a premium surcharge. Protected only. Refer to Definitions - Auxiliary heating/cooking unit. may include certain incidental business activities on the insured premises, without affecting the eligibility status, provided the premises is occupied principally for private residential purposes. (Refer to Company for eligible business occupancies); may cover a dwelling under construction (completed and occupied within six-months) only for the interest of the intended owner-occupant; may be extended to incidental farming activity on the insured premises, only if the farming activity does not affect the eligibility status, and the premises is occupied principally for private residential purposes and farming is not the insured's occupation and the insured property is not exposed within 200 feet of any farm building. Incidental farming includes activities such as the farming of garden plots and the grazing of small numbers of animals, subject to the following: maximum livestock exposure - 4 horses for pleasure use, or - 6 head of livestock with premium charge. maximum 40 acres for incidental farming - by the named insured, or - by a tenant (rented to others). 2. Home-Xtra Program The following conditions also apply. The dwelling must be: occupied by no more than one family. built within the last 30 years with roof replaced within last 20 years. (Older dwellings that are completely updated may qualify for the Standard Homeowners program. Refer to Eligibility Rule.) 3. Standard Program The following conditions also apply. Dwelling must have the following: Electrical amp service. Plumbing - Updated in the last 40 years. Heating - Replaced in the last 30 years. Roof - Re-shingled in the last 20 years. Occupancy may include up to four families. Policy may be extended to one of the co-owners of the dwelling provided each co-owner occupies a separate apartment within the dwelling (used only for residential purposes). Coverage for the other co-owner's interest in the dwelling, related private structures and for premises liability may be provided by Endorsement ML-41. A secondary or seasonal residence located in the same state as the primary residence may be insured on the policy covering the primary residence, using Endorsement ML-67, or on a separate homeowners policy (provided the insured's primary residence is insured with this Company). A separate policy is required for a secondary residence in another state in which the Company operates. The Tenants Form-4 or Unit-Owners Form-6, coverage may be written for a secondary or seasonal residence. E. INELIGIBILITY Risks with the following characteristics are not eligible for homeowners coverage. 1. Home-Xtra or Standard Program No risks with losses in the prior three years other than one weather related claim. No risks with any water damage claim within the prior five years. Dwelling without central heat. Refer to Definitions - Approved central heat. Sec. 2A Homeowners H-4 Updated MN 06-15

12 Risks with an auxiliary wood burning heating unit in an attached garage or related private structure. No solid fuel burning cooking/heating appliances in partially protected or unprotected risks. Dwelling (primary, secondary or seasonal) with central heat and auxiliary heating/cooking (solid fuel) units not vented to an approved chimney. Refer to Definitions - Approved chimney and Auxiliary heating/cooking unit. Dwelling with poor housekeeping, either inside the residence or on the outside premises. Risks with plumbing pipes and lines that are comprised of galvanized, lead or polybutylene material and where the combined total exceeds 10% of all plumbing. No log homes. Dwellings with synthetic stucco, EIFS (Exterior, Insulation and Finish Systems) siding. Dwelling style old and completely outdated architecturally. Dwelling without continuous masonry foundations. Dwelling with a flat roof. Dwelling that is next to unusually hazardous exposures. Risks with a business conducted on the premises that is either uninsured or insured elsewhere. Mobile Manufactured Home. Risk with more than three dogs. Risks involving domestic pets which are vicious and have a tendency to bite; wild animals, such as lions, bears, monkeys, wolves, etc.; exotic pets, such as snakes, tarantulas, piranha fish, etc. Risks with any trained guard dogs or any dogs of a breed generally accepted as aggressive, including but not limited to: Pit Bulls (American Staffordshire Terriers and Bull Terriers), Rottweilers, German Shepherds, Hybrid Wolves, Doberman Pinschers, Chows, Akitas, Presa Canario (Canary Dog), American Bulldogs, Colorado Bulldogs, Alaskan Malamute, and Mastiff (American Bandogge, Bull, Neapolitan). Sec. 2A Homeowners H-5 Risks involving the ownership of