California Agent Guide

Transcription

1 California Agent Guide CSAA Insurance Exchange Homeowners (HO-3, HO-4, HO-6) Personal Umbrella (PUP) CSAA Fire & Casualty Insurance Company Dwelling Fire (DP-3) Revised: 10/01/16

2 Contact Information, Address and Phone Numbers Las Vegas Underwriting Phone Number: (888) Customer Service/Claims Phone Number: (800) Mailing Address: Payment Address: CSAA Insurance Group P.O. Box 22221, Oakland, CA CSAA Insurance Group P.O. Box 30670, Los Angeles, CA DP-3 ONLY Endorsements: Agency Support Help Desk: (877) Revised: 10/01/16

3 Table of Contents Section 1: General Information 1.1 Binding Authority Binding Authority 1.2 Brokering of Business Brokering of Business 1.3 Moratorium Binding Restrictions Moratorium Binding Restrictions 1.4 Eligibility Binding Period Eligibility Binding Period 1.5 Premium Payment Option Payment Methods Payment Plans 1.6 Property Inspection Guidelines Overview Exterior Inspection Interior Inspection High Value Inspection (By Appointment) CA Earthquake Authority (CEA) 1.7 Proof Requirements Overview Proof of Central Burglar/Fire Alarm Proof of Multi-Policy Proof of AAA Membership New Policy Discount Proof of Senior Discount Proof of Mature Policyholder Discount Proof Associated HO-4 Policy Proof of Residential Sprinkler System, Gated Community and/or on-site Security Documentation for Scheduled Personal Property Items Documentation for Course of Construction Requirements and Documentation needed for Day Care Endorsement 1.8 File Documentation Overview All Pages of the Signed (Applicant and Agent) Application All Required Proof Documents Additional Documentation File Maintenance Routine Audits 1.9 Agency File Document Checklist Agency File Document Checklist 1.10 Claims History Ordering CLUE Ordering Catastrophe Claims 1.11 Endorsement Processing Guidelines General Guidelines Billing Re-finance Change of Residence Premises 1.12 Death of a Sole Named Insured Death of a Sole Named Insured Revised: 10/01/16

4 General Rules Cancellations Endorsements Non-renewals 1.13 Cancellations General Cancellation Rule Homeowners Policy Cancellation Request Form Cancellation of No Contact Renewal Prior Non-renewals or Cancellations Cancellation Request for Deceased Insureds Bureau Request Cancellations Backdate Cancellation Requests More than 30 Days & Requests Underwriting Cancellations Cancellation for Non-Payment Insured Cancellation Request Cancellation Fee 1.14 Cancellation Withdrawal Cancellation Withdrawal 1.15 Automatic Renewal Processing Automatic Renewal Processing 1.16 Non-Renewals Non-Renewals 1.17 Reinstatements without Lapse Reinstatements without Lapse 1.18 Reinstatements Reinstatements 1.19 Re-write Policies Re-write Policies 1.20 Non-Pay Rewrites Non-Pay Rewrites 1.21 Renewal Grace Period Renewal Grace Period 1.22 Return of Premium Return of Premium 1.23 Renewal Re-Tiering Request Guidelines Renewal Re-Tiering Request Guidelines Section 2: Eligibility Guidelines 2.1 Program Eligibility Named Insured Mortgagee, Additional Insured and Additional Interest 2.2 Named Insured Eligibility Applicant(s) Claim History Dangerous Animals and Pets Occupancy 2.3 Dwelling/Premises Eligibility Business on the Premises Day Care/Child Care/Adult Care/Pet Care Business on the Premises Farming Business on the Premises Permitted Incidental Occupancies Business on the Premises Home Business Central Fire/Burglar Alarms Revised: 10/01/16

5 2.3.6 Coastal Waters Condition of Property Course of Construction, Remodeling or Renovation Coverage A Requirement Detached Structures Dwelling Address Dwelling Age Location of Dwelling Log Homes Modular Homes New Year Built Protection Class Roof Age Secondary/Seasonal Dwellings Swimming Pools/Spas Trampolines Wildfire Brush Exposure Wildfire Defensible Space Wildfire Risk Assessment (ISO FireLine TM ) Wood Stoves 2.4 Unacceptable Risks Business on the Premises Canceled, Refused Insurance or Non-Renewed Claim History New Business Coal Burning Stoves Condition of Property Detached Structures Dwelling Age Dwelling Foundation Types Dwelling Location Dwelling Roof Characteristics Dwelling Types Log Homes Occupancy Rental Property Dwellings Resident Employees Roomers & Boarders Secondary/Seasonal Dwellings Security Bars Slope Swimming Pools/Spas Trampolines Vacant, Unoccupied or Rented Out Water Heater Wildfire Risks Wood Stoves Section 3: Coverages 3.1 Product Offerings Overview Form HO Form HO Form HO Form DP Insurance to Value Requirements Insurance to Value Requirements 3.3 Increased Limit Options Revised: 10/01/16

6 3.3.1 Coverage B - Increased Other Structures Limits Coverage C - Increased Personal Property Limits Coverage D - Increased Loss of Use Limits Coverage E - Increased Personal Liability Limits Coverage F - Increased Medical Payment Limits 3.4 Increased Limits (Applies to DP-3 only) Coverage B - Increased Other Structures Limits Coverage C - Increased Personal Property (Landlord Furnishings) Limits Coverage D - Increased Fair Rental Value Limits Coverage E - Increased Premises Liability Limits Coverage F - Increased Medical Payment Limits 3.5 Coverage Minimum and Maximum Requirements Coverage Minimum and Maximum Requirements 3.6 Coverage Minimum and Maximum Requirements Coverage Minimum and Maximum Requirements 3.7 Available Deductible Options HO-57 $100 Deductible HO 58 (HO 58C) $250 Deductible HO 59 (HO 59C) $500 Deductible HO 60 (HO 60C) $1,000 Deductible HO 76 (HO 76C) $1,500 Deductible HO 77 (HO 77C) $2,000 Deductible HO 78 (HO 78C) $2,500 Deductible HO 79 (HO 79C) $3,000 Deductible HO 80 (HO 80C) $4,000 Deductible HO 81 (HO 81C) $5,000 Deductible HO 82 (HO 82C) $7,500 Deductible HO 177 $250 Theft Deductible Deductible Options Section 4: Rating Rules 4.1 Policy Characteristics Rating Variables Market Tier Assignment Protection Class 4.2 Discounts Home Protection Devices Home Protection Devices Descriptions AAA Membership Employee Discount Senior Discount Mature Policyholder Discount Multi-Policy Discount Professional Designation Discount Renters Insurance Certificate Discount Special Instructions and Discount Codes 4.3 Coverage A Revaluation Offset Coverage A Revaluation Offset 4.4 Age of Home Factor Age of Home Factor 4.5 Persistency Rating Factor Persistency Rating Factor % Dwelling Renovation Overview Revised: 10/01/16

7 4.7 Claims Claim Points Prior Claim Rating Claim Experience Rating 4.8 Surcharge Surcharge Prior Claims Surcharge Claim Experience Rating Factor 4.9 Fees Fees 4.10 Endorsement Premium Adjustment Endorsement Premium Adjustment 4.11 Cancellation Return Premium Cancellation Return Premium Section 5: Section 6: Section 7: Tier Criteria (Confidential) 5.1 Tier Criteria (Confidential) Tier Criteria (Confidential) Customer Facing Forms 6.1 Customer Facing Forms Consumer Information Notice Endorsements - HO-3, HO-4, and HO Mandatory Endorsements BFUNS Lender's Loss Payable Endorsement HW A6 00 Amendatory Endorsement HW Personal Injury HO Special Provisions - California HO No Section II - Liability Coverages for Home Day Care Business / Limited Section I - Property Coverages for Home Day Care Business HO Unit-Owners Rental to Others HO 90 Worker's Compensation and Employers' Liability Insurance (Residence Employees) HW Premises Alarm or Fire Protection System HO 44 3 or 4 Family Residence Premises Form CA Supplement 7.2 Assurance+ Endorsement HW Assurance+ Endorsement 7.3 Additional Interest Endorsements HO 41 Additional Insured or Additional Interest - Designated Premises HO Additional Interests - Residence Premises HO 1004 Berth, Slip or Buoy Endorsement 7.4 Building/Other Structures Endorsements HO 28 Limited Home Replacement Cost HO 40 Other Structures-Rented To Others HO 48 Other Structures - Not Rented HO 51 Building Additions and Alterations (Form 4 Only) HW Loss Assessment Coverage HO 300 Excluded Appurtenant Structure(s) HW Water Back Up and Sump Discharge or Overflow HO Unit-Owners Coverage A Special Coverage HW Rebuild to Green Endorsement HW Mortgage Payment Protection Revised: 10/01/16

8 7.5 Business Endorsements HO 42 Office Occupancy - Described Premises Only HO 43 (HO 43C) Office Occupancy - Additional Premises HO 70 Additional Residence Premises - Rented to Others HO 71 Business Pursuits 7.6 Personal Property Endorsements HO 29 Replacement Value Endorsement Personal Property HO 210 (HO 210C) Jewelry and Watches Increased Limits of Liability Increased Coverage C - Unscheduled Personal Property (Without HO 29 Replacement Value - Unscheduled Personal Property) HO 61 Scheduled Personal Property (OTHER THAN BOATS) HW Scheduled Personal Property (OTHER THAN BOATS) HO 61 (HO 61C) Scheduled Personal Property (Boats Only) HW Owned Motorized Golf Cart Physical Loss Coverage HO Identity Fraud Expense Coverage 7.7 Liability Endorsements HO 75 Watercraft Liability HO 164 (HO 164C) Snowmobile Liability Liability - Coverage E - Described Residence Premises Additional Residence Premises - Occupied by Insured Increased Coverage D - Loss of Use 7.8 General Endorsement HO 299 (HO 299C) General Endorsement Section 8: Section 9: Endorsements - DP Mandatory Endorsements BFU NS Lenders Loss Payable DL (edition date 07/29/2005) and DW California Special Provisions ILN California Fraud Statement DL Workers Compensation Residence Employees-California DP Actual Cash Value Loss Settlement Windstorm or Hail Losses to Roof Surfacing DP Premises Alarm or Fire Protection System DP Limited Fungi, Wet or Dry Rot or Bacteria DL Premises Liability DL Personal Liability Additional Policy Conditions DL Personal Injury 8.2 Additional Insured Endorsement DW Additional Insured Location 8.3 Building/Other Structures Endorsements DW Limited Replacement Cost for Coverage A Dwelling DW Loss Assessment Coverage DW Other Structures on the Insured Location Increased Limits DP Ordinance or Law Coverage Increased Coverage DP Water Back Up and Sump Discharge or Overflow DW Vacancy Coverage (Not available on New Business) DP Windstorm or Hail Broad Form and Special Form DP Windstorm or Hail Radio & TV Antennas, Awnings & Signs 8.4 Personal Property Endorsement DP Limited Theft Coverage Personal Umbrella Policy (PUP) 9.1 General Information Eligible Binding Period Revised: 10/01/16

9 9.1.2 Premium Payment Plan Cancellation of Policy Midterm Cancellations Non-Renewals 9.2 Eligibility Guidelines Named Insured Applicant Limits of Liability Underlying Policy Requirements Unacceptable Hazards and/or Liability Exposures Prior Approval Situations Questions for applicant who is a member of a board of directors or is a director or officer for any type of non-profit organization: Renewals 9.3 Coverage Product Offerings Other Insurance Required Underlying Insurance 9.4 Rating Information Coverage and Rating Information Discounts 9.5 Changes to the Personal Umbrella Policy General Guidelines 9.6 Endorsement Premium Adjustment Endorsement Premium Adjustment 9.7 Whole Dollar Premium Rule Whole Dollar Premium Rule 9.8 Premium or Coverage Revision Premium or Coverage Revision 9.9 Definitions Auto Boats Domestic Partner Exclusionary Endorsements Low Speed Vehicle Personal Umbrella Policy Personal Watercraft Recreational Vehicles Special Acceptance Underlying Insurance Watercraft Young Driver Section 10: Section 11: National Flood Insurance Program 10.1 Flood Program (WYO) Write Your Own (WYO) Flood Insurance Program Description of Coverage Standard Deductible Eligibility for Coverage AAA NCNU as a WYO Flood Insurance Carrier Sources of Information California Earthquake Authority (CEA) 11.1 California Earthquake Authority (CEA) Revised: 10/01/16

10 California Earthquake Authority CEA Rate Manual CEA Applications CEA Payments Sources of Information Section 12: Section 13: Section 14: Fair Plan Import 12.1 Fair Plan Fair Plan Community Service Survey 13.1 Community Service Survey Community Service Survey Construction Definitions 14.1 Construction Types Frame Construction Masonry Construction Masonry Veneer Log Home Superior Construction Non-Combustible Masonry Non-Combustible Fire Resistive 14.2 Electrical Service Fuses Circuit Breakers 14.3 Foundations Perimeter Foundation Pier and Post Foundation Slab Foundation Wood Foundation Basement Foundation 14.4 Heating Base Board Heating Floor Furnace Forced Air Heating/Central Heating Free Standing Wood Stove Radiant Heating Wall Heater Heat Saver or Heat Reclaimer 14.5 Plumbing Cast-iron Pipe Copper Pipe Copper Tubing Galvanized Pipe Plastic Pipe 14.6 Retrofit Cripple Walls Mud Sill or Mud Sill Plate Shear Panels 14.7 Roof Types Composition Shake Revised: 10/01/16

11 Tar and Gravel Tile Slate Metal 14.8 Wiring Conduit Flexible Armored Cable Romex Knob and Tube 14.9 Wood Burning Stove (Solid Fuel Stove Information) Overview Wood Burning Stove Pellet Stove Wood/Gas Stove Safety Issues Hearth Non-combustible Material Floor Protection Combustible Material Dampers Section 15: Glossary 15.1 Glossary Actual Cash Value Aggregate Limit Apartment Building Appraisal Appurtenant Structure Basement Foundation Base Board Heating Beneficiary Burglar Alarm Cast-iron Pipe Chattel Mortgage Circuit Breakers Class of Personal Property Condominium Conduit Copper Pipe Copper Tubing Cripple Walls Dampers Dead Bolt Deductible Detached Structure Duplex Electrical Service Escrow Free Standing Wood Stove Fire District Fire Extinguisher Fire Resistive Building Flexible Armored Cable Forced Air Heating/Central Heating Floor Furnace Foundations Fire Resistive Revised: 10/01/16

12 Frame Construction Fuses Galvanized Pipe Grantor Hearth Heating Heat Saver or Heat Reclaimer Impound Account Inaccessible Inception Date Knob and Tube Lender Livestock Log Home Loss Payee Masonry Construction Non-Combustible Masonry Non-Combustible Masonry Veneer Mortgagee Mud Sill or Mud Sill Plate Other Structure Peril Pellet Stove Perimeter Foundation Pier and Post Foundation Plastic Pipe Plumbing Primary Dwelling Protection Class Radiant Heating Recognized Fire Department Residence Employee Retrofits Remote Roof Types Romex Satellite Dish Seasonal Residence Secondary Residence Shear Panels Slab Foundation Smoke Alarm Title Company Townhouse Trust Trustee Unprotected Wall Heater Watercraft Liability Water Heater Wiring Wood Burning Stove Wood/Gas Stove Wood Foundation Section 16: California Property Agent Guide - Procedures 16.1 HO-3 and HO-4 Binding and New Business Submission Requirements Revised: 10/01/16

13 Process for HO-3 and HO-4 Binding and New Business Submission Binding Face-to-Face, by Fax, by Mail Submitting an Application 16.2 HO-6 Binding and New Business Submission Requirements Process for HO-6 Binding and New Business Submission Binding Face-to-Face, by Fax, by Mail Submitting an Application 16.3 DP-3 Binding and New Business Submission Requirements Process for DP-3 Binding and New Business Submission Binding Face-to-Face, by Fax, by Mail Submitting an Application 16.4 Special Circumstances Special Circumstances 16.5 Re-finance Re-finance 16.6 Evidence of Insurance Process for Refinances Evidence of Insurance Process for Refinances 16.7 Evidence of Insurance Process - Miscellaneous Evidence of Insurance Process - Miscellaneous 16.8 Cancellation Withdrawal Cancellation Withdrawal 16.9 Reinstatements without Lapse Payment Requirements Branch Office Procedures Contact Center Procedures Insurance Billing Services Procedures HO-3 & HO-4 homeowner policies canceled or dropped due to AAA NCNU's error or oversight WebDocs Access Insurance to Value Requirements New Business Mid-Term /Renewal Contact Centers/District Service Units Quotes Prior Claims Rating Factors Persistency and Prior Claims Points Experience Rating HO 40 Other Structures-Rented To Others HO 40 Other Structures-Rented To Others HO 41 Additional Insured or Additional Interest - Designated Premises Keying Endorsement into System HO 48 Other Structures - Not Rented How to determine limit of liability How to determine what structures are endorsed on the policy Keying Endorsement into System HO 51 Building Additions and Alterations (Form 4 Only) HO 51 Building Additions and Alterations (Form 4 Only) HO 192 Condominium or Townhouse Units - Owner Steps to calculate 100% replacement value Change the endorsement Delete the endorsement Revised: 10/01/16

14 16.17 HO 61 (HW 04 61) Scheduled Personal Property (OTHER THAN BOATS) Requirements Process To key the HO-61 endorsement in HDES All classes except Boats Premium Boat Description Boat Type Hull Type Boat Age Boat Class - Outboard Motorboats Only Boat Class - Outboard Motorboats Premium Only Increased Coverage D - Loss of Use Increased Coverage D - Loss of Use HO 299 General Endorsement Review Contract Agreements $1,000,000 Endorsement Process Guidelines DL Personal Injury DL Personal Injury DW Limited Replacement Cost for Coverage A Dwelling DW Limited Replacement Cost for Coverage A Dwelling DW Loss Assessment Coverage DW Loss Assessment Coverage DP Ordinance or Law Coverage Increased Coverage DP Ordinance or Law Coverage Increased Coverage DP Windstorm or Hail Broad Form and Special Form DP Windstorm or Hail Broad Form and Special Form DP Windstorm or Hail Radio & TV Antennas, Awnings & Signs DP Windstorm or Hail Radio & TV Antennas, Awnings & Signs DP Limited Theft Coverage DP Limited Theft Coverage DP Actual Cash Value Loss Settlement Windstorm or Hail Losses to Roof Surfacing DP Actual Cash Value Loss Settlement Windstorm or Hail Losses to Roof Surfacing CEA Payment Process CEA Payment Process Submitting a PUP Application Process Not Requiring Insurance Services Approval: HO 42 Office Occupancy Described Premises Only Professional Indicator Homeowners Territories Section II HO 43 Office Occupancy Additional Premises Homeowners Territories Section II Business Pursuits Questionnaire Business Pursuits Questionnaire Section I Territories and County Codes for HO-3 and HO-4 Policies Section I Territories and Definitions California Zip Code List Revised: 10/01/16

15 16.35 Section II Territories Homeowners Section II Territories California Revised: 10/01/16