horses used in rodeos, races, exhibitions, horse shows, breeding, boarding, raising and selling, or any horsemanship activities of a business nature. (Horses used for private pleasure, refer to Optional Liability Coverages.) Risks that were formerly farm property that still contain farm buildings and/or farm liability exposures. Risks with unapproved swimming or wading pools. Refer to Definitions - Approved swimming and wading pools. Risks that have swimming pools with diving boards or slides. Risks with trampolines. Risks that are vacant or unoccupied. Risks that have sidewalks, steps or stairs in poor condition. Optional physical damage and liability coverage will not be extended to: - Three wheel all terrain vehicles, - Snowmobiles and all terrain vehicles (ATVs) -- Model-"Arctic Cat Kitty Cat (60 ccs.)" -- Skidoo Mini-Z -- Any unit with engine rating over 650 ccs passenger designed jet skis exceeding 100 hp/900 cc, or 3-4 passenger designed jet skis exceeding 120 hp/1,000 cc. - The above described recreational units if they are: -- licensed for use on public roads, -- used in racing or competitive activities, -- rented to others, -- modified for accelerated performance. Note: Contact the Underwriting Department for binding approval on snowmobiles, ATVs and personal watercraft with larger engine ratings. Consideration will be given providing that there are no operators under the age of 16, acceptable driving history and loss history with supporting coverage. The following will not be eligible: Operators of snowmobiles, ATVs and personal watercraft units who have had: -- More than one moving violation per member of household, or two minor violations in the household within the last three years; -- Any serious or major violations within the last five years; MN 06-16

13 -- Any at fault accidents in the last three years; and -- Any violations or at-fault accidents for drivers (under the age of 23) within the last five years. 2. Home-Xtra Program Additional ineligible characteristics apply. Secondary or seasonal dwellings. Town and row houses. F. BINDING AUTHORITY Coverage may be bound, subject to all underwriting guidelines, and the following conditions. 1. Home-Xtra or Standard Program Dwelling must be located 8 miles or less from a responding fire protection service. Optional physical damage and liability coverage for: - Snowmobiles up to 650 ccs. - Personal watercraft (jet skis, etc.) not more than 100 hp/900 cc for 1-2 passenger designed jet skis, or 120 hp/1,000 cc for 3-4 passenger designed jet skis. Inland Marine - Refer to Inland Marine section of your Manual. Earthquake Coverage Effective Date - Any time there is an earthquake of 5.0 or greater on the Richter scale, including any resulting aftershocks, earthquake coverage cannot be bound or added until 15 days have passed. No binding authority if uncontained fire within a five mile radius. No binding authority if flood waters have created a scenario where Water Sewer Backup losses are more likely to occur. 2. Home-Xtra Program Physical Damage Coverage Limits - Permanent residence: Coverage A, $1,000,000 - Protected and Partially protected; $250,000 - Unprotected. Liability Coverage Limits - Bodily injury and property damage: Coverage L, $500,000 per occurrence; Medical payments: Coverage M, $5,000 per person, $25,000 per accident. 3. Standard Program Physical Damage Coverage Limits - Permanent residence: Coverage A, $750,000 - Protected and Partially protected; $250,000 - Unprotected. Liability Coverage Limits - Bodily injury and property damage: Coverage L, $500,000 per occurrence; Medical payments: Coverage M, $5,000 per person, $25,000 per accident. Secondary or seasonal dwelling - Coverage A, $500,000 - Protected and Partially protected; $250,000 - Unprotected. Exceptions may be considered. Refer to Company for authorization. G. RECOMMENDED COVERAGE GUIDE 1. Home-Xtra Program Age* of Cov. A Coverage Dwelling Limit Form Up to % of Form 3 & 5 years Replcmt.value Dwellings over age limit are not eligible under the Home-Xtra Program. Refer to Eligibility Rule. * (Exception refer to State Page) 2. Standard Program Cov. A Coverage Limit Form % of Form 2 & 3 Replcmt.value If market value is less than 90 percent of replacement value, the dwelling may be eligible for modified replacement cost. H. PACKAGE POLICY MINIMUM LIMITS 1. Home-Xtra Program Principal Coverage Form 3 Form 5 A $200,000 $250,000 B 10% of Cov. A C D 70%* of Cov. A (Actual loss sustained in 12 mo. period) Sec. 2A Homeowners H-6 MN 06-16

14 2. Standard Program - (one or two family dwelling)* Principal Coverage Form - 2 or 3 A (Primary) $125,000 A (Seasonal) $ 75,000 B 10% of Cov. A C 60%* of Cov. A D 20%* of Cov. A * Three or four family dwelling exception - Cov. C 30% of Cov. A Cov. D 10% of Cov. A 3. All Programs Principal Coverage L M 4. Other Provisions All Forms $100,000 each occurrence $1,000 each person/ $25,000 each accident Principal Coverage B, C, D, L, and M limits may be adjusted. Refer to Optional Coverages. All homeowners (with replacement cost coverage) policies require the Automatic Adjustment of Limits provision for Coverage A, B, C and D. IV. HOMEOWNERS PROGRAMS OWNER'S POLICY Note: All owners forms provide ACV coverage on asphalt roofs that are damaged by wind or hail when over 15 years old at the time of loss. Amendment Form C380 Roof Surfacing Amendment - Actual Cash Value Terms for Windstorm or Hail Loss on Asphalt Roof Surfaces Over 15 Years Old is attached to all owners Forms 1, 2, 3, 5, and 6. A. HOME-XTRA PROGRAM This program is designed for the preferred class, one family dwelling occupied by responsible persons. Coverage is provided under two options. 1. Home-Xtra Form - 3 a. Property Coverage - Provides for risks of direct physical loss, unless the loss is excluded, under Coverage A, B and D. Provides for perils of fire, extended coverage, and other named perils (same perils as provided in Broad Form - 2), under Coverage C. Sec. 2A Homeowners H-7 b. Liability and Medical Payments Coverage - provides for: Coverage L -- Personal Liability -- damages due to bodily injury or property damage caused by an occurrence related to the insured premises or the insured's personal activities. Coverage M -- Medical Payments to Others -- medical expenses incurred by persons who are not insureds if bodily injury occurs in connection with the insured premises or the insured's personal activities. c. Expanded Provisions provide - Coverage C - Personal Property limit is 70 percent of Coverage A - Residence limit. Coverage D - Additional Living Costs and Loss of Rents limit of insurance is subject to the limit of actual loss sustained in a twelve-month period. d. Broadening Coverages provide - Increased Coverage A limit for Dwelling. In the event of a total loss, the limit of liability shown for Coverage B - Private Structures, may be added to the Coverage A - Residence, limit of liability when the combined replacement value of all detached private structures on the premises, excluding fences, driveways, sidewalks and inground pools, is less than $1,000. Personal Property - Limitations on Certain Property. Limits of coverage are increased for various classes of property. Expanded Replacement Cost or Excess Dwelling Coverage is included, subject to a maximum limit of 125 percent of the amount shown on the declarations for Coverage A - Residence. Replacement Value provisions are included for Coverage C - Personal Property and selected personal property items. Automatic Adjustment of Limits is included for Coverage A, B, C and D, to be increased annually by a percentage shown on the declarations. MN 06-16

15 Common Loss Deductible provision is included which provides an option for a single highest deductible to apply when a loss occurrence involves more than one coverage part under the homeowners policy, or other policy (except business personal property coverage) of the insured, which is provided by us. Extends liability and medical payments coverage automatically to watercraft powered by outboard motors up to 50 h.p. Coverage L - Personal Liability, is extended to include personal injury coverage. 2. Home-Xtra + Form - 5 a. Property Coverage - Provides for risks of direct physical loss, unless the loss is excluded, under Coverage A, B, C and D. b. Liability and Medical Payments Coverage - Provides for: Coverage L -- Personal Liability -- damages due to bodily injury or property damage caused by an occurrence related to the insured premises or the insured's personal activities. Coverage M -- Medical Payments to Others -- medical expenses incurred by persons who are not insureds if bodily injury occurs in connection with the insured premises or the insured's personal activities. c. Expanded Provisions provide - Coverage C - Personal Property limit is 70 percent of Coverage A - Residence limit. Other Coverage C - Personal Property provisions include: - Grave Markers limit $2,500 - Lock Replacement limit $ Credit Card limit $5,000 - Fire Department Service Charge limit $1,000 - Electronic Device limit $2,500 Coverage D - Additional Living Costs and Loss of Rents limit of insurance is subject to the limit of actual loss sustained in a twelvemonth period. Sec. 2A Homeowners H-8 d. Broadening Coverages provide - Increased Coverage A limit for Dwelling. In the event of a total loss, the limit of liability shown for Coverage B - Private Structures, may be added to the