16 Section 1: General Information 1.1 Binding Authority Binding Authority Appointed agents in good standing have binding authority in accordance with the rules contained in this document. If an applicant or dwelling does not meet the underwriting standards listed in this document, coverage cannot be bound. In no event may an agent permit a solicitor to bind us on a risk. Coverage is bound as of the time and date indicated on the application, provided that before binding: The application is completed and uploaded; and Both the applicant and agent sign the application, and the premium down payment is made as determined by the Agency Software rating tool. In a close of escrow situation, the software will print an invoice and the Agent must forward it to the Title Company. Fax the Company copy of the invoice with the Application. The agent is required to give the insured a copy of the signed application and all supporting documentation when the policy is bound. Agents do not have authority to issue policies, endorsements, or cancellation notices unless specifically authorized by AAA Insurance in writing to do so. For Binding and New Business Submission Requirements click here. 1.2 Brokering of Business Brokering of Business We do not permit brokering of business. It is unacceptable to accept applications from them for risks they have underwritten or will service outside AAA Insurance's agent offices. 1.3 Moratorium Binding Restrictions Moratorium Binding Restrictions No coverage may be bound on New Business or by endorsement to in-force policies if the National Weather Service has issued a severe weather warning for the area for the duration of the warning, unless prior approval is obtained from underwriting. o No coverage can take effect until 24 hours after the warning has been lifted, except for Water Backup and Sump Discharge coverage on a HO-6 or DP-3 policy which can be added or amended once the event has past. o Severe weather and other catastrophic conditions includes but is not limited to: warning for rain, wind, flood, snow, ice, tornado or hurricane. No coverage may be bound on New Business or by endorsement to in-force policies for five days in the event of a natural or man-made catastrophe. No coverage can be bound for New Business policies or by endorsement to in-force policies for dwellings within a 50 mile radius from the epicenter of a 5.0 to 5.9 magnitude earthquake event or within a 100 mile radius from the epicenter of a magnitude 6.0 or greater earthquake event. o A 15 day waiting period following the event applies before coverage can be effective. No coverage can be bound for new business policies or by endorsement for in-force policies during a fire moratorium unless the fire is more than 85% contained for over 24 hours, no insured structures are threatened and there has been no acreage increase for at least 24 hours. The Company reserves the right to suspend binding authority as the Company deems appropriate. You will be notified in writing when this has occurred. 1.4 Eligibility Binding Period Eligibility Binding Period The policy must be written for a term of one year. Premiums are annual premiums Revised: 10/01/16

17 Applies to HO-3, HO-4 and HO-6 Policies may be bound with an effective date no more than 50 days in the future. Applies to DP-3 Policies may be bound with an effective date no more than 60 days in the future. 1.5 Premium Payment Option Payment Methods AAA offers a variety of down payment options and payment plans. The Rating Software will provide all available new business down payment and payment plan options. Current options are as follows: Electronic Check Electronic Funds Transfer (installments only) Credit Card (Visa & Master Card) Check Cash Money Order Escrow/Mortgagee Check Payment Plans Applies to HO-3, HO-4, and HO-6 10% on new business and the applicant currently has a AAA NCNU auto policy or will have a AAA NCNU auto policy written concurrent with the HO-3, HO-4, or HO-6 policy: 25% on new business without an associated AAA NCNU auto policy 40% on the first non-pay rewrite 100% on the second or more non-pay rewrite If the down payment is to be paid by the mortgagee or by a Title Company, an insured down payment is not required to bind coverage. The agency software will produce a Bill for the Down Payment. The Agent must ensure this bill is delivered to the mortgagee or Title Company for payment. The Down Payment must be mailed directly to AAA Insurance. Applies to DP-3 Insured Billed Minimum Down Payment Number of Additional Payments Mortgagee Billed Minimum Down Payment Annual 100% 0 Actual Paid in Full 100% Semi-Annual 50% 1 Quarterly 25% 3 For semi-annual pay plans (down pay and 2nd installment): The second and final installment is mailed 160 days into the policy term to be due on the 180th day. For quarterly pay plans (down pay + 2nd, 3rd and 4th installments): The 2nd installment is mailed 70 days into the policy term to be due on the 90th day. The 3rd installment is mailed 160 days into the policy term to be due on the 180th day. The 4th & final installment is mailed 250 days into the policy term to be due on the 270th day. The due date for billings is 20 days from the invoice date. If money is not received a cancellation notice is mailed 5 days after the due date, and the policy will lapse 20 days later. The policy may be reinstated (with a lapse) if money is received within 30 days of the lapse date Revised: 10/01/16

18 Note: If you select "Direct Bill Paid in Full", the insured will be billed at renewal for the full amount of the premium. If you select "Mortgagee Bill Paid in Full", the mortgage company will be billed at renewal for the full amount of the premium. 1.6 Property Inspection Guidelines Overview Applies to HO-3, HO-6 and DP-3 Home inspections are handled by CIS Group. CIS Group will conduct a detailed inspection on selected new business policies within the 60- day underwriting period. When the application is keyed, the inspection will be automatically ordered. Not all new business policies will be inspected. Only the policies that meet the inspection criteria will be inspected. The agent should advise the insured there is a possibility the inspection may indicate a need to adjust the Coverage A limit. Note: In conjunction with our CIS service level agreement, the assigned inspector will be validating the inspection results with some of the ISO 360Value TM information and will duplicate an ISO report for the underwriter to review. Advise the applicant or insured that Coverage A may be adjusted once an inspection has been completed. Applies to DP-3 Any additions or renovations of the insured's dwelling over $5,000 in current coverage A limit requires a new ISO 360Value TM valuation report to be completed and saved by the agent or Area Manager and attached to the policy amendment form. A Special Inspection Request is not necessary. A reduction in Coverage A requires a new ISO 360Value TM valuation report to be completed and saved by the agent or Area Manager and attached to the policy amendment. A Special Inspection Request is not necessary Exterior Inspection Applies to HO-3, HO-6 and DP-3 This inspection is the most commonly ordered and does not require an appointment or the presence of the insured to be completed. The CIS inspector will drive to the home, knock on the door to determine if anyone is home and identify his/herself if the insured is home. If the insured is home, the CIS inspector will walk around the perimeter noting any conditions issues with the property and photograph the home and any conditions concerns that may exist. If nobody is home or minors are alone in the home, the inspector will not inspect the home and the inspection will need to be rescheduled. If the insured insists to be present for the inspection, please contact an underwriter to advise CIS. This inspection does not require the binding Agent to include the Property Inspection & Access Information form with the application. Upon return to the office, the inspector will complete the inspection report and upload photos of the home to InHous Interior Inspection Applies to HO-3, HO-6 and DP-3 This inspection is rarely used. The inspector must make an appointment with the insured and the insured or their representative must be present while the inspector is on the premises. The inspector takes measurements, verifies the types and grades of building materials and adjusts the Home Profile accordingly upon return to the office. Photos of both interior and exterior are taken for uploading into InHous High Value Inspection (By Appointment) Applies to HO-3, HO-6 and DP-3 This type of inspection is an in-depth examination of the home's construction and building materials for valuation purposes. High Value (HV) inspections are completed by an inspector when a dwelling is bound that meets a certain threshold for Coverage A or in some cases if the home is too custom in nature for the binding Agent to be able to complete an accurate Home Profile at the point of sale posing a risk of seriously inaccurate valuation of the risk. This type of Revised: 10/01/16

19 inspection is done by appointment only, in the presence of the insured and can take up to several hours to complete. Applies to DP-3 The insured will then need to coordinate the appointment with the tenant. CIS Group will conduct a High Value inspection in order to underwrite policy. High Value inspection is required for homes above 4,000 square feet or above 2,000 square feet and built before CIS Group will post the inspection in InHous and photos will also be available in Fastlane. Coverage A will be adjusted within the underwriting period or at next renewal CA Earthquake Authority (CEA) An inspection should only be considered when adding a CEA to an existing homeowners policy. It should not be requested in conjunction with new business. Note: If you are dealing with a unique case, please review the situation with your Underwriter to help determine the need for a CEA Inspection request. 1.7 Proof Requirements Overview Acceptable proof and documents are as follows: Proof of Central Burglar/Fire Alarm Acceptable proof can be a copy of a receipt or service contract with the alarm company. A current billing statement is also acceptable Proof of Multi-Policy A discount will apply to the AAA NCNU Insurance homeowner policy premium when an insured has a valid AAA NCNU (Select Auto product only) Insurance automobile policy Proof of AAA Membership Acceptable proof of membership in AAA is a current member number for the association New Policy Discount A discount will apply to new business condominium (HO-6) policies Proof of Senior Discount Applies to HO-3 and HO-4 only The MVR from the named insured s CSAA IG auto policy or a CLUE (Auto or Property) report will be utilized as documentation Proof of Mature Policyholder Discount The MVR from the named insured s CSAA IG auto policy or a CLUE (Auto or Property) report will be utilized as documentation Proof Associated HO-4 Policy Applies to HO-6 (4.2.9 Renters Insurance Certificate Discount) Copy of the current declarations page in the name of the insured's tenant. It is recommended that we instruct the insured/landlord to be included as an "additional interest" on the tenant's policy to ensure full compliance Proof of Residential Sprinkler System, Gated Community and/or on-site Security Acceptable proof can include a recent service bill, association statement of association services/fees, or signed letter from Condominium Association on appropriate letterhead with contact information included, and verified by agent Revised: 10/01/16

20 Documentation for Scheduled Personal Property Items Jewelry: For items valued at more than $2,500 attach an appraisal, sales receipt or the stated value from the Insured's previous or current homeowners insurance carrier not more than five years old. A complete item description must be provided in the appraisal, sales receipt or stated value from the Insured's previous/current homeowners insurance carrier: o Precious Stones/Gems: The type, cut, color, clarity and weight of stone. o Precious Metals (such as gold or platinum jewelry): The karat and color of the precious metal. o Pearls: The color, diameter, shape and arrangement of pearls. o Necklaces/Bracelets: The length, link type (if a chain style), weight, metal type and gemstone details of the necklace or bracelet. Although not required, if a picture of the jewelry item is available please attach to the Form B. Note: The appraisal must be from a certified gemologist and must describe the color, clarity, cut and carat weight of the stones. All other classes (except Musical Instruments): For items valued at more than $5,000 attach an appraisal, sales receipt or the stated value from the insured's previous or current homeowners insurance carrier not more than five years old. Musical Instruments a sales receipt, appraisal or the stated value from the Insured's previous or current homeowners insurance carrier not more than five years old, if available, should be submitted along with a complete description of the musical instrument. Also include make, model numbers and serial numbers if applicable Documentation for Course of Construction A copy of a certificate of insurance, showing workers compensation and general liability, from the contractor is required with the application Requirements and Documentation needed for Day Care Endorsement Day care homes/centers or similar situations which involve continuous child or adult care for compensation must be licensed and insured. Include a copy of the license and proof of insurance with the application. Note: In the remarks section of the Application or a separate written statement (on an existing account), add the following statement: I understand that Section II Liability Coverage is not extended to my day care center and obtain the insureds signature. To see guideline requirements click here. 1.8 File Documentation Overview The agency software will display a list of documents that are to be kept in your agency files or are to be faxed to Underwriting. All bound applications must be properly completed and uploaded. Agents must maintain the following documentation in their files: All Pages of the Signed (Applicant and Agent) Application The Named Insured's signature(s). Either spouse or both. If not married, all signatures are needed. Voice signature authorization is acceptable provided the verbatim script is answered clearly and concisely. Agent signature. At least one Named Insured's [owner occupant(s) or tenant(s)] signature on the application and any associated forms. This affirms the statements on the application and provides the required Subscriber Agreement Revised: 10/01/16

21 1.8.3 All Required Proof Documents All required proof documents: Proof of prior insurance Proof of primary insurance for DP policies Proof of central burglar alarm or fire alarm Licenses Certificates of Insurance Appraisal documentation for scheduled personal items (Not available on DP-3) CLUE report ISO 360Value TM cost estimator (Not required on HO-4 and HO-6) PUP Exclusion - if applicable (Not available on DP-3) EFT Payment Plan Authorization Form - if applicable A copy of the invoice the Agent sent to the payer if down payment is Escrow/Mortgagee Billed (Not available on DP-3) A copy of the Evidence of Insurance if one was issued (Not available on DP-3) Additional Documentation Although not common, Underwriters may require additional documentation if the unique nature of a case supports the need for it. To obtain Underwriting approval prior to binding, simply call underwriting at ( ). If the risk is approved note the name of the person giving approval and the date in the Notes section of the application File Maintenance Applies to HO-3 and HO-4 All the documents that must be submitted and kept in Fastlane (i.e. copies of applications, discount proof, etc.). Applies to HO-6 and DP-3 The agency software will produce a fax cover page/file documentation checklist at the time of upload that lists all the documents that must be kept in the agency file. Agents maintain all required documents (i.e. copies of applications, discount proof, etc.) Routine Audits Audits will be performed on random files. Agents will be required to provide file maintenance documentation to a company representative during an on-site visit or via Fax Audit. For Fax Audits agents will receive a list of required documentation that must be faxed to Underwriting no later than two days after the request. Failure to submit the documentation will result in a failed audit. 1.9 Agency File Document Checklist Agency File Document Checklist Applies to HO-6 and DP-3 The Agency Acknowledgement section in the Application portion of netpositive will display checkboxes near the items requiring signatures and copies. The Agent is to check the items which are available for collection at the time of the application, or the items that the agents will collect from the insured at a future date. The agent is to leave those items that need to be followed up by the underwriters unchecked. Items left unchecked will automatically be referred to Underwriting for follow up on along with a copy of the application. A "Request for Information" letter will generate on the View tab for the agent to provide to the applicant. This letter will identify the information required of the applicant for the successful completion of the policy application Revised: 10/01/16

22 The applicant can return the required forms directly to underwriting via: Fax: ( ) Mail: P.O. Box Oakland, CA The agent must select "Yes" in the Agency File Acknowledgement section: o The agent is responsible for obtaining, maintaining, and storing all of the pertinent application items (forms, signatures, documents, etc) that comprise a completed policy application. o The agent is responsible for providing the applicant with copies of all signed documents Claims History Ordering CLUE Ordering Applies to HO-3, HO-4, and HO-6 Use of LexisNexis Property CLUE is required prior to binding. The CLUE report should be ordered both for the risk address and the prior address if the time at the risk address is less than 3 years. When charging for claims, only charge for claims the insured presented while living in the residence. Do not charge for prior claims on the residence the insured is buying if presented by a previous owner. Do not charge for claims on rental properties owned by the insured if the property was tenant occupied at the time the claim was presented. Include any explanations to the underwriter in the notes section of the application. The CLUE report must be ordered for all Named Insureds. Applies to DP-3 Use of LexisNexis Property CLUE is required prior to binding. The CLUE report should be ordered both for the risk address and the applicant's home address. Prior Claim points are assessed for claims occurring within the last 3 years for the rental property while owned and held as a rental by the insured. The Prior Claims surcharge applies at the time of application, first renewal, and second renewal provided the prior claim is within the 3 year period. The CLUE report must be ordered for all Named Insureds Catastrophe Claims Policy must still meet new business eligibility guidelines for prior loss history If the CLUE report indicates a claim cause of loss is Earthquake, do not charge for the claim. Do not enter it into the rating software. If the CLUE report has a claim and indicates the claim was a catastrophe loss, do not charge for the claim and do not enter it into the software. If the CLUE report indicates a claim and does not indicate the claim was a catastrophe loss but the applicant indicates the loss resulted from a catastrophe (for example a wildfire, hurricane or tornado). o Do not enter the claim into the software. Make a note for the underwriter explaining the situation. The underwriter will be responsible for verifying the loss resulted from a hurricane or tornado. If it did not, the underwriter will up rate the policy Endorsement Processing Guidelines General Guidelines All policy changes must be submitted immediately upon notification of change. Changes not requiring a signature may be processed on the Web, ed, mailed, phoned or faxed to the company. Changes requiring a signature by the named insured must be mailed or faxed to the company. Changes requiring a fax or hard copy signature include: o Agent of record changes - processed for policy renewal only (fax prior to policy renewal). o Cancellation Requests - unless the request for cancellation is by phone and is recorded Revised: 10/01/16

23 Billing Additional premium will be spread over remaining installments (if any) and billed to the insured. A premium reduction will be applied to the current outstanding balance. The credit will be spread over the remaining installments, including the current installment (if there is one) as long as the endorsement transaction occurs before the due date of the installment. If there is no remaining balance after all credits have been applied, a refund will be sent to the insured for the amount of the credit. All premium adjustments reflect rates and rules in force at the time of policy inception. Premium changes are calculated pro-rata Re-finance Applies to HO-3, HO-6 and DP-3 In the case of a re-finance, please use the following procedure: Submit the endorsement showing the new mortgagee information. If a rewrite of the policy is necessary due to requirements of the new mortgagee, submit a cancellation request and rewrite the policy as new business or contact Underwriting. Advise the new mortgagee that if no money is currently due, any money received will be returned. To see process and procedures click here Change of Residence Premises Applies to HO-3, HO-6 and DP-3 Any change of residence premises will require the cancellation of the existing policy and a new application to be submitted. o If the insured sells the home or moves to a new location. o An HO-4 may be needed if the insured continues to live in the house after the policy is canceled. Applies to HO-4 When a tenant moves to a new rental location, an endorsement should be submitted to amend the residence premises address. Verify any new roommates, pets, or other factors that may affect the rate. Submit a new inventory list if the personal property amount changes. Non-owner/occupant (renter) to an owner/occupant (owner of a condominium, townhouse and/or Cal-Vet) requires cancellation of the non-owner/occupant (renter) policy and a new application written for the owner/occupant (owned condominium, townhouse and/or Cal-Vet) dwelling Death of a Sole Named Insured Death of a Sole Named Insured In instances where the only Named Insured listed on the policy dies during the coverage period, and there s NOT an unlisted or listed resident spouse, adhere to the process outlined below for endorsements, cancellations, and non-renewals General Rules Death Certificate not required. Confirm caller ( or author of correspondence, if request in writing) is the legal representative for the deceased Named Insured s estate: o Only the executor or other legal representative of the estate can request cancellation or policy changes. o Letter of Appointment from executor or other legal representative required before policy change/cancellation can be processed. Send to Underwriting for all related transactions (cancel, endorse, non-renewal). Set policy to non-renew at end of current term (assuming renewal offer not yet generated and non-renewal notice in compliance with laws of state) Revised: 10/01/16

24 Cancellations Only the executor or other legal representative of the estate can request cancellation (Letter of Appointment from executor or other legal representative required before policy changes can be processed). Effective date of cancellation should be date after request do not backdate to time of death re: Coverage still in force for executor and other insured s as defined by contract Endorsements Only the executor or other legal representative of the estate can request a change to the policy (letter of Appointment from executor other legal representative required before policy changes can be processed). Do not backdate any change to time of death re: Coverage still in force for executor and other insured s as defined by contact Non-renewals Affected policy should be non-renewed at the end of the current term (assuming a renewal offer has yet to generate) Cancellations General Cancellation Rule Applies to HO-3 and HO-4 The cancellation of the policy may be requested by phone (verbal request), written notice, or by signing the cancellation request form F1130 "Homeowners Policy Cancellation Request". The cancellation will be processed by using the Online Cancellation Tool (OCT) for all cancellation requests except the following: o Policyholder requesting a backdate cancellation effective date of more than 30 days o No Contact Cancellations Cancellation requests not processed using the OCT will be canceled by obtaining a completed and signed "Homeowners Policy Cancellation Request" form F1130 and obtaining any required documentation. A cancellation may not be backdated unless: o The property was sold o Insurance was placed elsewhere o It was a No Contact renewal If the backdate is more than 30 days, documentation must be provided. If an insured requests a backdate credit on a policy that is already canceled, documentation must be provided Homeowners Policy Cancellation Request Form Applies to HO-3 and HO-4 Unless required, the insured does not need to sign the "Homeowners Policy Cancellation Request" form F1130. If the insured requests to sign the Homeowners Policy Cancellation request form to cancel the policy, they may do so Cancellation of No Contact Renewal Applies to HO-3 and HO-4 When an insured tells us that No Contact renewal offer was unwanted, a cancellation should be backdated to the renewal date. No signature or documentation is required, as long as no payments, changes or claims were made on the renewed policy. These policyholders have stated they did not accept our offer to renew Prior Non-renewals or Cancellations Applies to HO-3, HO-4 and HO-6 Applicants who have been canceled, refused insurance or non-renewed by another carrier in the past three years may not be eligible Revised: 10/01/16