Coverage A - Residence, limit of liability when the combined replacement value of all detached private structures on the premises, excluding fences, driveways, sidewalks and inground pools is less than $1,000. Increases the coverage limit for business property away from the insured premises to $500. Refrigerated Food Spoilage coverage is increased to $1,000. Extended Water Damage (Sewers, Drains and Sumps) coverage up to $2,500, is included. Expanded Replacement Cost or Excess Dwelling Coverage is included, subject to a maximum limit of 125 percent of the amount shown on the declarations for Coverage A - Residence. Automatic Adjustment of Limits is included for Coverage A, B, C and D, to be increased annually by a percentage shown on the declarations. Replacement Value provisions are included for Coverage C - Personal Property and selected items. Common Loss Deductible provision is included which provides an option for a single highest deductible to apply when a loss occurrence involves more than one coverage part under the homeowners policy, or other policy (except business personal property coverage) of the insured, which is provided by us. Extends liability and medical payments coverage automatically to watercraft powered by outboard motors up to 50 h.p. Coverage L - Personal Liability includes personal injury coverages. B. STANDARD PROGRAM This program is designed for better than average one to four family dwellings occupied by respon- MN 03-07

16 sible persons, and insured for at least 90 percent of replacement value. Coverage forms range from Broad and Special as indicated. 1. Broad Form - 2 a. Property Coverage: Provides for perils of fire; extended coverage; vandalism; limited glass theft; falling objects; weight of ice, snow or sleet; sudden and accidental tearing apart, burning or bulging; accidental discharge of liquids or steam; freezing, sudden and accidental damage from electrical currents; under Coverages A, B, C, and D. b. Liability and Medical Payments Coverage provides for: (see below**) c. Broadening Coverage provides for - (see below ***) 2. Special Form - 3 a. Property Coverage: Provides for risks of direct physical loss, unless the loss is excluded, under Coverage A, B, and D. Provides for perils of fire, extended coverage and other named perils (same perils as provided in Broad Form - 2), under Coverage C. b. Liability and Medical Payments Coverage provides for: (see below**) c. Broadening Coverage provides for - (see below ***) ** Coverage L -- Personal Liability -- damages due to bodily injury or property damage caused by an occurrence related to the insured premises or the insured's personal activities. ** Coverage M -- Medical Payments to Others -- medical expenses incurred by persons who are not insureds if bodily injury occurs in connection with the insured premises or the insured's personal activities. *** Increase Coverage A limit for Dwelling. In the event of a total loss, the limit of liability shown for Coverage B - Private Structures, may be added to the Coverage A - Residence, limit of liability when the combined replacement value of all detached private structures on Sec. 2A Homeowners H-9 the premises, excluding fences, driveways, sidewalks and inground pools is less than $1,000. *** Automatic Adjustment of Limits is included for Coverage A, B, C, and D, to be increased annually by a percentage shown on the declarations. *** Extends liability and medical payments coverage automatically to watercraft powered by outboard motors up to 50 h.p. C. OPTIONAL COVERAGES (Rate Tables D and E) The Homeowners programs include a variety of optional provisions that extend, add or limit coverages, as follows. 1. Principal Coverages (subject to Underwriting Guidelines - Package Policy Minimum Limits) Coverage B* may be increased by additional insurance on designated private structures (Form ML-48). Coverage C* may be increased or decreased, but may not be less than 40 percent of the Coverage A limit. However, Coverage may not be decreased when provisions include: - ML-42, Office, Professional, Private School or Studio Occupancy; - ML-55, Replacement Value Loss Settlement Terms; - ML-184, Automatic Adjustment of Limits Coverage C* with Form ML-42, Office, Professional, Private School or Studio Occupancy - When the insured gives professional instruction, such as music, dancing, etc., and there has been no physical alteration of the residence for that purpose, the increased amount for Coverage C may be waived. However, the additional premium for the liability exposure, determined in Table E, must be charged. Coverage D may be increased. Coverages L and M may be increased. The revised Coverage C, D, L, and M limits will be shown on the declarations. * (Exception refer to State Page) MN 07-02