25 Consideration will be given to applicants when the reason is due solely to the number of claims with another carrier, and there are no condition concerns or potential for future losses related to past claims. The number of claims must meet or eligibility guidelines. Refer to underwriting Cancellation Request for Deceased Insureds Applies to HO-3 and HO-4 If the sole named insured is deceased, we must obtain documentation showing who has been authorized to make changes for the estate. A copy of the death certificate is not sufficient and no longer required for any policy changes and/or cancellation. Only the executor or in the case of a Living Trust, the successor trustee can make changes or cancel the policy after the documentation is received and the policy has been updated. Proof of acceptable documentation to support backdate of over 30 days will still be required Bureau Request Cancellations Applies to HO-3 and HO-4 If a policy in force less than 60 days is being canceled by the Bureau, a notice must be given to the insured within the 60 day underwriting period and not less than 20 days prior to the effective date of cancellation. Risks located in areas eligible for coverage in the California Fair Plan must be given 30 days notice of cancellation. Policies in force more than 60 days may be non-renewed by the Bureau, providing notice of intent to do so is given to the insured not less than 45 days prior to effective date of the nonrenewal. Midterm cancellations are only allowed for: o Non-payment of premium o Material misrepresentation of fact o Substantial change to risk Backdate Cancellation Requests More than 30 Days & Requests Applies to HO-3 and HO-4 These cancellation requests must be processed obtaining a completed and signed "Homeowners Policy Cancellation Request" form F1130. Supporting documentation must be obtained for cancellation requests more than 30 days Underwriting Cancellations Applies to HO-6 and DP-3 Policies canceled at the company's request include the following: If the company elects to cancel a policy within the 60-day underwriting period, notification will be provided to the insured at least 30 days prior to the effective date of the cancellation. Midterm cancellations are only allowed for: o Non-payment of premium. o Fraud or material misrepresentation on the application or in pursuit of a claim. o If the insured is convicted of a crime that involves an act increasing a hazard insured against. o A "grossly negligent act or omission" committed by the insured that substantially increases the hazards insured against. o Physical changes in the property that makes it uninsurable. o Any other reason permitted by the laws of the state where the residence premises is located. A Certificate of Mailing is considered proof of mailing Cancellation for Non-Payment Applies to HO-6 and DP-3 Cancellation notices are mailed 12 days in advance of the cancellation effective date Revised: 10/01/16

26 Insured Cancellation Request Applies to HO-6 and DP-3 Policies will be canceled at the insured's request when a signed cancellation request is received showing the requested date of cancellation. Cancellations may not be backdated more than 30 days from the date of notice, unless the home was sold and a copy of the escrow closing statement or new policy declaration is received. Cancellations can now be accepted via telephone. However, only the named insured can request the phone cancellation. Agents are still required to submit written documentation. The following steps are to be followed for a phone cancellation: o Obtain a first and last name of the named insured o Property Address o Advise the named insured of any applicable cancellation fees o After the cancellation form has been properly completed, the Agent will advise the named insured of the following: "This cancels your policy in its entirety. After this phone call, there will be no coverage in effect as of 12:01 a.m. tomorrow for the property located at (repeat property address). If you have not done so already, please contact an insurance agent to replace your property insurance." Obtain current mailing information to send cancellation notice and return premium, if refund applies Cancellation Fee All Cancellation other than at the company's request will be calculated on a pro-rata basis, but are subject to a cancellation fee as indicated in the policy (Also see Fees Section 4.9) Cancellation Withdrawal Cancellation Withdrawal Applies to HO-6 and DP-3 Cancellations may be withdrawn and there will be no interruption of coverage when either the requested underwriting information or payment due is received on or prior to the cancellation date of the policy for specific cancellation codes only. If a cancel notice is mailed out and the requested information/payment is received after the cancel date (lapse) a reinstatement notice will generate. To see process and procedures click here Automatic Renewal Processing Automatic Renewal Processing Applies to HO-3 and HO-4 The automatic renewal system provides that the computer produces a renewal declaration 55 days prior to the expiration of a policy. Note: Concurrent with the production of the renewal declaration, the Accounts Receivable system will receive a renewal premium record and create an invoice. The premium for HO 4 policies will reflect the Consumer Price Index as developed by the U.S. Department of Labor. The premium for HO-3 may reflect adjustments to Coverage limits provided by ISO 360Value TM. The renewal declaration is sent to the insured and mortgagee if applicable. An invoice is included to the payor Non-Renewals Non-Renewals Applies to HO-3, HO-4, HO-6 and DP-3 Policies in force more than 60 days may be non-renewed by the Bureau, providing notice of intent to do so is given to the insured not less than 45 days prior to effective date of the nonrenewal Reinstatements without Lapse Reinstatements without Lapse Applies to HO-3 and HO-4 A canceled or dropped policy may be reinstated without a lapse in coverage Revised: 10/01/16

27 All reinstatement requests can be handled at either a branch location that is able to handle payment processing or through the Contact Center. If handled through the Contact Center, voice signature is required. A canceled or dropped policy may only be reinstated without a lapse of coverage under the following circumstances: o The canceled or dropped policy has not lapsed more than 30 days. o The policy meets new business acceptance guidelines. o The policy has not been reinstated more than twice in the past three years from the reinstatement request date. o No known losses of any kind occurred during the time the policy was canceled. o The policy was not a Bureau request cancellation. Reinstatement without Lapse process and procedures click here Reinstatements Reinstatements Applies to DP-3 Underwriting may offer (one time only) reinstatement for a policy that has canceled for nonpayment of premium provided the insured contacts the company within 30 days of the cancellation date. A lapse in coverage will exist from the effective date of cancellation until the date the payment is received electronically. If the payment is received by mail the coverage will be reinstated effective 12:01 am the day after the postmark date Re-write Policies Re-write Policies Applies to HO-3, HO-4 and HO-6 Insureds that want to cancel their existing policy mid-term to take advantage of a new rating plan and/or points that have fallen off are not eligible to have a new policy written. Existing insureds are being assessed the correct premium based on the rating plan in effect for their policy period and must wait until renewal to take advantage of the new rates and/or point reduction Non-Pay Rewrites Non-Pay Rewrites Applies to HO-6 and DP-3 Policies that have been canceled more than once, for non-payment of premium, cannot be reinstated. The insured may apply for a new business policy (one time only) but must be written without Prior Insurance for rating purposes Renewal Grace Period Renewal Grace Period If a policy expires at renewal because the insured has not paid the renewal down payment, the policy will be renewed without a lapse if proper payment is made within 30 days of the renewal effective date. Policies that renew without a lapse are not considered to have been reinstated. For Renewal only, the insured has an additional 30 days after the last day to reinstate without a lapse to reinstate with a lapse. All other Reinstatement guidelines still apply Return of Premium Return of Premium Applies to HO-3, HO-4, HO-6, and DP-3 A return premium check will not be issued if a balance exists on a policy unless the return premium owed exceeds the remaining balance on the policy. Applies to HO-6 and DP-3 If the return premium exceeds the remaining balance on the policy, all of the scheduled installments have been billed out internally, and there has been no activity on that policy for ten days, a return premium check will be generated on the following Wednesday. Return premium is subject to Small Premium Adjustments: o When a change or cancellation results in an additional or return premium of less than $5, no invoice or return will be generated Revised: 10/01/16

28 o o However, if any future bill is mailed to the named insured, the balance due will reflect a charge or credit for any small premium adjustments of $5 or less. The named insured has the right to all return premiums. Refunds of $5 or less will be made if specifically requested by the named insured Renewal Re-Tiering Request Guidelines Renewal Re-Tiering Request Guidelines Applies to HO-6 and DP-3 Once a risk has been in-force for at least six months without a lapse in coverage, an Agent or insured may request that AAA Insurance re-evaluate the risk to determine whether or not it qualifies for a more favorable tier. We will assess the risk at that time and offer it the most competitive price for which the policyholder qualifies in conjunction with the renewal offer for the next policy term. All policies may have a new financial responsibility report ordered every 12 months from the time of their last report, if requested by a named insured. AAA Insurance will automatically run and re-evaluate every 36 months. The tier will be adjusted only if it is an improvement Revised: 10/01/16

29 Section 2: Eligibility Guidelines 2.1 Program Eligibility Named Insured Applies to HO-3 and HO-6 The named insured(s) must be the owner-occupant and must appear as listed on the deed except for situations involving a contract of sale, in which case the purchaser-occupant of the property is considered the insured and must be named on the policy. Applies to DP-3 The named insured(s) must be the non-resident owner(s) and must appear as listed on the deed except for situations involving a contract of sale, in which case the purchaser-nonresident owner of the property is considered the insured and must be named on the policy. Applies to HO-3, HO-6, and DP-3 If legal verbiage (e.g., John Smith and Karen Smith, HW as JT, Ramona Martinez, An Unmarried Woman, etc.) is required for the close of escrow, select that option in the application portion of the software. This legal verbiage will print only on the Evidence of Insurance exactly as entered. For situations involving a trust, a trustee can be listed as the named insured(s) on a policy provided that the trustee(s) is an individual and not a corporation, and resides in the household (must be non-resident owner for DP-3). Contact underwriting for further information. The trust should be listed as an additional insured in the interests section of the software, and trust documents should be provided. For situations involving LLCs (Limited Liability Company), the owner of the LLC can be listed as the named insured(s) on a policy provided the named insured(s) is the sole owner and resides in the household (must be non-resident owner for DP-3 or HO-6 with HO endorsement). The LLC should be listed as an additional insured in the interests section of the software, and LLC documents should be provided. Applies to HO-4 The policy must reflect the name of the applicant(s) residing at the specified dwelling address. Named insureds must be related or be domestic partners. Unrelated persons in the same household must have separate policies Mortgagee, Additional Insured and Additional Interest Many lenders require a policy in force on or before the day escrow closes. Some will only accept an original policy while others may want the original plus one copy. Occasionally, applicants who are changing insurance carriers will be required to pay a substitution fee to the lender. Most lenders require renewal policies at least 30 days prior to expiration of current policies. Many lenders require one year's premium to be prepaid. Not all mortgagees have the same requirements. Determine the lender's requirements when discussing insurance with the applicant. By doing so, you will eliminate problems which may arise. An insured may only authorize this change, not the mortgagee. Under California Civil Code , a lender is prohibited from requiring limits that exceed the replacement cost. If this situation occurs, you may inform the insured of this code however it will be up to the insured whether they want to dispute this with their lender or simply authorize a coverage change. Applies to HO-3 and HO-6 A maximum of 4 Mortgagees/Lenders and a maximum of 2 Named Additional Insureds (or Additional Interests) may be listed on the application. If the risk requires it, Named Additional Insureds (or Additional Interests) may be recorded by listing their information in the "notes" section of the application. This information will not print out on the declaration page. Non-individuals such as municipalities, businesses, corporations or companies cannot be added as a Named Insured or Additional Insured Revised: 10/01/16

30 Applies to DP-3 A maximum of 2 Mortgagees/Lenders and a maximum of 2 Named Additional Insureds (or Additional Interests) may be listed on the application. If the risk requires it, up to two more Named Additional Insureds (or Additional Interests) may be recorded by listing their information in the "notes" section of the application. This information will not print out on the declaration page. Non-individuals such as municipalities, businesses, corporations or companies cannot be added as a Named Insured or Additional Insured. The information recorded in the General Information section of the application will appear on the policy declarations. 2.2 Named Insured Eligibility Applicant(s) Applies to HO-3, HO-4, HO-6, and DP-3 Policies must be written in the name of a current AAA member, member spouse or member domestic partner Claim History New Business Applies to HO-3, HO-4, and HO-6 Prior claims used for qualification purposes must represent a substantial relationship to risk of future loss. We consider only applicant-related claims for qualification. A claim means any paid claim or any open claim. Therefore, any loss that was closed without payment (CWP) is not considered a claim. Eligibility will not be based solely on the number of prior losses or claims. Upon referral to underwriting, losses or claims in which remedial or other actions have been taken will be evaluated to determine whether the increased risk of future loss has been mitigated. No more than one of the losses or claims in the previous five years can be a liability loss or claim, unless it can be demonstrated that the liability exposure is no longer present in the dwelling or on the residence premises An Applicant Loss History Certification form must be completed for all applicant-related losses. Applies to HO-3 and HO-6 A risk with a property-related claim may be inspected to determine if the condition of property is acceptable. Applies to DP-3 Use of LexisNexis Property CLUE is required prior to binding an application. The CLUE report should be ordered for the risk address and the applicant s home address. Eligibility will not be based solely on the number of prior losses or claims. Upon referral to underwriting, losses or claims in which remedial or other actions have been taken will be evaluated to determine whether the increased risk of future loss has been mitigated. Applicant with any liability losses or claims in the past 5 years is ineligible, unless it can be demonstrated that the liability exposure is no longer present in the dwelling or on the residence premises. If the applicant s prior carrier is not a CLUE contributor, a letter of experience detailing loss history up to a 5-year period is required Dangerous Animals and Pets Applies to HO-3, HO-4, HO-6, and DP-3 Any exclusions on animals make the risk ineligible. Applicants/Named Insureds with any dogs or other animals, reptiles, and/or pets with any prior biting history are ineligible. (also applies to rental property location/tenants for DP3 s) Revised: 10/01/16

31 o Prior bite history means any history of biting, attacking, or otherwise injuring any person or animal on one or more occasions, as established by any of the following: a. The applicant's/insured's knowledge of such events; b. Court records; c. Insurance records, whether or not a claim was paid; or d. The records of a local public safety, law enforcement, or similar agency. Applicants/Named Insureds with Vicious Dogs or exotic and/or dangerous animals/pets are ineligible. (also applies to rental property location/tenants for DP3 s) o A Vicious Dog is defined as a dog with ancestry (pure or mix breed) properly classified as any of the following breeds: Rottweiler Chow Doberman Pit-bull, Pit Bull mix, American Pit-bull Terrier, American Staffordshire Terrier and Stafford Bull Terrier Wolf Mix or Wolf Dog Presa Canario Akita A Vicious Dog also means any dog used or bred for fighting with any other dog; or any dog trained to attack persons or animals. However vicious dog does not include a dog used as a service or guide dog and licensed by law as such Occupancy Applies to HO-3 An owner occupied single family, duplex, triplex, or fourplex residence premises used exclusively for private residential purposes is eligible for coverage. Applies to HO-4 A tenant occupied apartment, townhouse, condominium, or single-family dwelling (or one unit in a 1-4 family dwelling) residence premises used exclusively for private residential purposes is eligible for coverage. Applies to HO-6 An owner occupied single-unit condominium/townhouse (or tenant occupied if endorsed with the HO Unit-Owners Rental to Others Endorsement) residence premises used exclusively for private residential purposes is eligible for coverage. Applies to DP-3 A tenant (non-owner) occupied residence premises containing no more than 4 units used exclusively for private residential purposes is eligible for coverage. 2.3 Dwelling/Premises Eligibility Business on the Premises Day Care/Child Care/Adult Care/Pet Care Applies to HO-3 and HO-4 Home day care on the premises, including child day care, adult day care, or pet day care, is unacceptable unless the applicant/insured is licensed. The following statement must be added to the remarks of the application and the insured's signature obtained: "I understand that Section II Liability Coverage is not extended to my day care center, adult day care, or pet day care. To see qualification requirements click here. Applies to HO-6 All policies will be endorsed with the mandatory No Section II-Liability Coverage for Day Care Business-Endorsement to exclude liability coverage when a home day care, child day care, Revised: 10/01/16

32 adult day care, or pet day care risk exposure is present on the premises and/or performed by the applicant/insured Business on the Premises Farming Applies to HO-3 and HO-4 Farming/Ranching on the premises is unacceptable unless it is incidental and not for profit. Applies to DP-3 Business on premises, including farming, is unacceptable. Dwellings located on a farm are unacceptable Business on the Premises Permitted Incidental Occupancies Applies to HO-3 and HO-4 Policies must be endorsed with the Business Office Occupancy Endorsement (HO-42) when a permitted incidental occupancy exposure is present on the premises and is deemed eligible for coverage (e.g. Applicant maintains an incidental office, professional, private school or studio occupancy, which might include providing professional instruction such as music, dancing or similar instruction in the dwelling). Applies to HO-6 Policies must be endorsed with the Permitted Incidental Occupancy - Residence Premises Endorsement when a permitted incidental occupancy exposure is present on the premises and is deemed eligible for coverage (e.g. insured maintains a permitted incidental professional office, private school, or studio occupancy in the dwelling or in an (other structure) on the residence premises). Applies to DP-3 Business on premises is unacceptable Business on the Premises Home Business Applies to HO-6 The policy provides business property coverage up to $2,500, which can be increased by endorsement. Some business occupancies will make a risk unacceptable if the nature of the business involves certain risks exposures, including but not limited to, hazardous liability situations or materials. If the presence of the business changes the character of the residence from a private dwelling to commercial or mercantile, the risk is unacceptable. Optional business endorsements are listed under the Business Endorsement Section of the manual. Contact Underwriting for guidance. Applies to DP-3 Business on the premises is unacceptable Central Fire/Burglar Alarms Applies to HO-3, HO-6, and DP-3 Dwellings with Coverage A greater than $1,000,000 must have a monitored central fire/burglar alarm Coastal Waters Applies to HO-3, HO-6, and DP-3 Dwellings must be located more than 500 feet from bay waters or coastal waters Condition of Property Applies to HO-3, HO-4, HO-6, and DP-3 Each dwelling insured and grounds must be well maintained, have a roof in good repair, and must meet all guidelines outlined in this manual Revised: 10/01/16

33 2.3.8 Course of Construction, Remodeling or Renovation Applies to HO-3 New dwellings in the course of construction must meet the following criteria: o The policy is issued only in the name of the intended owner-occupant of the dwelling. Dwellings being built for speculation, a.k.a. Builders Risk, are not eligible. o Built by a licensed contractor having a completion date within 180 days of the policy effective date. o Policy deductible is $1,000 o A copy of a certificate of insurance, showing workers compensation and general liability, from the contractor is required with the application. o Coverage A must be calculated on the basis of 100% of the completed replacement cost. Dwellings that are currently undergoing any remodeling must meet the following criteria: o Work is being done by a licensed contractor and the work will be completed within 180 days of the policy effective date. o The home remains occupied during the remodel. o A copy of a certificate of insurance, showing workers compensation and general liability, from the contractor is required with the application o Coverage A must be calculated on the basis of 100% of the completed replacement cost. Applies to HO-6 We will not provide course of construction for a unit that is not occupied. Applies to DP-3 Dwellings in the course of construction or those undergoing major renovation are not eligible for the program at this time Coverage A Requirement Applies to HO-3, HO-6, and DP-3 Dwellings must be insured to a minimum of 100% of the estimated replacement cost as determined by the AAA valuation tool. Coverage A may be increased to 20% above the estimated replacement cost by the insured. Underwriting approval required for requests greater than 20% Detached Structures Applies to HO-3 Other Structures Rented To Others o The detached structure must be insured to 100% of replacement cost. o Such structures must be used for residential purposes and may not be occupied by more than two roomers or boarders per family. Other Structures Not Rented o The detached structure must be insured to 100% of replacement cost. Applies to HO-6 If additional structures on the premises represent significant replacement costs the Coverage A for the policy should be adjusted to include the replacement cost for those items. Applies to DP-3 A description of each structure and its usage should be discussed with Underwriting prior to binding. The detached structure must be insured to 100% of replacement cost Dwelling Address Applies to HO-3, HO-4, HO-6, and DP-3 The exact dwelling address is required. When an exact dwelling address is non-existent, the legal description of the property as it appears on the deed or the address used by a local utility company is required. Rural route and box number addresses are unacceptable Revised: 10/01/16

34 Dwelling Age Applies to HO-3 Dwellings built prior to 1940 must have had the plumbing, wiring, electrical service, heating and roof fully updated. Applies to HO-6 Risks built prior to 1940 without all three major systems fully renovated including electrical, heating and air-conditioning, and plumbing. The following qualify as full renovations: o Plumbing: Must include the installation of 100% copper water supply lines, and/or plumbing material that is comparable in quality, safety, and durability. o Electrical: Must include the replacement of fuse or breaker boxes (to include 100% circuit breakers), switches, fixtures, and wiring. Wiring must be 100% Romex and/or a wiring material that is comparable in quality, safety, and durability. o Heating and Cooling System: Must include 100% furnace and air conditioning replacement, or replacement of burners on furnaces and compressors on central air conditioning systems. Applies to DP-3 Dwellings built prior to 1940 without 100% Dwelling Renovation (as defined under the 100% Dwelling Renovation description) Location of Dwelling Applies to HO-3, HO-4, and HO-6 Dwelling must be located in Bureau territory of California. Applies to DP-3 Dwelling must be located in the state of California Log Homes Applies to HO-3, HO-4 and DP-3 Log homes are acceptable for coverage provided that they are located in Protection Classes 1-8 and were constructed by a licensed contractor. (Proof that structure is of conventional construction may be required for risk to qualify for coverage.) Log home dwellings are constructed of pre-cut solid logs (usually in kit form) that are assembled at the building site by a professional building contractor Modular Homes Applies to HO-3, HO-4 and DP-3 Modular homes are sectional prefabricated houses that consist of multiple sections called modules. Modular homes do not have axles or a frame, meaning that they are typically transported to their site by means of flat-bed trucks. Modular buildings must conform to all local building codes for their proposed use, while mobile homes, made in the United States, are required to conform to federal codes governed by HUD. Modular homes must meet the following requirements in order to be eligible: o Must be on private land o Must be bolted to a concrete foundation o Cannot have a HUD sticker Manufactured/Mobile homes are unacceptable New Year Built Applies to HO-3 To qualify for a new year built, the dwelling must have been dismantled down to no more than one stud wall and the foundation of the original structure. Documentation is required and the following is acceptable: o Contract agreement between homeowners and designated licensed contractor. o City and/or county permits o Realty paperwork (i.e. a disclosure statement advising that the home was 100% rebuilt.) Revised: 10/01/16

35 Protection Class Applies to HO-3, HO-4, HO-6, and DP-3 Dwellings must be located in Public Protection Class (PPC) 1-9. Dwellings located in PPC 10 are unacceptable Roof Age Applies to HO-3 and DP-3 Dwellings must have roofs that have been replaced within the past 25 years if composed of wood shake/wood shingle or asphalt composition. Dwelling must have roofs that have been replaced within the past 10 years if composed of tar and gravel. Applies to DP-3 Dwellings with roofs over 14 years of age (over 24 years if the roof is tile, slate or metal) must be covered on an ACV (actual cash value) basis for losses due to windstorm and hail. Refer to HO (DP for DP-3) in the mandatory endorsement section for further details Secondary/Seasonal Dwellings Applies to HO-3 and HO-6: Applicants/Named Insureds must have their primary home insured with our AAA Company and have matching Personal Liability limits. The deductible on a Secondary or Seasonal dwelling must be the same as or higher than the deductible on the primary residence policy, subject to state requirements. Secondary/Seasonal dwellings must be insured on separate HO-3 or HO-6 policies. The Eligibility Guidelines that apply to the primary residence will also apply to a secondary or seasonal residence. A secondary residence is defined as an additional residence used for other than recreational purposes. A seasonal residence is defined as one that is a supplement to the insured's primary residence that is used for recreational or vacation purposes and is occupied less than 50% of the time. Applies to HO-3 Secondary/Seasonal dwellings rented to others are unacceptable. Applies to HO-6 The supplemental Underwriting Information questions must be completed on the application Swimming Pools/Spas Applies to HO-3, HO-4, HO-6, and DP-3 Dwellings with a swimming pool and/or spa must be fenced with a locked gate. o In-ground pools with mechanized pool covers capable of bearing at least 300 pounds can be considered in lieu of fencing and a locking gate in those areas where the community or neighborhood covenants do not allow for fences Trampolines Applies to HO-3, HO-4, HO-6, and DP-3 Dwellings with a trampoline on premises are acceptable with the following safety measures in place: o Safety padding covering the hooks and springs around the perimeter of the trampoline, o Perimeter fencing, o Located in an open area away from hazards that can be jumped from or landed on Wildfire Brush Exposure Applies to HO-3, HO-6, and DP-3 Dwellings must be located more than 500 feet of brush Revised: 10/01/16

36 Wildfire Defensible Space Applies to HO-3, HO-6, and DP-3 Dwellings must have a defensible space around the property of either 30 ft (flat terrain), 100 ft (slight slope), or 150 ft. (moderate to steep slope). o Defensible space is the area around the property where the vegetation has been cleared, or well thinned, pruned and maintained. o All dead or dying vegetation must be removed from the property. Vegetation includes: brush, trees, grasses or organic debris. o Tree limbs and branches should be removed, up to 6 to 10 feet up from the ground. If the defensible space distance requirement can't be achieved because the dwelling is on a small lot, the risk will be considered acceptable if the area between the property line and the dwelling has been cleared of vegetation as described above Wildfire Risk Assessment (ISO FireLine TM ) Applies to HO-3, HO-6, and DP-3 The wildfire exposure for all insured risks is evaluated using ISO FireLine TM. FireLine TM considers three factors (fuels, slope, and access) to develop a fire hazard risk score. An ISO FireLine TM report must be ordered for each quoted policy. Policy eligibility is determined based on the FireLine TM score in the table below for the insured risk. Wildfire Risk Assessment Wildfire Risk Score Eligibility Category A 0 2 Eligible Category B 3 4 Eligible if no wood shake roof Category C 5 and above Ineligible Wood Stoves Applies to HO-3, HO-6, and DP-3 Risks with wood stoves are acceptable with the following: o Dwelling is located in protection class 1-8 o Dwelling has an ABC rated fire extinguisher mounted close to the unit or is readily accessible o Dwelling has at least one smoke detector installed per floor o Stove has been installed by a heating contractor or other professional and/or inspected within the previous 12 months and found free of defects o Stove has a vent/chimney that is UL approved for wood and adheres to clearance standards o Stove is not the sole source of heat o Stove does not have multiple venting (two or more units connected to the same chimney/vent) o Stove does not have a heat saver or heat reclaimer in the vent pipe o Stove is not a combination wood/gas unit or homemade unit o Stove is not located in a garage or outbuilding o The interior section of the stove pipe does not have more than two ninety (90 ) degree bends, is not smaller in size than the exhaust collar, and does not slant downward towards the chimney The Company will perform an internal/external inspection on all risks with a wood burning stove. 2.4 Unacceptable Risks Business on the Premises Applies to HO-3, HO-4, HO-6, and DP-3 Business on the premises involving any of the following: o Employees working on the premises Revised: 10/01/16

37 o o o o o o Foot traffic exceeding more than 2 customers per week Business conducted in a detached structure or business equipment being stored in a detached structure Hazardous situations or materials Manufacturing or repairing of goods or products A professional liability exposure which is uninsured Any commercial or mercantile risks Applies to DP-3 Business on the premises including any of the following: o Incidental occupancies o Farming and Ranching o Tenant day care, child day care, adult day care, or pet day care Canceled, Refused Insurance or Non-Renewed Applies to HO-3, HO-4, HO-6, and DP-3 Applicants who have been canceled, refused insurance or non-renewed by another carrier in the last three years unless approved by underwriting. Applies to HO-3, HO-4, and HO-6 Applicants canceled or dropped by AAA Insurance are unacceptable for reinstatement if any of the following apply: o Policy has lapsed more than 30 days o Policy does not meet new business eligibility guidelines o Policy has been reinstated more than twice in the past three years from the reinstatement request date o There are any known losses of any kind that occurred during the time the policy was canceled o Policy was canceled or non-renewed by AAA due to underwriting reasons Applies to HO-3, HO-4, and HO-6 Applicants canceled by AAA Insurance for non-payment of premium more than once in the previous 36 months are unacceptable without 100% down payment obtained. Applies to DP-3 Applicants canceled by AAA Insurance for any reason other than "home sold" or canceled for non-payment of premium more than once are unacceptable. Applicants canceled by AAA for non-payment of premium for the first time and did not contacted AAA Insurance within 30 days of the cancellation date to request a new policy are unacceptable Claim History New Business Applies to HO-3, HO-6, and DP-3 Applicants with more than 1 paid claim (CAT or non-cat) within the last 36 months are unacceptable. Applicants are allowed 1 paid CAT claim as long as the total claim count within the last 36 months does not exceed 2 incidents. See below for acceptable claim combinations. 1 paid CAT claim = eligible 1 paid non-cat claim = eligible 1 paid CAT claim plus 1 paid non-cat claim = eligible All other claim combinations are ineligible. Applies to HO-4 Applicants with any paid non-cat claim, or more than one paid CAT claim, within the last 36 months are unacceptable Revised: 10/01/16

38 Applies to HO-3, HO-4, HO-6, and DP-3 Applicants with any liability paid claims where the liability risk exposure is still present in the dwelling or on the residence premises. Note: Eligibility for new business will not be based solely on the number of prior claims. Upon referral to underwriting, losses in which remedial or other actions have been taken will be evaluated to determine whether the increased risk of future loss has been mitigated. Loss history eligibility for DP-3 applicants is determined based on paid claims on any rental property Coal Burning Stoves Applies to HO-3, HO-6, and DP-3 Dwellings with coal burning stoves Condition of Property Applies to HO-3, HO-4, HO-6, and DP-3 Dwellings with any of the following: o Any un-repaired damage, including mine-subsidence damage o Poor condition or maintenance of the roof or premises o Peeling paint o Evidence of liability hazards including but not limited to trip and fall hazards. Dwellings with masonry or concrete walkways or foundations that show significant settling, cracking or deterioration, or premises that show signs of any slipping, sinking, or shifting of land. Dwellings or premises that show signs of clutter or unsanitary conditions including but not limited to the following: o Piles of rubble, newspapers, combustible materials or other household garbage not containerized or kept in a clean manner o Tires, car batteries and other hazardous waste piled in yards o Disabled/non-functioning home appliances o Abandoned or dilapidated vehicles stored in or on the property Applies to HO-6 Condominium Association Roofs that have exceeded their useful life Detached Structures Applies to HO-3 A request for an Excluded Detached Structure Endorsement (HO-300) or the presence of an ineligible detached structure on the premises. Any detached structure over 50% of Coverage A. Over 3 detached structures on premises. Applies to DP-3 Risks with more than 2 detached building structures on the premises, or any one building structure which has a replacement cost of more than 100% of Coverage A requires a referral to Underwriter. More than 2 detached building structures could be an indication of potential business or commercial exposures on the premises Dwelling Age Applies to HO-3 Dwellings built prior to Applies to HO-6 Dwellings built prior to Risks built prior to 1940 without all three major systems fully renovated including electrical, heating and air-conditioning, and plumbing Revised: 10/01/16

39 Applies to DP-3 Dwellings built prior to Dwellings built prior to 1940 without 100% Dwelling Renovation (as defined under the 100% Dwelling Renovation description) Dwelling Foundation Types Applies to HO-3, HO-6, and DP-3 Dwellings with any of the following foundation types: o Built on pier and post regardless of retrofitting o Built on wood o Built on un-reinforced masonry o Built without a permanent foundation o Built with 50% or more of the structure supported by poles, stilts, columns or cantilevers o Not bolted or anchored to the foundation Dwelling Location Applies to HO-3, HO-4, HO-6, and DP-3 Dwellings located in remote areas or inaccessible by emergency or fire-fighting vehicles and/or equipment (e.g. road not wide enough to accommodate two vehicles). Applies to DP-3 Dwellings located on farm property Dwelling Roof Characteristics Applies to HO-3 and DP-3 Dwellings with roofs that have not been replaced within the past 25 years if composed of wood shake/wood shingle or asphalt composition. Dwellings with roofs that have not been replaced within the past 10 years if composed of tar and gravel. Dwellings with composition asphalt shingles over wood shake/shingle roofs. Dwellings with three or more layers of roof material Dwelling Types Applies to HO-3, HO-4, HO-6, and DP-3 Dwellings with the following characteristics: o Mobile homes or manufactured homes with or without a HUD sticker o Trailer homes o Houseboats o Boats used as a residence o Non-conventional construction techniques such as kit homes and structures not constructed by a license contractor o Dwellings made of materials that cannot be confirmed or valued by AAA Home Valuation Tool o Commercial or mercantile building structures o Multi-family dwellings with 5 or more units (e.g. five-plex). Applies to HO-3, HO-6, and DP-3 Dwellings listed on a national or state historic home registry Log Homes Applies to HO-3, HO-4 and DP-3 Log homes not constructed by a qualified licensed contractor and/or are located in protection class 9 and Occupancy Applies to HO Revised: 10/01/16

40 Dwellings that are not owner-occupied single-family, duplex, triplex or fourplex dwellings used exclusively for private residential purposes. Applies to HO-4 Rental units that are not a tenant occupied apartment, townhouse, condominium, or singlefamily dwelling (or one unit in a 1-4 family dwelling) used exclusively for private residential purposes. Applies to HO-6 Dwellings that are not owner occupied single-unit condominium/townhouse (or tenant occupied if endorsed with the HO Unit-Owners Rental to Others Endorsement) residence premises used exclusively for private residential purposes. o Units rented to others on a daily, weekly or seasonal basis. o Units associated with time-sharing plans. Applies to DP-3 Dwellings that are not tenant (non-owner) occupied dwellings containing no more than 4 units used exclusively for private residential purposes Rental Property Dwellings Applies to DP-3 Named Insured(s) with 7 or more non-owner occupied dwellings Resident Employees Applies to HO-3, HO-4, and HO-6 Risks with more than 2 resident employees, defined as an employee of the insured, who resides at the insured location year round, whose duties are related to the maintenance or use of the residence premises. Examples would be: caretaker, butler, maid, and au pair Roomers & Boarders Applies to HO-3, HO-4, and HO-6 Dwellings with more than 2 roomers or boarders per unit Secondary/Seasonal Dwellings Applies to HO-3, HO-4 and HO-6 Seasonal/secondary homes with any of the following: o Applicants/Named Insureds who don't have their primary home insured with our AAA Company and/or don't have matching Personal Liability limits. o The deductible on a Secondary or Seasonal dwelling is not the same as or higher than the deductible on the primary residence policy, subject to state requirements. o Secondary/Seasonal dwellings that are not insured on separate HO-3, HO-4 or HO-6 policies. o A secondary residence used primarily for recreational purposes. o A seasonal residence that is not a supplement to the insured's primary residence and/or not used for recreational vacation purposes and/or is occupied 50% or more of the time. Applies to HO-3 Secondary/Seasonal dwellings rented to others. Applies to DP-3 Seasonal/secondary homes, vacation rentals, or rented condominiums (vacation rentals include those situations where the dwelling is rented to short term tenants) Security Bars Applies to HO-3, HO-6, and DP-3 Dwellings with security bars on the windows without quick-release mechanisms Revised: 10/01/16

41 Slope Applies to HO-3, HO-6, and DP-3 Dwellings built on a slope of more than 30 degrees or built into a hillside Swimming Pools/Spas Applies to HO-3, HO-4, HO-6, and DP-3 Dwellings with a swimming pool and/or spa that is not fenced with a locked gate, or has an inground pool and/or spa without a mechanized pool cover capable of bearing at least 300 pounds, where the community or neighborhood covenants don't allow fences Trampolines Applies to HO-3, HO-4, HO-6, and DP-3 Dwellings with a trampoline on premises without all of the following safety measures in place: o Safety netting around the trampoline o Safety padding covering the hooks and springs around the perimeter of the trampoline o Perimeter fencing o Located in an open area away from hazards that can be jumped from or landed on Vacant, Unoccupied or Rented Out Applies to HO-3 and HO-6 Dwellings that are vacant, unoccupied, or rented out. Applies to HO-4, HO-6, and DP-3 Dwellings that are vacant or unoccupied Water Heater Applies to HO-3, HO-6, and DP-3 Dwelling with a water heater that is not strapped to the wall with at least one strap. Dwelling with a water heater (except electric heaters) located in the garage not raised at least 18 inches from the floor Wildfire Risks Applies to HO-3, HO-6, and DP-3 Dwellings located within 500 feet of brush. Dwellings that don't have a defensible space around the property of either 30 ft (flat terrain), 100 ft (slight slope), or 200 ft. (moderate to steep slope). Dwellings with Fireline score of 5 or higher, regardless of roof type, or dwellings with Fireline score of (3 or 4) with wood shingle or wood shake roofs Wood Stoves Applies to HO-3, HO-6, and DP-3 Risks with wood stoves with any of the following: o Dwelling is located in protection class 9 or 10 o Dwelling does not have an ABC rated fire extinguisher mounted close to the unit or is not readily accessible o Dwelling does not have at least one smoke detector installed per floor o Stove has not been installed by a heating contractor or other professional and/or inspected within the previous 12 months and found free of defects o Stove does not have a vent/chimney that is UL approved for wood and/or does not adhere to clearance standards o Stove is the sole source of heat o Stove has multiple venting (two or more units connected to the same chimney/vent) o Stove has a heat saver or heat reclaimer in the vent pipe o Stove is a combination wood/gas unit or homemade unit o Stove is located in a garage or outbuilding o The interior section of the stove pipe has more than two ninety (90 ) degree bends, and/or is smaller in size than the exhaust collar, and/or slants downward towards the chimney Revised: 10/01/16

42 Section 3: Coverages 3.1 Product Offerings Overview AAA offers 4 programs - HO-3, HO-4, HO-6 and DP Form HO-3 HO-3 Special Form - Covers the dwelling (Coverage A), other structures (Coverage B), and loss of use (Coverage D) against direct physical loss (refer to the policy booklet for exclusions). Glass coverage is unlimited subject to a $50 deductible Form HO-4 The HO-4 Contents Broad Form insures household contents, personal possessions, additional living expense, liability coverage and medical Form HO-6 HO-6 - Unit-Owners Form - Provides "named perils" coverage on building property and personal property for an insured's owner occupied or tenant occupied single-unit condominium with no more than 2 roomers or boarders. All risk coverage can be endorsed for Coverage A. The residence may be part of a multi-unit complex. HO-6 policies are for condominium and townhouse developments with existing Homeowner's Association Master Insurance Policies only. Buildings without a Master Insurance Policy (including Tenants in Common) do not qualify for coverage under the HO-6 policy. Tenant occupied condominiums must have the HO Endorsement Form DP-3 The Rental Property insurance form DP-3 provides both Section I - Property and Section II - Liability coverage. Section I provides "open perils" coverage on the dwelling and other structures and "named perils coverage on personal property. The Limited Replacement Cost endorsement provides for an option of 125% or 150% of the Coverage A amount. Section II provides $100,000 of non-owner occupied premises liability coverage and $1,000 in medical payments coverage. Increased limits are also available. The policy may be written on a non-owner occupied dwelling that is used exclusively for private residential purposes and contains not more than 4 units. The insured is eligible to place insurance coverage on 6 non-owner occupied dwelling locations. If the insured has more than 6 dwelling locations, Underwriting should be contacted for approval. However, No more than 9 dwelling locations is ever permitted. Vacation rentals or seasonal/secondary homes should not be written in this program. 3.2 Insurance to Value Requirements Insurance to Value Requirements Dwelling replacement cost is primarily determined using ISO 360Value TM. All risks must be insured to a minimum of 100% of their replacement cost value. ISO 360Value TM software estimates the replacement cost to be used as the Coverage A amount. Be sure that the square footage is accurate and that you enter all pertinent dwelling information to ensure an accurate Coverage A amount. Dwellings in the course of construction or those undergoing major renovation are not eligible for the program at this time. Dwellings that are located on farm property are not eligible. Any additions or renovations of the insured's home over $5,000 in value requires a new ISO 360Value TM regular valuation report or detailed valuation report to be completed and saved Revised: 10/01/16