17 2. Additional Coverages Other property and/or liability/medical payments coverages are described in the Property Damage and/or Liability and Medical Payments - Optional Limits and Coverages section. Scheduled Property - Refer to Inland Marine section for rules and rates. A $15 minimum premium applies. 3. Roof Surfacing Options - See Rules C379 Roof Surfacing Amendment - Actual Cash Value for Windstorm or Hail Loss ML4967 Cosmetic Damage Exclusion - Exterior Wall Surfacing, Roof Surfacing and/or Exterior Door and Window Surfacing ML4969 Roof Surfacing Amendment - Actual Cash Value Terms V. OWNERS POLICY RATING INFORMATION A. PREMIUM DETERMINATION 1. Primary Residence a. Determine homeowners program and coverage. Home-Xtra - HX Form HX + Form - 5 Standard - Broad Form Special Form - 3 b. Determine territory (refer to State Page), protection class, dwelling construction. c. Select base coverage premium for desired Coverage A limit and deductible. d. Apply premium adjustments for changes in basic coverages. (Rate Table D or E.) e. Apply premium modification, if applicable, for deductible option and/or adjustments for other provisions according to rules. 2. Secondary or Seasonal Residence (Standard Program Only) a. Follow steps a., b., c., d., and e. for primary residence and determine premium. b. Apply a Coverage L and M credit (Rate Table E - Credit for secondary residence.) c. Add Coverage L and M premium (Rate Table E - Additional residence occupied by the insured), based on Coverage L and M limits. d. Total premium for secondary or seasonal dwelling is the combined premium from steps a., b. and c. B. DEDUCTIBLE OPTIONS AND FACTORS A minimum $1,000 wind and hail deductible is mandatory for all policies that have an all perils deductible of less than $1,000. Premium adjustment factors for additional deductible options are indicated below. For this rule, the basic premium includes: the adjusted premium for amended limits for Coverages B and C. 1. All perils deductible options All Perils Apply Factor to $500 Deductible Deductible Premium $ 500 Basic* $ 1, $ 1, $ 2, $ 5, $10, * A mandatory $1,000 wind and hail deductible applies to all owners forms. Apply a.94 rating factor to the base $500 deductible premium. * Without a supporting personal auto policy the minimum deductible required is $1,000 for Homeowners, Home-Xtra, and Home-Xtra+ policies. f. Determine additional premium for including optional coverages. (Rate Table D or E and/or other coverage rules and rates in this Manual.) g. Total policy premium is the combined premium from steps c., d., e., and f. Sec. 2A Homeowners H-10 MN 06-16

18 2. Modified Deductible With Higher Wind & Hail Deductible Apply Factor to $500 Deductible Premium Perils Flat Percent Except Wind Wind Wind/Hail Hail Factor Hail Factor $ 250 $ % 1.10 $ 250 $1, % 0.98 $ 250 $2, % 0.90 $ 500 1% 0.88 $ 500 $1, % 0.82 $ 500 $2, % 0.78 $1,000 1% 0.84 $1,000 2% 0.74 $1,000 $2, % 0.70 $1,500 1% % % 0.67 $2,500 1% 2% % 0.65 C. PREMIUM MODIFICATIONS The following premium adjustments apply if the described conditions exist. Refer to Optional Coverage rate tables for adjustment factors. Premium adjustments (credit or surcharge) are shown on the declarations page. 1. Protective Devices Credit For a dwelling with the installation of the following approved and maintained alarm systems, a credit will apply to the base premium: a. Central Station Burglary and/or Fire Alarms b. Fire Department and/or Police Department Alarms c. Local Alarms, including smoke and/or gas detection d. Sprinkler System For this rule, base premium includes: the additional premium for amended limits of Coverage C. Attach Endorsement ML-216 Sec. 2A Homeowners H Auxiliary Heating/Cooking Unit Surcharge For a dwelling with an auxiliary heating/cooking (solid fuel) unit, a surcharge applies for each unit. Refer to Definitions - Auxiliary heating/cooking unit. 3. Asset Management Studies have continuously shown that an insureds loss potential is indicated by their ability to manage their overall assets. The use of a credit-based insurance score to reflect this loss potential has been validated at many levels and proven to be one of the most accurate tools used to fairly match loss potential and premium. The rate adjustments as displayed in Table D will be applied to all policies when any one named insured has a confirmed insurance score within the intervals shown. When there are multiple named insureds, the highest score available will be used. The applicable rating factor is applied to the base premium. For this rule, the base premium includes: excludes the premium from optional coverages. The designated impact