43 by the agent or Area Manager and attached to the Policy Amendment form. A Special Inspection Request is not necessary. A reduction in Coverage A requires a new ISO 360Value TM valuation report to be completed and saved by the agent or Area Manager and attached to the Policy Amendment form. A Special Inspection Request is not necessary. Applies to HO-6 Coverage A must be insured for 100% of its Replacement Cost Value but not less than the greatest of either: $25,000 or the amount that the Mortgage company requires. Under HO-6 policies Coverage A covers the following: o The alterations, appliances, fixtures and improvements which are part of the building contained within the "residence premises"; o Items of real property which pertain exclusively to the "residence premises"; o Property which is the insured's insurance responsibility under a corporation or association of property owners agreement; or o Structures owned solely by the insured, other than the "residence premises", at the location of the "residence premises". Note: If additional structures on the premises represent significant replacement costs the Coverage A for the policy should be adjusted to include the replacement cost for those items. Ordinance or Law Coverage: you may use up to 10% of the limit of liability that applies to Coverage A for the increased costs you incur due to the enforcement of any ordinance or law under certain conditions. See policy booklet for details. Steps to calculate 100% replacement cost click here. 3.3 Increased Limit Options Coverage B - Increased Other Structures Limits Applies to HO-3 and DP-3 Coverage limits for "other structures on the residence premises may be increased (by endorsement) from the standard 10% of the Coverage A amount included on the basic policy. The number of "other structures" may not exceed two "other structures". The total amount of Coverage B, including all "other structures", may not exceed 100% of the Coverage A limit. Structures away from the residence premises may also be covered by endorsement. Applies to HO-6 Unlike HO-3 policies, there is no specified Coverage B for appurtenant structures Coverage C - Increased Personal Property Limits Applies to HO-3, HO-4, HO-6, and DP-3 Coverage limits for "personal property" may be increased in the basic policy. The total amount of the Coverage C limit may not exceed 100% of the Coverage A limit on an HO-3 policy, or $200K on an HO4 policy, or $500K on an HO6 policy. Additionally, this increased limit does not increase the special limits of liability under Coverage C. Optional endorsements are available for additional personal property coverage and personal property replacement cost Revised: 10/01/16

44 Applies to HO-3 and HO-4 Unscheduled Personal Property (Coverage C) is covered for loss by these perils: Fire or lightning Theft Windstorm Falling objects Explosion Weight if ice, snow or sleet Riot or civil commotion Aircraft Vehicles Accidental discharge or overflow of water or steam Sudden and accidental tearing apart, cracking, burning or bulging Freezing Smoke Vandalism or malicious mischief Sudden and accidental damage from artificially generated electrical current Damage by glass or safety glazing materials Applies to HO-3 Standard Deductible: $250 However, any one of the following are also acceptable (refer to Endorsements section for more information): HO-57 $100 Deductible; HO-59 $500 Deductible; HO-60 $1,000 Deductible; HO-76 $1500 Deductible; HO-77 $2,000 Deductible; HO-78 $2,500 Deductible; HO-79 $3,000 Deductible; HO-80 $4,000 Deductible; HO-81 $5,000 Deductible; HO-82 $7,500 Deductible Note: Deductible applies to Section I coverages only. No deductible applies under Section II - Liability. Applies to HO-4 Standard Deductible: $100 HO-4 Renter's policies must also have a HO-177, $ Theft Loss Deductible; however, any one of the following are also acceptable (refer to Endorsements section for more information); HO-59 $500 Deductible; HO-60 $1,000 Deductible; HO-76 $1500 Deductible; HO-77 $2,000 Deductible; HO-78 $2,500 Deductible; HO-79 $3,000 Deductible; HO-80 $4,000 Deductible; HO-81 $5,000 Deductible; HO-82 $7,500 Deductible Applies to HO-6 Coverage C must be insured for 100% of its Replacement Cost Value but not less than $25,000. If it is a tenant occupied condominium, as evidenced with the HO 17 33, a minimum of $5,000 for Personal Property will apply. Applies to DP-3 Coverage limits for "personal property" (landlord furnishings) may be increased in the basic policy. The total amount of the Coverage C limit may not exceed 100% of the Coverage A limit Revised: 10/01/16

45 3.3.3 Coverage D - Increased Loss of Use Limits Applies to HO-3, HO-4, HO-6, and DP-3 Coverage limits for "loss of use" (additional living expenses), may be increased in the basic policy. The coverage limit may not exceed 50% of Coverage A for an HO-3 and HO-4 policy, or 75% of Coverage C for an HO-6 policy Coverage E - Increased Personal Liability Limits Applies to HO-3, HO-4, HO-6, and DP-3 Coverage E covers payment on the insured's behalf of all sums which the insured shall become legally obligated to pay as damages (up to the limit of the policy) because of personal injury or property damage caused by an occurrence arising out of the insured premises or personal activities. The basic policy provides liability coverage of $100,000, and can be increased in increments of $100,000 up to a maximum of $1,000, Coverage F - Increased Medical Payment Limits Applies to HO-6 The basic policy provides medical payments coverage of $1,000 per person and can be increased in increments of $1,000 up to a maximum of $5,000. Medical payments coverage is not available to tenants residing in the dwelling. 3.4 Increased Limits (Applies to DP-3 only) Coverage B - Increased Other Structures Limits Applies to DP-3 Coverage limits for "other structures" on the residence premises may be increased (by endorsement) from the standard 10% of the Coverage A amount included on the basic policy. The number of "other structures" may not exceed two "other structures". The total amount of Coverage B, including all "other structures", may not exceed 100% of the Coverage A limit Coverage C - Increased Personal Property (Landlord Furnishings) Limits Applies to DP-3 Coverage limits for "personal property" (landlord furnishings) may be increased in the basic policy. The total amount of the Coverage C limit may not exceed 100% of the Coverage A limit Coverage D - Increased Fair Rental Value Limits Applies to DP-3 Coverage limits for "fair rental value" may be increased in the basic policy. The coverage limit may not exceed 50% of Coverage A Coverage E - Increased Premises Liability Limits Applies to DP-3 The basic policy provides liability coverage of $100,000, and can be increased in increments of $100,000 up to a maximum of $1,000, Coverage F - Increased Medical Payment Limits Applies to DP-3 The basic policy provides medical payments coverage of $1,000 per person and can be increased in increments of $1,000 up to a maximum of $5,000. Medical payments coverage is not available to tenants residing in the dwelling. 3.5 Coverage Minimum and Maximum Requirements Coverage Minimum and Maximum Requirements Applies to HO-3 and HO-4 The table below shows the minimum and maximum coverage limits Agents can bind. For limits higher than binding authority refer to underwriting Revised: 10/01/16

46 HO-3 HO-4 Owner HO-4 Renter Coverage A Dwelling Maximum: $9,999,900 N/A N/A Coverage B Other Structures Minimum 10% of Cov A N/A N/A Maximum 10% of Cov A N/A N/A Coverage C Personal Property Minimum: $25,000 $15, family dwellings-no HO-29 50% of Cov A N/A N/A 1-2 family dwellings with HO-29 75% of Cov A N/A N/A 3 family dwellings - no HO-29 30% of Cov A N/A N/A 3 family dwellings with HO-29 45% of Cov A N/A N/A 4 family dwellings no HO-29 25% of Cov A N/A N/A 4 family dwellings with HO-29 37% of Cov A N/A N/A Maximum 100% of Cov A $300,000 $200,000 Coverage D Loss of Use Minimum 40% of Cov A 20% Cov C 20% Cov C Maximum 50% of Cov A 50% Cov C 50% Cov C Revised: 10/01/16

47 Section II Coverages - Liability Coverage E Personal Liability Minimum Maximum $100,000 HO-3 and HO-4 Forms $1,000,000 - HO-3 and HO-4 Forms Coverage F Med. Payments to Others All Forms $1,000 each person/$25,000 each accident Applies to HO-6 The table below shows the minimum and maximum coverage limits Agents can bind. For limits higher than binding authority refer to underwriting. Coverage D - Loss of Use Minimum Maximum Tenant-Occupied Maximum 20% of Cov C 75% of Cov C 75% of Cov C or $50,000, Whichever is greater Coverage E - Personal Liability Minimum $100,000 Maximum $1,000,000 Coverage F - Medical Payments to Others Minimum $1,000 Maximum $5, Coverage Minimum and Maximum Requirements Coverage Minimum and Maximum Requirements Applies to DP-3 The table below shows the minimum and maximum coverage limits Agents can bind. For limits higher than binding authority refer to underwriting Revised: 10/01/16

48 Coverage Type Minimum Limits Maximum Limits Coverage A Dwelling 1 to 4 family Minimum $50,000 Maximum $9,999,900 Coverage B Other Structures Coverage B Other Structures 3 to 4 Family Coverage C Personal Property Coverage D Fair Rental Value Minimum 10% of Coverage A Minimum 5% of Coverage A Minimum 5% of Coverage A (or $5,000 whichever is greater) Minimum 20% of Coverage A Maximum 100% of Coverage A Maximum 100% of Coverage A Maximum 100% of Coverage A Maximum 50% of Coverage A Coverage E Premises Liability $100,000, $200,000, $300,000, $400,000, $500,000, $1,000,000 Coverage F Medical Payments to Others $1,000, $2,000, $3,000, $4,000, $5, Available Deductible Options HO-57 $100 Deductible Located on Form A Available for HO-3 What this endorsement does: Amends the standard deductible to $100 applicable to any loss under Section I of the policy. Requirements: Not available on HO 4 policies ($100 is the standard deductible). Must have HO 57 with HO 177 ($250 Theft Deductible) but no other deductible combinations are allowed. Whenever lowering the deductible, check Claims History and discuss with Underwriting if necessary. Premium: A premium is charged when this endorsement is selected HO 58 (HO 58C) $250 Deductible Located on Form A Available for HO-4 and HO-6 What this endorsement does: Amends the deductible to $250 to any loss under Section I of the policy. Requirements: Not available on HO 3 policies ($250 is the standard deductible). Must be the only deductible on the policy. Whenever lowering the deductible, check Claims History and discuss with Insurance Product Operations if necessary. Premium: A discount is applied when this endorsement is selected Revised: 10/01/16

49 3.7.3 HO 59 (HO 59C) $500 Deductible Located on Form A Available for HO-3, HO-4, and HO-6 What this endorsement does: Amends the deductible to $500 to any loss under Section I of the policy. Requirements: Must be the only deductible on the policy. Whenever lowering the deductible, check Claims History and discuss with Underwriting if necessary. Premium: A discount is applied when this endorsement is selected HO 60 (HO 60C) $1,000 Deductible Located on Form A Available for HO-3, HO-4, and HO-6 What this endorsement does: Amends the deductible to $1,000 to any loss under Section I of the policy. Requirements: Must be the only deductible on the policy. Whenever lowering the deductible, check Claims History and discuss with Underwriting if necessary. Premium: A discount is applied when this endorsement is selected HO 76 (HO 76C) $1,500 Deductible Located on Form A Available for HO-3, HO-4, and HO-6 What this endorsement does: Amends the deductible to $1,500 to any loss under Section I of the policy. Requirements: Must be the only deductible on the policy. Whenever lowering the deductible, check Claims History and discuss with Underwriting if necessary. Premium: A discount is applied when this endorsement is selected HO 77 (HO 77C) $2,000 Deductible Located on Form A Available for HO-3, HO-4, and HO-6 What this endorsement does: Amends the deductible to $2,000 to any loss under Section I of the policy. Requirements: Must be the only deductible on the policy. Whenever lowering the deductible, check Claims History and discuss with Underwriting if necessary. Premium: A discount is applied when this endorsement is selected HO 78 (HO 78C) $2,500 Deductible Located on Form A Available for HO-3, HO-4, and HO-6 What this endorsement does: Revised: 10/01/16

50 Amends the deductible to $2,500 to any loss under Section I of the policy. Requirements: Must be the only deductible on the policy. Whenever lowering the deductible, check Claims History and discuss with Underwriting if necessary. Premium: A discount is applied when this endorsement is selected HO 79 (HO 79C) $3,000 Deductible Located on Form A Available for HO-3, HO-4, and HO-6 What this endorsement does: Amends the deductible to $3,000 to any loss under Section I of the policy. Requirements: Must be the only deductible on the policy. Whenever lowering the deductible, check Claims History and discuss with Underwriting if necessary. Premium: A discount is applied when this endorsement is selected HO 80 (HO 80C) $4,000 Deductible Located on Form A Available for HO-3, HO-4, and HO-6 What this endorsement does: Amends the deductible to $4,000 to any loss under Section I of the policy. Requirements: Must be the only deductible on the policy. Whenever lowering the deductible, check Claims History and discuss with Underwriting if necessary. Premium: A discount is applied when this endorsement is selected HO 81 (HO 81C) $5,000 Deductible Located on Form A Available for HO-3, HO-4, and HO-6 What this endorsement does: Amends the deductible to $5,000 to any loss under Section I of the policy. Requirements: Must be the only deductible on the policy. Whenever lowering the deductible, check Claims History and discuss with Underwriting if necessary. Premium: A discount is applied when this endorsement is selected HO 82 (HO 82C) $7,500 Deductible Located on Form A Available for HO-3, HO-4, and HO-6 What this endorsement does: Amends the deductible to $7,500 to any loss under Section I of the policy. Requirements: Must be the only deductible on the policy Revised: 10/01/16

51 Whenever lowering the deductible, check Claims History and discuss with Underwriting if necessary. Premium: To quote the proper credit, multiply the basic premium from the basic premium charts or discounted premium by the appropriate percentage: HO 177 $250 Theft Deductible Located on Form A Available for HO-3 and HO-4 What this endorsement does: Amends the deductible to $250 for theft of property covered under Coverage C (Unscheduled Personal Property). Requirements: Rented HO 4 must have a minimum HO 177, $250 Theft Loss Deductible; however, the HO 58, HO 59, HO 60 may be selected instead. May have HO 57 with HO 177 but no other deductible combinations are allowed. In order to have an HO 177 on an HO 3 policy, it is necessary to purchase the HO Deductible Options Available for DP3 All policies are subject to a deductible that applies to Section I coverages. A $500 deductible is the default unless an optional deductible has been selected. Deductibles of $250, $500, $750, $1,000, $1,500, $2,000, $2,500, $3,000, $4,000, and $5,000 are available Revised: 10/01/16

52 Section 4: Rating Rules 4.1 Policy Characteristics Rating Variables Applies to HO-4, HO-6 and DP-3 A number of variables affect the basic policy premium and endorsement premium. Each rating variable must be carefully and accurately determined and entered into the Rating Software. The insured and Agent confirm the accuracy of this information by signing the application. The following variables may affect the premiums: Applies to HO-6 Territory Coverage Limits Mature Policyholder discount Construction Type/Protection Class Deductible Professional Designation Discount Age of building Prior Claim Points Factor Multi-Product Discount Primary/Secondary/Seasonal Use Additional variables apply or may apply to added endorsements Experience Claim Points Factor Experience Discount AAA Membership Discount Renters Insurance Certificate Discount Home Protection Device Discount Employee Discount Revised: 10/01/16

53 Applies to DP-3 Factors relating to Insured Location Coverages Discounts and Surcharges Territory Coverage Limits Prior Claim Construction Type Deductible Year Dwelling Built Protection Class Roof Type Year 100% Renovation Discounts # of Family Units (Dwelling Protection & Devices etc.) Landlord experience Property Manager for location (property manager does not need to live at the rental location) Hazardous Risk Exposures (Swimming Pools, Wood Stoves etc.) Additional variables apply or may apply to added endorsements Market Tier Assignment Applies to DP-3 Policies The rental property program has 5 Market Tiers: Ultra-Preferred 1 Ultra-Preferred 2 Preferred 1 Preferred 2 Standard All applications that are acceptable qualify for the Standard tier. Eligibility for the remaining market tiers is based on an applicant's prior loss history, landlord experience, and whether the insured has a full-time or part-time Property Manager for the insured location. The Software will automatically weigh all underwriting criteria and place the applicant in the qualifying market tier. The market tier prior loss history is based on: o The last 5 years of claims experience. o Claim history for the rental property on the application & rental properties currently insured with ACA Insurance. Landlord experience is based on: o The number of consecutive years the insured has owned and held the "insured location" as rental property. o The number of consecutive years the insured has owned other rental properties, as rental properties, in the last 5 years. Note: In order to ensure rating accuracy, all closed claims with a loss amount greater than zero (0) that pertains to the applicant for any risk address and other rental properties owned within the last 5 years must be listed. Property Manager is defined as follows: Revised: 10/01/16

54 o o Property Manager - An entity or individual who is acting on the owner's behalf with respect to the maintenance and upkeep of the property. The "Property Manager" is not the property owner or the dwelling occupant. If an insured owns their own "Professional" Property Management Company and the company has a current business license in that profession, then the company itself would be considered the Property Manager, not the individual insured. "Professional Property Manager - Full-time" - means a "Property Manager" whose main occupation is the management of the property of others. Note: (An example would be a property management company which may also possess commercial liability policy or an individual that manages property of others full time). "Non-Professional - Part-Time" - means an individual who is a "Property Manager" but who has another occupation aside from managing the property of others Protection Class Applies to HO-3, HO-4, HO-6, and DP-3 Dwellings must be located in Public Protection Class (PPC) 1-9. Dwellings located in PPC 10 are unacceptable. Log homes are acceptable for coverage provided that they are located in Protection Classes 1-8 and were constructed by a licensed contractor. (Proof that structure is of conventional construction may be required for risk to qualify for coverage.) Applies to HO-3, HO-4, and HO-6 Protection Class changes will be adjusted at the next renewal date of the policy. To determine the protection class, find the Fire District name from the ISO Public Protection Class Pages and select the Protection Class for that Fire District. Use the chart below as a guide to assist you in determining the Protection Class. Rule If a single Protection Class is shown, always use whichever class is listed regardless of the distance from the fire hydrant. If a split Protection Class is shown, select the first P.C. if the dwelling is less than 1,000 feet from a fire hydrant; chose the second P.C. if the hydrant is over 1,000 feet. If a split Protection Class is shown and the footnotes indicate acceptable water supply other than the fire hydrant is allowed for certain fire districts listed, chose the fire P.C. The distance requirement for the hydrant may be waived. Subscription fire department are indicated by a footnote. Protection Class 10 applies to individual properties that do not subscribe to the subscription fire department. Example Protection Class is listed as 3 and the distance from the fire hydrant is over 1,000 feet, select 3. Protection Class is 5/9 and the dwelling is less than 1,000 feet from a hydrant, select 5. Protection Class is 5/8, the dwelling is over 1,000 feet from a fire hydrant, the Fire District name is Bear Valley and the footnotes indicate Hydrant district requirement does not apply due to an alternative creditable water supply for the following Fire District. Names: Yellow-Jacket & Bear Valley, select 5. Protection Class is 5/9, primary fire department response is provided by a Subscription Fire Department. If the insured does not have a contract for service with the subscription Fire Department protection class 10 applies Revised: 10/01/16

55 On a split Protection Class, the only time the fire hydrant distance requirement is waived is when an ISO footnote indicates "Hydrant distance requirement does not apply due to an alternative creditable water supply". Otherwise the dwelling must be less than 1,000 feet from the hydrant. Applies to HO-6 Public Protection Class (PPC) will be ordered automatically in netpositive after the user enters a complete address on the General screen and continues to the Dwelling page. Additionally, the PPC value returned from the vendor (ISO) will auto-populate in the Protection Class field located on the Dwelling screen. Split PPC: In most instances, netpositive will assign a single PPC value. However, in some cases, a split PPC will be returned (i.e. 5/9). In that instance, the user will be prompted to select the Hydrant Distance and netpositive will assign the applicable PPC based on that response. Note: ISO will verify each address and return a message if the address entered at netpositive does not match the standardized address for that location. The user can either select the standardized address returned by ISO, or click cancel and retain the address originally entered. Regardless, the PPC associated with the standardized address will be used for the quote. For all quotes, the pre-fill PPC information will only be valid for sixty (60) days; netpositive will re-order upon expiration. 4.2 Discounts Home Protection Devices Applies to HO-3, HO-6, and DP-3 Dwellings with Coverage A greater than $1,000,000 must have a monitored Central Fire/Burglar Alarm. Home Protection Devices Include the following: Applies to HO-3 A Smoke and Burglar Alarm discount will apply to the base premium provided that the dwelling has the following protective devices: Devices Discount Smoke or fire alarm and Local burglar alarm 5% Smoke or fire alarm and Central burglar alarm 10% Applies to HO-6 Residential Sprinklers Central Burglar Alarm Local Burglar Alarm Gated Community Central Fire Alarm Local Fire alarm On Site Security Guard Applies to DP-3 Devices Max. Local Burglar and Residential Sprinklers 10% Local Burglar and Local Fire 10% Central Burglar or Central Fire 7.5% Revised: 10/01/16

56 Gated Community 5% Residential Sprinklers 5% Local Burglar or Local Fire 5% Gated Community and Local Fire 10% Gated Community and Residential Sprinklers 10% Central Burglar and Local Fire 12.5% Central Burglar and Residential Sprinklers 12.5% Local Burglar and Central Fire 12.5% Central Burglar and Central Fire 15% None 0% Home Protection Devices Descriptions Applies to HO-3, HO-6, and DP-3 A discount will apply if the residence premise is located in a gated community and/or, has a burglar and/or fire prevention system installed in accordance with the following schedule summary: Local Burglar Alarm - A full alarm system that covers the total living area of the dwelling. The alarm system is connected to a majority of windows and doors and is controlled through a central control panel. It is not a simple stand-alone alarm for individual windows and doors, but a centrally controlled alarm program that is wired throughout the dwelling. This alarm system sounds an audible alarm at the residence and is controlled through a central control panel. Central Burglar Alarm - A burglar alarm that reports directly to a police station or central station. This is a full alarm system that covers the total living area of the dwelling. The alarm system is connected to a majority of windows and doors and is controlled through a central control panel. This alarm system is wired to an alarm company that monitors each alarm call. The company calls the Insured when an alarm occurs and also sends the police department to the home. Local Fire Alarm - A full alarm system the covers the total living area of the dwelling, with a minimum of one smoke detector per floor. Garage must have a minimum of one heat detector. This alarm system sounds an audible alarm at the residence and is controlled through a central control panel. Central Fire Alarm - A fire alarm that reports directly to a fire station or central station. A full alarm system the covers the total living area of the dwelling, with a minimum of one smoke detector per floor. The garage must have a minimum of one heat detector. This alarm system sounds an audible alarm at the residence and is controlled through a central control panel. This alarm system is wired to an alarm company that monitors each alarm call. The company calls the insured when an alarm occurs and also sends the fire department to the home. Residential Sprinkler System - Automatic sprinklers installed in all areas including bathrooms, attics, and attached structures. Gated Community - A community that has access restricted 24 hours a day either through an automatic gate or the presence of a guard at the entrance to the community. Documentation for a central burglar alarm or fire alarm credit must be submitted with the application. Proof can be a copy of a receipt or service contract with the Alarm Company. A current billing statement is also acceptable. Note: Homes under the course of construction do not qualify for any of the above discounts Revised: 10/01/16

57 4.2.3 AAA Membership Applies to HO-3, HO-4 and HO-6 A AAA membership discount will apply to the dwelling policy premium when an insured has a AAA Membership. The discount applies to new and renewal policies. The discount will be eliminated upon termination of membership Employee Discount Applies to HO-3, HO-4, and HO-6 An employee discount will apply to the homeowner policy premium for permanent AAA employees and retired employees who are eligible for benefits. The discount applies to new and renewal policies. The discount will be eliminated upon termination of employment. Employee Discount 10% Senior Discount Applies to HO-3 and HO-4 A senior discount will apply to the base premium provided at least one named insured must be age 65 or over. The discount does not apply to Secondary policies. Senior Discount 10% Mature Policyholder Discount Applies to HO-6 A discount will apply to the base premium provided at least one named insured must be age 50 or over. The discount does not apply to Secondary policies Multi-Policy Discount Applies to HO-3 (Primary and Secondary Policies) A discount will apply to the AAA NCNU Insurance homeowner policy premium, when an insured has other property and casualty insurance products with AAA NCNU including: Auto (Select Auto product only). Applies to HO-6 A discount will apply to the AAA NCNU Insurance homeowner policy premium, when an insured has other property and casualty insurance products with AAA NCNU including: Auto (Select Auto product only) and Earthquake (CEA) Professional Designation Discount Applies to HO-6 Affinity group discounts will apply to applicants with professional designations/certifications as well as active duty or retired military. Documentation for affinity group discounts must be submitted with the application. Proof can be a copy of the applicant's designation certificate, Association Identification Card or equivalent or recent paycheck or equivalent employment documentation. A discount up to 10% applies for the following profession: o Accountants o Architect o Computer Professional o Dentist o Engineer o Pharmacist o Physicians o Real Estate Agent o Veterinarian A discount up to 5% applies for the following profession: o Attorney o Audiologist Revised: 10/01/16

58 o o Fireman/Policeman Nurse Renters Insurance Certificate Discount Applies to HO-6 (1.7.7 Proof Associated HO-4 Policy) Our philosophy is to ensure that an HO-6 landlord is adequately protected against losses due to the tenancy of the unit. To promote these benefits, we will offer a landlord discounts when an HO- 4 renter's policy is in force with the tenant Special Instructions and Discount Codes Applies to HO-3 Special Instructions and Discounts Code No special instructions 000 Employee 003 Smoke or Fire Alarm and Local Burglar Alarm 100 Smoke or Fire Alarm and Local Burglar Alarm/Employee 103 Smoke or Fire Alarm and Central Burglar Alarm 200 Smoke or Fire Alarm and Central Burglar Alarm/Employee 203 Senior 600 Senior/Employee 603 Senior/Smoke or Fire Alarm and Local Burglar Alarm 700 Senior/Smoke or Fire Alarm and Local Burglar Alarm/Employee 703 Senior/Smoke or Fire Alarm and Central Burglar Alarm 800 Senior/Smoke or Fire Alarm and Central Burglar Alarm/Employee Revised: 10/01/16

59 Applies to HO-4 Special Instructions and Discounts Code No special instructions 000 Cal-Vet* 002 Employee 003 Cal-Vet*/Renewal Commission** 012 Cal-Vet*/Employee 023 Senior 600 Senior/Cal-Vet* 602 Senior/Employee 603 Senior/Cal-Vet*/Renewal Commission 612 Senior/Cal-Vet*/Employee 623 *Cal Vet is not a discount but an indicator that the described residence premises is owned by the named insured and is being financed through the California Department of Veterans Affairs. Note: Any special instruction code ending in the number 10 indicates that the policy was originally written as a reinstated policy and the agent received Renewal Commission. 4.3 Coverage A Revaluation Offset Coverage A Revaluation Offset Applies to HO-3 Coverage A Revaluation offset is one of the factors used in rating a policy. It is based on the number of years a policy has been in force, and is derived by the system from the first policy effective year of the policy. 4.4 Age of Home Factor Age of Home Factor Applies to HO-3 This is based on the age of the home. The Age of Home is one of the factors used in rating a policy Revised: 10/01/16

60 4.5 Persistency Rating Factor Persistency Rating Factor Applies to HO-3 The Persistency Rating Factor is one of the factors used in rating a policy. If the policy has been in force for 5 years or more, the persistency factor applies as follows: Number of Years Discount 0 4 0% 5 9 5% % % Dwelling Renovation Overview Applies to DP-3 The dwelling must meet the following requirements to be eligible for a premium adjustment: The dwelling must be 10 years old or older, and the features or systems outlined below must have been updated by a qualified licensed contractor per the requirements listed to conform to local code requirements. o Plumbing: must include the installation of 100% copper water supply lines, and plumbing fixtures within the structure. o Electrical: must include the replacement of fuse or breaker boxes, switches, fixtures, and wiring. Wiring must be 100% Romex wire. o Heating and Cooling System: must include furnace and air conditioning replacement, or replacement of burners on furnaces and compressors on central air conditioning systems. o Roof: Entire roof surface, gutters, and downspouts must be replaced The premium adjustment is based on the earliest year in which any one of the items was updated: (Enter the earliest month and year each item was completed into the Renovation Month/Year Field in the Rating Software). The premium is adjusted by a factor. Note: Documentation is not required unless work is completed by the insured or a non-licensed contractor. If work was completed by the insured or non-licensed contractor documentation required is copy of the City Inspection sign-off and permits. 4.7 Claims Claim Points Applies to HO-3, HO-4, and HO-6 A claim means a paid, closed claim. The amount paid means the indemnity claim payment and does not include the deductible assumed by the insured. Any open loss or loss that was closed without payment (CWP) is not considered a claim for rating purposes. Claims from ISO/PCS/CLUE designated catastrophic losses do not trigger claim points. Claim points are rated using Prior Claims for new business and Experience rating factors for renewals. Assess claim points for Prior and Experience Claims using this table: Indemnity Points $0 $2,000 0 $2, Revised: 10/01/16

61 4.7.2 Prior Claim Rating Prior claim points apply to new business policies for applicant-related closed claims when the insurer's payments exceeded $2,000 and that occurred within the three-year period ending with the effective date of the application. Prior Claims are also assessed and rated at the first and second renewal of the policy if the loss is still within the three-year period ending 55 days prior to the renewal date. If an applicant have more than one residence and policy type, rate prior primary policy losses on new primary policies and prior secondary losses on new secondary policy. For this purpose, the Applicant Loss History Certification form requires you to indicate if the CLUE loss occurred on a primary, secondary or other (i.e. rental property) residence. To see Prior Claims Rating Factors click here Claim Experience Rating Experience claim points apply to renewal policies for closed claims made on the AAA NCNU policy and that occurred within the three-year period ending 55 days prior to the renewal date. For policies that have been in effect for the following years, the subsequent discount is applied under the Experience rating factor: 3 years with no claims point, up to 2% discount is applied. 4 years with no claims point, up to 5% discount is applied. 5 years with no claims point, up to 8% discount is applied. 6 or more years with no claims point, up to 10% discount is applied. To see Claims Experience Factor click here. 4.8 Surcharge Surcharge Premiums will be adjusted if any of the following exposures exist: Applies to DP-3 Livestock - Livestock is generally defined as Cattle, Sheep, Swine, Goats, Horses, Mules and Donkeys. There can be no more than 5 livestock on the described premises and horses are limited to no more than 2. Wood Stoves - The charge for wood stoves for all forms is $25. A wood burning stove is a free standing heating source which may have the potential to present an increased exposure to fire loss, if not properly installed or maintained. This surcharge will not apply to pellet stoves. See Eligibility Guidelines and Construction Definitions for further information. Swimming Pools - Swimming Pools present a potentially serious exposure to loss. The exposure increases with accessories such as diving boards and slides. The surcharges coincide with the degree of risk. Adequate security measures and compliance with local ordinances regarding swimming pools and their accessories assist in minimizing the exposure to loss. The swimming pool should be fenced, the accessories should have nonskid-surfacing materials present, and adult supervision of children should be in place. Carefully determine the presence of ANY of the above exposures and indicate them on the application or the rating software. Inform the insured of their responsibility to inform AAA immediately if/when they obtain any of these exposures Prior Claims Surcharge Applies to DP-3 Prior Claim points are assessed for claims occurring within the last 3 years for the rental property while owned and held as a rental by the insured. The Prior Claims surcharge applies at the time of application, first renewal, and second renewal provided the prior claim is within the 3 year period ending 55 days prior to the renewal date. The claim payments must exceed $1,000 for the prior claims surcharge to apply. Note: A claim means a paid closed claim. Any loss that is still open, a loss with payment less than or equal to $1,000, or a loss closed without a payment is not considered a claim for rating purposes Revised: 10/01/16

62 Paid Claim Amount Cause of Loss $0 $1,000 $1,001 10,000 $10,001 and above Fire Water Theft Liability Other Apply the table above for each claim. Total the points for each claim and use the table below to determine the appropriate factor Claim Experience Rating Factor Applies to DP-3 A Claim Experience Rating Factor will apply on renewal policies. AAA Insurance claims occurring in the last 3 year period ending 55 days prior to renewal date with payments exceeding $1,000 will be included in the claims experience rating factor. For policies that have been in effect for 6 or more years, and have had no claims, a 10% experience rating discount will apply. Net Paid Claim Amount Cause of Loss $0-1,000 $1,001-10,000 $10,001 and above Fire Water Theft Liability Other Fees Fees Applies to DP-3 All fees are fully earned as soon as the event that triggers the fee occurs. No commission is paid on fees. Installment fees are added to all installment bills including renewal down payments less than 100%. Listed below are the fee charges: Installment Fee $5.00 Cancellation Fee* $40.00 Reinstatement Fee $20.00 Non-Sufficient Funds $20.00 Installment Fee (Non-EFT and EFT Pay Plans) - This fee is triggered anytime an invoice is sent out or a scheduled installment is generated. The renewal offer generates with a renewal fee for the first installment payment. However, the renewal fee is not actually charged to the policy unless/until the policy renews with a renewal down payment less than the total term premium Revised: 10/01/16

63 Non-Sufficient-Funds (NSF) Fee - This fee is triggered anytime we receive an NSF transaction (e.g. dishonored checks or EFT payments). Once a check is returned, issue a notice of cancellation on the policy. The insured is then required to pay the original amount plus the $20.00 NSF check charge and any other applicable fees in order to avoid cancellation. If an in-force policy is canceled due to NSF and is reinstated, it will be reinstated with a lapse in coverage. If the down payment of the policy is returned as NSF, coverage will be null and void. Reinstatement Fee - This fee is triggered when a policy is reinstated with a lapse in coverage. Cancellation Fee - All cancellations other than at the company's request will be calculated on a pro-rata basis, but are subject to a cancellation fee as indicated in the policy. This fee will not be charged for the following situations: o o o o o o If an insured has been with AAA for five or more years, chooses to cancel their policy, and request to waive the cancellation fee. If an insured is moving out of state, regardless whether or not he or she stays with AAA. If an insured is in the military and he or she is moving to be stationed elsewhere. If an insured requests to cancel his or her policy within four days prior to the expiration date, or if the effective date is in the future. If the policy requires cancellation due to the death of the insured. If an insured decides to cancel their policy within 60 days from the original effective date due to Agent or company error Endorsement Premium Adjustment Endorsement Premium Adjustment All premium adjustments reflect rates and rules in force at the time of policy inception. Premium changes are calculated pro-rata Cancellation Return Premium Cancellation Return Premium Any premium refund due will be calculated on a daily pro-rata basis Revised: 10/01/16

64 Section 5: Tier Criteria (Confidential) 5.1 Tier Criteria (Confidential) Tier Criteria (Confidential) Revised: 10/01/16

65 Section 6: Customer Facing Forms 6.1 Customer Facing Forms Consumer Information Notice The Adverse Underwriting Notice (AUN) is to inform applicants that they have been subject to an adverse action based on information obtained in a consumer report. An adverse action occurs when information contained in a consumer report, such as MVR, or CLUE report, is used to charge a higher policy premium, cancel a policy, decline issuance of a new policy, or non-renew an existing policy. The AUN advises customers who to contact to get a free copy of the report for their review as well as how to contact AAA if they want information about the adverse action. The AUN will be printed by each insurance product system, but only when an adverse action is taken in regard to new business, mid-term changes and renewals Revised: 10/01/16

66 Section 7: Endorsements - HO-3, HO-4, and HO Mandatory Endorsements BFUNS Lender's Loss Payable Endorsement Mandatory for HO-3 and HO-6 Policies What this endorsement does: Mandatory when there is a mortgagee named on the policy declaration. The endorsement amends the policy by requiring payment for a covered property loss to be paid to the Mortgagee and provides notification of cancellation to the mortgagee. Requirements: When adding a lender, the 438BFUNS is added. When deleting a lender, the 438BFUNS is deleted HW A6 00 Amendatory Endorsement Mandatory for HO-6 Policies What this endorsement does: This endorsement is a standard endorsement that amends the base HO coverage form. It broadens, restricts or clarifies coverage within Section I and Section II coverages. Included within this endorsement is limited home replacement cost coverage (150%), flood emergency assistance, lock replacement and fungi limitations. This form also increases loss assessment coverage to $25,000 for Section I and II. Requirements: This form is mandatory and will be appended to all HO-6 policies HW Personal Injury Mandatory for HO-6 Policies What this endorsement does: This endorsement amends the definition of "bodily injury" under Coverage E to include personal injury to others, such as false arrest, malicious prosecution, wrongful eviction, slander, libel, or violations for rights of privacy. Requirements: None HO Special Provisions - California Mandatory for HO-3, HO-4, and HO-6 Policies What this endorsement does: This endorsement is a standard endorsement that amends the base HO coverage form to comply with state specific requirements. Requirements: This form is mandatory and will be appended to all HO policies HO No Section II - Liability Coverages for Home Day Care Business / Limited Section I - Property Coverages for Home Day Care Business Mandatory for HO-6 Policies What this endorsement does: This endorsement excludes coverage under Section I and Section II, if an insured is operating a Day Care Business on the residence premises. Special Limits of Liability for "Business" Property is limited to $2,500 on the residence premises and $500 off the residence premises. Requirements: This form is mandatory and will be appended to all HO-6 policies Revised: 10/01/16

67 7.1.6 HO Unit-Owners Rental to Others Mandatory for HO-6 Policies whether vacant or tenant occupied What this endorsement does: This endorsement extends coverage under Section I, Coverage C, and Section II, Coverage E, when the residence premises is regularly rented or held for rental to others. Requirements: Certain types of property, money, gold, silver, goldware, silverware, securities, stamps, jewelry, watches, furs, etc., are excluded for loss by theft. HO Unit Owners Coverage C Special Coverage cannot be added to a HO-6 policy when this endorsement is on the policy. HO Unit Owners Coverage C Special Coverage will need to be deleted if the HO Unit Owners Rental to Others is added to the policy. Premium: There is a premium charge when this endorsement is selected HO 90 Worker's Compensation and Employers' Liability Insurance (Residence Employees) Automatic for HO-3, HO-4, and HO-6 Cannot be added, changed or deleted. What this endorsement does: Under Coverage l: o Coverage extends to any injury or illness ''arising out of or in the course of employment". Benefits to the employee shall include: Medical care to cure the injury. Rehabilitation services necessary to get the employee back to work. Cash payments to replace lost wages. Additional payments if the injury is serious or results in death. Under Coverage II: o Employers' liability coverage is also included which will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury by accident or disease, including death at any time resulting there from, sustained by any residence employee arising out of and in the course of employment by the insured. Requirements: The coverage cannot be rejected even if the insured has no employees or ever expects to have any. Residence Employees are entitled to workers' compensation benefits set by State Law only if employed by a residence owner or occupant (tenant) for 52 hours or more and earn at least $100 in the 90 day period immediately preceding the date of injury. A parent, spouse, domestic partner or child of the named insured(s) would not be covered by workers compensation coverage. For example, a parent of a named insured who baby-sits a named insured's child (grandmother of the child) would not be eligible for workers' compensation benefits. Independent contractors are not covered. Injuries to employees occurring in the business pursuits of the insured are not covered. Premium: For secondary residences the HO 90 is extended from the primary homeowners policy. The Basic premium on the secondary is discounted by $ HW Premises Alarm or Fire Protection System Mandatory for HO-6 Policies What this endorsement does: This endorsement is mandatory when there is a local or central alarm and/or sprinkler system. The endorsement acknowledges the installation of a local or central burglar, fire alarm system and/or automatic sprinkler system in the residence premises. If the insured maintains the system, a credit will be applied on the policy Revised: 10/01/16