will be automatically applied to all new business and renewals. The score and associated impact will be updated within 36 months of its application. Per Minnesota statute 72A.20, Subd. 36 the insured may request us to order a new score no more than twice in any given calendar year and any resulting change will be effective on the next renewal. It is important to understand that such interim requests may result in an increased premium, as well as a decreased or no change in the premium charged. All applicants are notified of our use of insurance scores for underwriting and rating purposes through the application process. All existing insureds get a policyholder notice with their renewal. In addition, form PM183 Authorization to Collect Credit Information is available for use if so desired. As noted above no mid-term changes are made. 4. Supporting Coverage Discount A 10% Supporting Coverage Discount will be applied to the following coverage premiums: - Coverage A - Residence - Coverage B - Related Private Structures - Coverage C - Personal Property - Coverage D - Additional Living Costs and Loss of Rents - Coverage L - Personal Liability - Coverage M - Medical Payments To Others MN 06-16

19 if the named insured maintains a supporting personal auto policy with this Company. The Supporting Coverage Discount does not apply to Homeowners Optional Property Damage or Liability and Medical Payment coverage premiums. The discount does not apply to seasonal dwellings no matter if the seasonal is covered under a separate policy or if it is endorsed by the ML-67 to the main policy. 5. Dwelling - New Home Credit A dwelling with construction completed and occupied within the last ten calendar years is eligible for a base premium credit. If the dwelling is occupied in a year other than the year construction is completed, the later year will determine the base premium credit. For this rule, the base premium: exclude the premium for optional coverages. Attach Endorsement C Dwelling - Remodeled Home Credit (Minnesota exception only - does not apply in other states.) One or more of the following replaced dwelling component(s), may be eligible for a base premium credit. Such credit requires newly replaced component(s) within the last ten calendar years. The described component(s), must be certified by installers, inspected and approved by civil authority for proper building code compliance. Electrical System complete interior wiring, entrance service box, switches, motors; and if replaced - all old wiring removed. The replacement service must be at least 100 amp breaker service. Central Heating System - Hot air - furnace and blower including gas or oil burner and thermostatic controls. - Hot water or steam - furnace, water tank or boiler, all attendant piping and radiators and thermostatic controls. Roof The roof is totally replaced with new shingles. Plumbing System Full replacement of all culinary and sanitary piping, valves, fittings and fixtures, and domestic water heaters. The credit applies to the base annual premium, but not permitted at midterm. For this rule, base premium: excludes the premium for optional coverages. Attach Endorsement C Row and Townhouse Surcharge When an eligible one or two family owner-occupied dwelling is located in a townhouse or row house structure, the policy premium is subject to a surcharge factor (under the Standard Program only). An eligible two family owner-occupied dwelling is considered two individual units when determining the number of family units within a fire division. 8. Longevity Discount A longevity Discount applies to policies which remain continuously in force for five years or more. Upon completion of the fifth year the discount applies. If the policy has a lapse in coverage, for any reason including non-payment of premium, the discount no longer applies. The available rate adjustments are displayed in Table D. The applicable rating factor is applied to the base premium. For this rule, the base premium: excludes the premium from optional coverages or higher limits for principal coverages. 9. New Business Discount A new business discount applies to new policies written if the policyholder has been claim free the past 12 months. If the policy has a lapse in coverage, for any reason including non-payment of premium, the discount no longer applies. The amount of discount will range up to 15% based on a combination of the number of years insured and insurance score. The discount is reduced annually and upon completion of the tenth year no longer applies. The applicable rating factor is applied to the base premium. For this rule, the base premium: excludes the premium from optional coverages. Sec. 2A Homeowners H-12 MN 06-16