68 Requirements: Documentation for a burglar alarm credit must be submitted with the application. Proof can be a copy of a receipt or a copy of a service contract with the Alarm Company. A current billing statement is also acceptable. If the system is modified or removed, the insured agrees to notify the company so the discount can be adjusted or removed HO 44 3 or 4 Family Residence Premises Located on Form C Mandatory for HO-3 policies when the dwelling is a 3 or 4 family residence What the Endorsement Does: It amends the definition of "residence premises" to include a three or four family dwelling. Requirements: The named insured must be owner occupant of one of the units in the three or four family dwelling. Coverage F limits are $1,000 "each person" and $25,000 each accident Form CA Supplement Mandatory for HO-3 Policies What the Form Does: New coverage: Identity Theft Coverage up to $15,000 Auto Lock Coverage up to $250 Lost Luggage Coverage up to $500 Definitions: Insured is considered: any other person up to age 25 who is in the care of any person named above. (This is a change from current definition which limits the age to 21, instead of 25) Requirements: This form is mandatory and will be appended to all HO-3 policies. 7.2 Assurance+ Endorsement HW Assurance+ Endorsement Found on Homeowners Optional Coverage Form A (Not available for policies with HO 17 33) Available for HO-6 Policies What this endorsement does: This endorsement combines the following member focused endorsements: Identity Fraud Expense Coverage Replacement Value Endorsement Personal Property Mortgage Payment Protection Unit Owners Coverage A Special Coverage Loss Assessment Coverage Residence Premises Requirements: This endorsement can only be selected as a bundled package. If any of the endorsements included in the bundle endorsement are deleted, the Assurance + TM endorsement is no longer eligible and must be deleted. If this endorsement is selected, none of the individual endorsements can be selected. This endorsement is not available for risks with HO Additional Interest Endorsements HO 41 Additional Insured or Additional Interest - Designated Premises Found on Homeowners Optional Coverage Form A Revised: 10/01/16

69 Available for ALL Owned Condominium or Townhouse or Cal-Vet financed building What this endorsement does: It provides coverage to protect the interest in the building(s) and for premises liability of those persons who are named on the deed but do not live in the dwelling. Requirements: Only a non occupant co-owner of the insured premises can be named as an Additional Insured. Requests for an Additional Insured Endorsement to add non-individuals such as municipalities, businesses, corporations or companies are ineligible. Note: This endorsement is also used to name a Trust because a named insured cannot be a trust. Trusts A property interest held by one person for the interest of another. The names of any trusts associated with the ownership of a dwelling must be added with an HO 41, Additional Insured endorsement. A trustee can be listed as a named insured on an HO 3 or HO 4 policy provided that the trustee is an individual and not a corporation. The named insured cannot be the Trust. For an HO 3 policy, all non-occupant part owners, including living Trusts, are treated as Additional Insureds and named on the HO 41 endorsement. For an HO 4 policy, an HO Condominium or Townhouse Unit - Owners Endorsement must exist on the policy. Limited Liability Corporation (LLC) A limited liability corporation is a distinct type of business that limits the owner's liability for money invested in the LLC and any earnings can only be taxed once. LLC's are treated like corporations for liability purposes (that is, the owners are not responsible for obligations of the LLC) and are treated like partnerships for tax purposes (that is, the LLC pays no tax and gains and losses pass through to the owners). Note: Requests to add a limited liability corporation as a named insured or an additional insured makes the policy ineligible. If it is made known mid-term of the policy period that the house is deeded under the limited liability corporation, the policy should be non-renewed. Contact Underwriting for further details. When listing a Trust as a Named Insured and Additional Insured The homeowners policy should be keyed: Smith, John G/Jane M. individually trustees or Smith, John G/Jane M, trustees. The HO 41 endorsement should be keyed: Smith Family Trust dated June 24, If additional space is needed, complete the HO 299 General Endorsement as follows: John G. Smith and Jane M. Smith individually trustees of the Smith Family Trust 2005, dated June 24, Premium: There is no charge for this endorsement HO Additional Interests - Residence Premises Found on Homeowners Optional Coverage Form A Available for HO-6 Policies What this endorsement does: This endorsement allows a person, or certain types of organizations who have an interest in the residence premises, to be added as an additional interest on the policy. Coverages are not extended to the interested party. The interested party will be notified in writing if the policy cancels or non-renews. Requirements: The name and address as well as the description of the interest of the person or organization (who has the interest in the residence premises) are required to complete the application Revised: 10/01/16

70 7.3.3 HO 1004 Berth, Slip or Buoy Endorsement Found on Homeowners Optional Coverage Form A (Not available for policies with HO 17 33) Available for HO-6 Policies What this endorsement does: This endorsement represents a combination of and This endorsement allows a person, or certain types of organizations who have an interest in the property of the insured to be added as an additional interest on the policy. Coverages are not extended to the interested party. The interested party will be notified in writing if the policy cancels or non-renews. Requirements: The name of the person or organization (who has the interest in the residence premises) is required to complete the application. This endorsement is not available for tenant occupied risks or risks with endorsement HO Building/Other Structures Endorsements HO 28 Limited Home Replacement Cost Automatic for HO-3 policies What this endorsement does: In the event of a loss, the limits of liability for Coverages A and B are not limited by the amount shown in the declarations. In the event of a loss, the limits of liability for Coverages A and B are limited to 150% of the amount shown in the declarations. Special Exclusion. The coverage provided by this endorsement shall not apply to any loss caused by an earthquake. Requirements: The described dwelling and other building structures must be insured to 100% of replacement cost. The Bureau must be notified of changes to the dwelling and other building structures within 90 days if the value is $5,000 or more. An ISO 360Value valuation report must be attached to the Policy Application or Policy Amendment - Form. Premium The charge for this endorsement is included in the basic premium HO 40 Other Structures-Rented To Others Located on Form A Available for HO-3 policies What this endorsement does: It endorses the policy to provide Section I and Section II Coverages for detached structures rented or held for rental to others. Examples of such structures are: small cottage, detached garage with built-in apartment. Requirements: Must be a structure that is detached from the main dwelling. This endorsement is required for a structure rented to others. Any detached structure over 50% of coverage A or any policy with more than three detached structures is ineligible for coverage. Such structures must be used for residential purposes and may not be occupied by more than two roomers or boarders per family. The detached structure must be insured to 100% of replacement cost. If the property is inspected in the normal course of policy processing and underwriting review, the structure must meet acceptable condition standards. How to determine limit of liability: Revised: 10/01/16

71 Replacement cost can be calculated using ISO 360Value TM. If used, attach a print out of the ISO 360Value TM regular valuation report or detailed valuation report to the Form A and send to records to be imaged. Note: The Form A must be sent to records to be imaged even if the ISO tool is not used. Inflation Factor does not apply at renewal. Advise insured coverage should be reviewed annually to determine if the replacement cost is sufficient. Premium Additional premium is charged when this endorsement is selected HO 48 Other Structures - Not Rented Located on Form A Available for HO-3 policies What this endorsement does: Provides additional Section I coverage for a specific structure detached from the main dwelling when the automatic 10% limit under Coverage B is not enough to cover such structure. Examples of such structures are: detached garage, workshop, green house, tool shed and swimming pool, hot tub, patios and retaining walls. Requirements: Must be a structure that is detached from the main dwelling. Any detached structure over 50% of coverage A or policies with more than three detached structures is ineligible for coverage. The detached structure must be insured to 100% of replacement cost. Examples of building structures are: shed, cottage, garage, etc. Examples of non building structures are: pool, retaining wall, etc. If the property is inspected in the normal course of policy processing and underwriting review, the structure must meet acceptable condition standards. Premium: Additional premium is charged when this endorsement is selected HO 51 Building Additions and Alterations (Form 4 Only) Located on Form C Available for Rented HO-4 policies What this endorsement does: Allows the insured to increase the Limit of Liability under Coverage C applicable to building additions and alterations for example, built in cabinet shelves, new wall partitions, wet bar, etc. Requirements: Must be a Rented HO 4 policy. Premium: Additional premium is charged when this endorsement is selected HW Loss Assessment Coverage Found on Homeowners Optional Coverage Form A Available for HO-6 Policies What this endorsement does: This endorsement provides protection for special assessments for which the insured is liable as a result of membership in a property owners association. Coverage can be increased from the HO- 6 $25,000 limit, for Loss Assessment on the residence premises and/or additional locations. A limit of $50,000 can be purchased. Requirements: The premium for this endorsement on an HO-6 policy will depend upon whether endorsement HO 17 32, Unit-Owners Coverage A-Special Coverage, is attached to the policy. On new business, this endorsement only applies to the residence premises. A maximum of 2 locations in addition to the residence premises is allowed thereafter Revised: 10/01/16

72 Note: If endorsement HW is on the policy, it must be removed before a standalone HW with additional locations can be added and vice versa. This endorsement excludes coverage for loss assessments resulting from earthquake. The location is required to complete the application. Special Limit: The total limit available under this endorsement is no more than $1,000 of the assessment that results from a deductible in the policy of insurance purchased by a corporation or association of property owners HO 300 Excluded Appurtenant Structure(s) Located on Form A Available for HO-3 What this endorsement does: Excludes Section I Coverages to detached structures that are not eligible. Note: An exclusion does not reduce the premium Requirements: This endorsement is not eligible on New Business. The Insurance Product Operations Department prepares the typed documents only. Premium: There is no charge for this endorsement HW Water Back Up and Sump Discharge or Overflow Found on Homeowners Optional Coverage Form A Available for HO-6 policies What this endorsement does: This endorsement allows for coverage of up to $10,000 for direct physical loss, not caused by the negligence of any insured, to property covered under Section I caused by water backup through sewers, drains, or water overflow from a sump pump. Requirements: The coverage does not apply to direct physical loss of sump pump or related equipment, which is caused by mechanical breakdown. Note: There is a special deductible of $1000 which applies and replaces any other deductible provision in the policy with respect to this coverage HO Unit-Owners Coverage A Special Coverage Found on Homeowners Optional Coverage Form A (Not available for policies with HO 17 33) Available for HO-6 What this endorsement does: This endorsement broadens the Section I perils for Coverage A from named perils to open perils, subject to certain exclusions. Requirements: This endorsement is not available for tenant-occupied risks HW Rebuild to Green Endorsement Found on Homeowners Optional Coverage Form A Available for HO-6 policies What this endorsement does: Real and personal property can be replaced with eco-friendly, energy efficient property. Requirements: Revised: 10/01/16

73 Maximum benefit under this endorsement is $30,000 Per item limit is 400% of the replacement costs Insureds must already purchased replacement cost coverage (HO 29) in order to qualify for this endorsement Green products used are to comply with standards set by Energy Star Only Cov A and C are affected HW Mortgage Payment Protection Found on Homeowners Optional Coverage Form A (Not available for policies with HO 17 33) Available for HO-6 policies What this endorsement does: Provides benefit to the insured if the insured dwelling is rendered uninhabitable by reasons of damage caused by fire or other Perils Insured Against. The benefit will be paid to the insured in monthly installments on a promissory note, which is secured by a first deed of trust or mortgage covering the dwelling beginning 45 days after the occurrence which rendered the insured dwelling uninhabitable. This benefit will continue during the period that the insured dwelling remains uninhabitable but will not provide more than twelve (12) consecutive monthly installments. Requirements: Maximum benefit under this endorsement is $18,000. No part of the benefit shall be paid or payable for taxes, insurance, delinquencies on the insured promissory note, trustee fees, foreclosure costs, late penalties or other expenses stemming from a breach of the insured's obligations arising under the promissory note of deed of trust or mortgage. The payment will be limited to a maximum of $1,500 per month and will not include any delinquencies, foreclosure costs, or late penalties. This endorsement is not available for tenant-occupied risks. 7.5 Business Endorsements HO 42 Office Occupancy - Described Premises Only Found on Homeowners Optional Coverage Form A (Not available for policies with HO 17 33) Available for HO-3, HO4, and HO-6 What this endorsement does: This endorsement provides expanded Section I property coverages and Section II liability coverages when the insured maintains a permitted incidental professional office, private school, or studio occupancy in the dwelling or in an (other structure) on the residence premises. It deletes the exclusion for other structures on premises in which business is conducted. It also removes the $2,500 limit on (business property) on the insured premises that is used for the business described on the endorsement. This endorsement also covers personal property pertaining to the permitted incidental occupancy, within the Coverage C limits stated on the policy. This endorsement is used when the insured maintains an incidental office or gives professional instruction such as music, dancing, photography or similar types of instruction on premises. The insured must not employ any assistants and there must not be any physical alterations of the dwelling to accommodate this occupancy. This endorsement may be written with Section II coverage only (liability only coverage for either the dwelling or another structure on the residence premises where the business is conducted) or with both Section I and Section II coverages. Note: Applies to HO-3 Business property away from the premises is limited to $2500. Applies to HO-6 Business property away from the premises is still limited to $500. Requirements: The following are ineligible for coverage: Revised: 10/01/16

74 o Business equipment over $50,000. o Foot traffic exceeding two customers per week. o Employees working on the premises. o Business involving hazardous situations or materials. o Business involving the manufacturing or repairing of goods or products. o A professional liability exposure which is uninsured. Applies to HO-3 and HO-4 o The business is conducted in or business equipment is stored in a detached structure. Applies to HO-6 o Sun tanning or professional exercise equipment. The following are required to complete the application: o A description of the permitted occupancy/business. o Whether the business location is in the primary dwelling or in another structure on the residence premises. o The limit of liability and description of other structure, if the permitted occupancy/business is located in another structure on the residence premises. The Business Pursuits Questionnaire must be completed. Applies to HO-3 and HO-4 Coverage C must reflect the insureds office equipment, office supplies and office furnishings. Applies to HO-6 This endorsement is not available for tenant-occupied risks. For Professional Indicator and Homeowners Territories Section II click here. Premium: Applies to HO-3 and HO-4 Coverage F limits are $1,000 "each person" and $25,000 per accident. Additional premium is charged when this endorsement is selected HO 43 (HO 43C) Office Occupancy - Additional Premises Located on Form A (Not available for policies with HO 17 33) Available for HO-3, HO-4, and HO-6 What this endorsement does: Modifies the policy language to provide Section II Coverages only, when the Insured has a permissible office, professional private school or studio occupancy in an additional residence premises occupied by the insured, other than the described premises, which otherwise meets the eligibility requirements. Refer to the policy booklet for a more detailed description. Requirements: Applies to HO-3 and HO-4 Underwriting Operations approval is required on all HO 43's. The Business Pursuits Questionnaire must be completed. Applies to HO-6 This endorsement is not available for Tenant-occupied risks. The following are ineligible for coverage: o Business equipment over $50,000. o Foot traffic exceeding two customers per week. o Sun tanning professional exercise equipment. o Employees working on the premises. o Business involving hazardous situations or materials. o Business involving the manufacturing or repairing of goods or products Revised: 10/01/16

75 o A professional liability exposure which is uninsured. For Homeowners Territories Section II click here. Premium: Applies to HO-3 and HO-4 Coverage F limits are $1,000 each person and $25,000 per accident. Applies to HO-6 Coverage F limits are $1,000 each person Additional premium is charged when this endorsement is selected HO 70 Additional Residence Premises - Rented to Others Located on Form A (Not available for policies with HO 17 33) Available for ALL Primary policies only What this endorsement does: Extends Section II coverage, Coverage E Personal Liability and Coverage F Medical Payments to Others, to an additional one or two family residence premises, rented to others, owned by the Named Insured or spouse or domestic partner. Note: For use when our insured has their rental home insured with another carrier that does not provide liability insurance coverage to the other carriers DP3 form. If the insured has a secondary dwelling with an AAA DP-3 policy, the insured will not require the HO-70 endorsement and it should be removed. Requirements: The dwelling must be located in California. The dwelling must be a single-family or a duplex. The limits of liability for Coverage E and for Coverage F are uniform for all exposures covered under the policy. Maximum number of additional residences rented to others is 6. If the insured owns one unit in a condominium complex that does have a primary condominium association liability policy the HO-70 can be extended. Attach a copy of the association's liability policy to the endorsement request. Refer any requests to extend the HO-70 to more than one unit in a condominium complex to Underwriting for approval. Each location must meet the Loss History Eligibility Guideline. Attach the CLUE report of each location to the application or Form A. This endorsement is not available for tenant-occupied risks. Coverage F limits are $1,000 each person HO 71 Business Pursuits Located on Form C (Not available for policies with HO 17 33) Available for HO-3, HO-4, and HO-6 policies What this endorsement does: Extends insurance provided under Coverage E Personal Liability and Coverage F Medical Payments to Others, for liability arising out of business activities, other than a business in which the insured is sole owner or partner. This endorsement applies to the following professions: clerical office employees, salesmen, collectors, messengers and teachers. See PREMIUM section for further clarification of employees. Requirements: Cannot be self employed, a partner, or maintain any financial control in the business. Refer to the exclusions in the H0-3 or HO-4 Policy Booklet for coverage exclusions and discuss with insured at time of binding. List name and business of the insured in the remarks Revised: 10/01/16

76 Premium: The additional premium is based on the Business Pursuits Class and Coverage E amount. Classify and apply charge separately for each person insured. Classifications: A. Clerical Office Employees Salesmen, Collectors or Messengers. Salesmen, Collectors or Messengers No installation, demonstration or servicing operations. B. Salesmen, Collectors or Messengers including installation, demonstration or servicing operations. C. Teachers Athletic, Laboratory, manual training, physical training and swimming instruction, excluding liability for corporal punishment of pupils. D. Teachers Not otherwise classified, excluding liability for corporal punishment of pupils. E. Teachers Liability for corporal punishment of pupils. Additional premium for this coverage must be added to premium for classification C or D. Coverage F limits are $1,000 each person and $25,000 per accident. Additional premium is charged when this endorsement is selected. 7.6 Personal Property Endorsements HO 29 Replacement Value Endorsement Personal Property Located on Form A Available for HO-3, HO-4, and HO-6 policies What this endorsement does: The endorsement substitutes the term "replacement value" for "actual cash value" as it applies to Section I Coverage C Personal Property. Replacement Value means the current cost at the time of loss without deduction for depreciation to replace the damaged, destroyed or stolen property with articles of like kind and quality. The existing policy deductible(s) apply. Special Exclusion - The coverage provided by this endorsement shall not apply to any loss caused by an earthquake. Requirements - For HO-3 policies: To ADD HO-29 Coverage C must be increased to a minimum of: To DELETE HO-29 Coverage C can be lowered to a minimum of: 1 Family 75% of Cov. A 50% of Cov. A 2 Families 75% of Cov. A 50% of Cov. A 3 Families 45% of Cov. A 30% of Cov. A 4 Families 37% of Cov. A 25% of Cov. A Requirements - For HO-4 Policies: The HO 29 limit and the Coverage C limit must be equal. Premium: The charge for this endorsement is included in the basic premium HO 210 (HO 210C) Jewelry and Watches Increased Limits of Liability Located on Form A (Not available for policies with HO 17 33) Revised: 10/01/16

77 Available for HO-3, HO-4, and HO-6 policies What this endorsement does: Increases Section I Coverages, Special Limits of Liability for loss by theft of jewelry and watches from a limit of $2,500 to a limit of: $5,000 or $7,500. Requirements: The new total limit of liability is required to complete the application. This endorsement is not available for tenant-occupied risks Increased Coverage C - Unscheduled Personal Property (Without HO 29 Replacement Value - Unscheduled Personal Property) Located on the Policy Amendment Form Available for HO 3 What this endorsement does: Increases the limit of liability for Coverage C Unscheduled Personal Property. Requirements: Maximum increase: 100% of Coverage A Dwelling limit subject to approval by Area Management. Premium: The additional premium is $1.56 per $1,000 of insurance HO 61 Scheduled Personal Property (OTHER THAN BOATS) Found on Form B Available on HO-3 and HO-4 policies Description of Coverage: Provides coverage against physical loss with certain exceptions on all classes of specifically described personal property. Guideline: Each scheduled piece of property must be considered owned by the named Insured(s). Note: Engagement Rings - When an engagement ring is given to our insured, the ring is considered owned by the named insured and can be scheduled on the policy. Deductible: There is no deductible except on Boats (see Boat section of this manual). Limits of Liability: Personal Property schedules MUST not total more than 50% of the Coverage C limit. Scheduled jewelry cannot exceed 25% of the Coverage C limit. Per Item: $25,000 or maximum amount whichever is less. Limits exceeding the maximum amount require Underwriting approval. Coverage may be provided on the following classes: Cameras: Covers cameras, lenses, video cameras, projection machines, and articles of (Non-Professional) equipment pertaining thereto but excluding television cameras and equipment. A professional is a person who receives remuneration, whether full or part time, for services provided using camera equipment insured during the term of the endorsement. Coins: Covers rare and current coins, medals, paper money, bank notes, tokens of money and other numismatic property including coin albums, containers, frames, cards and display cabinets while owned by or in the care, custody or control of the insured. A separate value should be determined for each coin Revised: 10/01/16

78 Fine Arts: Covers paintings, etchings, imported tapestries, art glass windows, valuable imported rugs, original statuary, marbles, bronzes, antique furniture, rare books, antique silver, manuscripts, porcelains, rare glass. The pieces of art that have an enhanced value by their rarity, historical origin or artistry and are produced or intended primarily for beauty rather than utility. Note: The breakage of art glass windows, statuary, marble, glassware and similar fragile articles is excluded. Furs: Includes garments trimmed with fur or consisting primarily of fur but excluding "man-made" or "artificial" fur. Golfer's Equipment: Covers golf clubs, golf clothing and golf equipment (but excluding golf balls). Jewelry: Covers all jewelry excluding unset stones, ordinary toilet articles, cigarette cases, money clips, pens and pencils. Musical Instruments: Includes articles of equipment pertaining to musical instruments. For example: (Non-Professional) violin bow and case. A professional is a person who receives remuneration, whether full or part time, for services provided using musical instruments insured during the term of the endorsement. Note: A piano, even if not used, is considered a musical instrument. Silverware: Covers silverware, silver plated ware, gold ware, gold plated ware and pewter ware but excluding pens, pencils, smoking accessories and items of personal adornment. Stamps: Includes postage stamps, envelopes, official revenue, match and medicine stamps, reprints, essays, proofs and other philatelic property owned by or in care, custody or control of the insured including the books, pages and mountings thereof. A separate value should be determined for each stamp. Blanket Coverage: Cameras, Golfer's Equipment, Silverware, Stamps and Coins may be covered on a blanket basis up to a specified limit. Blanket coverage means that individual items do not need to be listed separately and should be scheduled as one item (number of items will always be "one"). Coverage in excess of the blanket limit requires listing individual items. It is permissible to provide coverage by either or both methods. Class Blanket Limit Camera $1,000 Coins $2,000 Golfer s Equipment $1,750 Silverware $2,000 Stamps $2,000 Note: PLEASE REFER TO OUR INSURING AGREEMENTS FOR ADDITIONAL EXCLUSIONS AND SPECAIL CONDITIONS. Appraisal Requirements: Jewelry: For items valued at more than $2,500 attach an appraisal, sales receipt or the stated value from the Insured's previous or current homeowners insurance carrier not more than five years old. A Revised: 10/01/16

79 complete item description must be provided in the appraisal, sales receipt or stated value from the Insured's previous/current homeowners insurance carrier: Precious Stones/Gems: The type, cut, color, clarity and weight of stone. Precious Metals (such as gold or platinum jewelry): The karat and color of the precious metal. Pearls: The color, diameter, shape and arrangement of pearls. Necklaces/Bracelets: The length, link type (if a chain style), weight, metal type and gemstone details of the necklace or bracelet. Although not required, if a picture of the jewelry item is available please attach to the Form B. All other classes (except Musical Instruments): For items valued at more than $5,000 attach an appraisal, sales receipt or the stated value from the insured's previous or current homeowners insurance carrier not more than five years old. Musical Instruments a sales receipt, appraisal or the stated value from the Insured's previous or current homeowners insurance carrier not more than five years old, if available, should be submitted along with a complete description of the musical instrument. Also include make, model numbers and serial numbers if applicable. Premiums: Additional premium is charged when this endorsement is selected. Premium list for each class click here HW Scheduled Personal Property (OTHER THAN BOATS) Found on Homeowners Optional Coverage Form B (Not available for policies with HO 17 33) Available on HO-6 policies What this endorsement does: This endorsement provides coverage against direct physical loss, with certain exceptions, on all classes of specifically described personal property. Deductible: No deductible. Requirements: Occupancy: This endorsement is not available for tenant-occupied risks. Limits of Liability: Personal Property schedules (Total of HW and HO 61C) MUST not total more than 100% of the Coverage C limit. Appraisals: Appraisal or a sales receipt is required on all classes of property, except for Musical Instruments. The name on the appraisal or sales receipt should be in the named insured(s) name and sales tax should not be included in the value of the item(s). The amount of insurance and a complete description of the item(s) are required to complete the application. Jewelry o For items valued at more than $2,500 attach an appraisal, sales receipt or the stated value from the Insured s previous or current homeowners insurance carrier not more than five years old. A complete item description must be provided in the appraisal, sales receipt or stated value from the Insured s previous/current homeowners insurance carrier: Precious Stones/Gems: The type, cut, color, clarity and weight of stone. Precious Metals (such as gold or platinum jewelry): The karat and color of the precious metal. Pearls: The color, diameter, shape and arrangement of pearls. Necklaces/Bracelets: The length, link type (if a chain style), weight, metal type and gemstone details of the necklace or bracelet. All other classes (except Musical Instruments) Revised: 10/01/16

80 o For items valued at more than $5,000 attach an appraisal or sales receipt with a complete description not more than 5 years old. Musical Instruments o A sales receipt, if available, should be submitted along with a complete description of the musical instrument. Also include make, model numbers and serial numbers if applicable. Coverage may be provided on the following classes: Cameras: Covers cameras, lenses, video cameras, projection machines, and articles of (Non-Professional) equipment pertaining thereto but excluding television cameras and equipment. A professional is a person who receives remuneration, whether full or part time, for services provided using camera equipment insured during the term of the endorsement. Coins: Covers rare and current coins, medals, paper money, bank notes, tokens and other numismatic property including coin albums, containers, frames, cards and display cabinets while owned by or in the care, custody or control of the insured. A separate value should be determined for each coin. Fine Arts: Covers paintings, etchings, imported tapestries, art glass windows, valuable imported rugs, original statuary, marbles, bronzes, antique furniture, rare books, antique silver, manuscripts, porcelains, rare glass. The pieces of art that have an enhanced value by their rarity, historical origin or artistry and are produced or intended primarily for beauty rather than utility. Note: The breakage of art glass windows, statuary, marble, glassware and similar fragile articles are only covered if loss is caused by one of the five named perils. Furs: Includes garments trimmed with fur or consisting primarily of fur but excluding "man-made" or "artificial" fur. Silverware: Covers silverware, silver plated ware, gold ware, gold plated ware and pewter ware but excluding pens, pencils, smoking accessories and items of personal adornment. Silverware property may be scheduled in sets, or items may be listed individually. Valuable items should be individually scheduled. Golfer's Equipment: Covers golf clubs, golf clothing and golf equipment. Jewelry: Covers all jewelry excluding unset stones, ordinary toilet articles, cigarette cases, money clips, pens and pencils. Musical Instruments: Includes articles of equipment pertaining to musical instruments. For example: (Non-Professional) violin bow and case. A professional is a person who receives remuneration, whether full or part time, for services provided using musical instruments insured during the term of the endorsement. Note: A piano, even if not used, is considered a musical instrument. Stamps: Includes postage stamps, envelopes, official revenue, match and medicine stamps, reprints, essays, proofs and other philatelic property owned by or in care, custody or control of the insured including the books, pages and mountings thereof. A separate value should be determined for each stamp, unless a collection is being scheduled on a blanket basis. Firearms: Individually owned personal use firearms may be scheduled. Make and model number along with the serial number and caliber/gauge are required. Firearms, whose primary value resides in their historical or one-of-a-kind nature, require an appraisal regardless of value Revised: 10/01/16

81 Comic Books & Trading Cards: Comic books and sports or trading cards are eligible for coverage. The name and issue number of the comic book and the type of trading card must be recorded if an item is to be individually scheduled. The insured must not be involved in the business of buying, selling or trading comic books or sports/trading cards. Premiums: Additional premium is charged when this endorsement is selected HO 61 (HO 61C) Scheduled Personal Property (Boats Only) Found on Form B (Not available for policies with HO 17 33) Available for HO-3, HO-4, and HO-6 policies Description of Coverage: Provides hull coverage against physical loss with certain exceptions. Hull coverage should be written for 100% of actual cash value. To schedule boats, you must obtain the Model Year, Manufacturer, Model, Length, and the hull identification number (HIN). The HIN is also referred to as a serial number. All boats, including inflatable rafts, canoes, and kayaks manufactured or imported to the United States after August, 1972 are required to have a HIN. The HIN is a 12 digit number. Note: It is important to determine hull, motor (if outboard) trailer and miscellaneous equipment values separately so their combined value will represent the coverage needed by the insured. Miscellaneous equipment shall include all items which are usual or incidental to the operation of the boat, for example: Anchor Extra Batteries Barometer Boating Ladders Boat Covers Hooks Canopies Compass Deck chairs Emergency Signals Fire Extinguishers Fuel Radio Equipment Stoves Tarps Tools Items that are permanently affixed to the boat shall be included in the value of the hull. Fishing equipment cannot be included. If the insured is replacing a boat that is currently scheduled on the policy, the boat is automatically covered for 30 days from date of purchase. Deductible: A deductible applies. Before committing to a deductible, be sure to verify that the hull coverage amount qualifies for the desired deductible; for example, the insured cannot purchase a $100 deductible for an $11,000 boat. Refer to Premium Chart for permissible deductible and hull coverage combinations Revised: 10/01/16

82 Limits of Liability: Hull Coverage* Minimum: $500 Maximum: $50,000 *Refer to Underwriting Guidelines for extended hull coverage authority for Area Management. Supplemental coverage included on HO-61 class 03 boats: Underwriting Guidelines: Watercraft liability and hull Coverages are provided only by HO 75 and/or HO 61 endorsements. Note: Since boat owners operate their boats in much the same manner as they do a car, the driving record is an important consideration. If an applicant has an automobile policy in force and a good driving record, coverage on boats will be acceptable, providing the boat qualifies. Boats not eligible include: Boats or motors used for public livery conveyance, rented to others or used for purposes other than private pleasure. Boats or motors used for racing. War surplus boats. Swamp buggies, amphibious boats, airboats, hydroplanes, and experimental craft of any type. Boats that use gasoline as a cooking fuel. Boats while under construction. Boats used for permanent living quarters. Boats powered by motors in excess of the horsepower recommended by the manufacturer. Area Management approval is required on: Boats over 15 years old but not built prior to All boats 20 years or older must be inspected for condition and photographed. Boats with speeds in excess of 50 mph and/or cubic inch displacement over 350 and/or horsepower over 250. Insurance Services Underwriting Operations approval is required on: Boats built before All classes combined exceeds 25% of Coverage A amount Revised: 10/01/16

83 Note: Hull coverage of $50,000 or more, must have a Marine survey included which is no more than two years, unless it is newly built. If newly built, submit a copy of the purchase order. Special or unique type boats, such as houseboats and boats equipped with an airplane engine. Boats operated by persons under age 22. Boats operated by persons with 2 or more moving citations (convictions) in past 24 months. Home made boats. Flat bottom boats. Boats with customized paint jobs. Co-owned boats. Note: Boats co-owned by the insured and another person qualify provided the other person qualifies and the boat will be in our insured's care and custody. (Liability is only extended for our insured.) Submitting Scheduled Boats for Underwriting Approval: To obtain Underwriting approval the following steps are required: The Form "B" must be unbound (no signatures, no effective date and on new business no policy number). Indicate "for approval" and the reason. Provide all necessary details. Photos must be included when necessary. Area Management's recommendation is mandatory Boat Specifications: Boat Type The boat types are as follows: o o o o o Inboard: The motor is inside of the hull of the boat. The drive shaft goes through the hull on the bottom of the boat. Outboard: The motor is usually detachable and is mounted on the stern of the boat (row boats are considered outboard). In/Out Board: The motor is inside the hull but the outdrive is outside the hull bolted to the transom. A jet ski is considered to be an In/Out Board Sailboat: A boat propelled partly or wholly by sail Other: Canoes, Kayaks and rafts under 26 feet Canoe: A light, open, slender boat that has pointed ends and is propelled by paddles Kayak: A light, slender boat that has pointed ends with a single or double opening in the center and is propelled by a double-bladed paddle. Raft: An inflatable craft that floats or drifts on water or propelled by oars. To see Boat Type click here. Hull Type The hull types are as follows: o o o o o Tri-Hull or Cathedral Hull: Two or more hulls attached closely together. V Bottom or Vee Hull: Designed to operate at high speeds and to cut through rough water. Flat Bottom: Typically small open boat. Catamaran or Tunnel Hull: Essentially two deep V hulls joined by a platform. Pontoon Hall: Flat bottomed boat with floats used to support the structure on water. See Hull Type click here. A hull is the body of a boat. It is a central concept in floating vessels as it provides the buoyancy that keeps the vessel from sinking Revised: 10/01/16

84 Boat Age Age of boat shall be determined by using the model year as year "one". Boat age is automatically advanced 1 year at renewal of the Homeowners policy. For example, if a 3- year-old boat is added to a policy mid-term, the age will become 4 at renewal. Boat Class - Outboard Motorboats Only: From the classification chart classify the boat and motor according to the length of the boat and horsepower of the motor. To determine the classification for boats without a motor, boats using two motors, or insuring a motor only, use the following process below: o o o o When a boat is insured without a motor, assume a motor of 22 horsepower. When a motor is insured without a boat, assume a boat length of 13 feet. When two motors are used (at the same time) on one boat, compute the horsepower by taking 100% of the horsepower of the largest motor and 50% of the horsepower of the second motor. When two or more boats used interchangeably with one motor, the highest rated combination shall be used for rating all items insured. Premium: Additional premium is charged when this endorsement is selected. To determine the premium from the appropriate premium tables click here HW Owned Motorized Golf Cart Physical Loss Coverage Found on Homeowners Optional Coverage Form A (Not available for policies with HO 17 33) Available for HO-6 policies What this endorsement does: This endorsement provides coverage for physical loss to a motorized golf cart including permanently installed accessories, equipment and parts, owned by an insured for golfing purposes. Also covered, for an amount equal to 10% of the limit of the highest scheduled golf cart, are accessories, equipment, or parts designed, or made solely for the use with the golf cart provided that such property is at an insured's residence or in or upon the cart off the insured's residence at the time of loss. Coverage is offered for comprehensive and collision. Requirements: This endorsement is not available for tenant-occupied risks. A deductible of $500 applies separately to each involved golf cart and, separately to Section I if not in or upon a golf cart at the time of loss. The $500 deductible replaces any other deductible in the policy with respects to property covered under this endorsement. Maximum of 1 golf cart per insured household. Maximum value per golf cart is $5,000. Golf carts with a value in excess of $5,000 are ineligible for coverage. Only golf carts built by the manufacturer for golfing purposes designed to carry no more than four people are acceptable. Unacceptable golf carts include those: Used for prearranged or racing purposes or other similar competition o Rented to others. o Used to carry persons or cargo for a charge. o Used for any business purposes except while on a golfing facility. o Designed to carry more than 4 people. o Built or modified after the manufacture to exceed a speed of 25 miles per hour HO Identity Fraud Expense Coverage Found on Homeowners Optional Coverage Form A Available for HO-6 policies What this endorsement does: Revised: 10/01/16

85 This endorsement provides coverage up to $15,000 for additional expenses incurred by the insured for one occurrence of Identity Fraud during the policy period. Additional expenses include: Costs for notarizing fraud affidavits. Costs for certified mail to law enforcement agencies, credit agencies, financial institutions or similar credit grantors. Lost wages as a result of time taken off from work. Loan application fees for re-applying for a loan when the original application is rejected solely because the lender received incorrect credit information. Reasonable attorney fees incurred, with our prior consent. Charges incurred for long distance telephone calls to merchants, law enforcement agencies, financial institutions or similar credit grantors, or credit agencies to report or discuss an actual identity fraud. Identity fraud is defined as the act of knowingly transferring or using, without lawful authority, a means of identification of an insured with the intent to commit, or aid or abet, any unlawful activity that constitutes a violation of federal law or a felony under any applicable state or local law. Requirements: This endorsement is not available for tenant-occupied risks. 7.7 Liability Endorsements HO 75 Watercraft Liability Located on Form A Available for HO-3, HO-4, and HO-6 policies What this endorsement does: It provides Section II coverage, Coverage E Personal Liability and Coverage F -Medical Payments to Others for bodily injury or property damage arising out of the ownership, maintenance, use, loading or unloading of watercraft. Requirements: Add only for horsepower over 50, combination of outboard motors of more than 50 total horsepower, or sailboats 26 feet or more (with or without auxiliary power). Note: Boats with motors of 50 horsepower or less, and sailboats under 26 feet are automatically covered. If HO 75 is selected, but the insured does not want the HO 61, indicate that hull coverage is not wanted in additional remarks section. Refer to the Boat Underwriting Guidelines of this section for conditions requiring Underwriting approval. Premium: Coverage F limits are $1,000 each person and $25,000 per accident. Additional premium is charged when this endorsement is selected. Note: Where two or more outboard motors are regularly used together in connection with any single watercraft owned by the insured, the horsepower of all such outboards shall be combined for rating purposes HO 164 (HO 164C) Snowmobile Liability Located on Form C (Not available for policies with HO 17 33) Available for HO-3, HO-4, and HO-6 policies What this endorsement does: Provides Section II Coverages, Coverage E - Personal Liability and Coverage F - Medical payments to Others, for each snowmobile. Refer to the HO-3, HO-4, or HO-6 policy booklet for a more detailed description Revised: 10/01/16

86 Requirements: Each snowmobile owned by the Named Insured or any other insured who is a resident of the Named Insured's household must be declared. Refer to the exclusions in the Homeowners policy booklet. Describe make, model and horsepower of each snowmobile. Premium: Coverage F limits are $1,000 "each person" and $25,000 per accident. The premium charge applies separately to each snowmobile. The minimum charge for each snowmobile for any period of coverage within a policy year shall be as indicated below for respective Limits of Liability Liability - Coverage E - Described Residence Premises Located on the Policy Amendment Form Available for HO-3 and HO-4 policies What this endorsement does: Allows the insured to select different limit for Coverage E Personal Liability. Requirements: Minimum Coverage E is $100,000. The respective limits of liability for Coverage E and for Coverage F are uniform for all exposures covered under the policy. Premium: Additional premium is charged when this endorsement is selected. Coverage F limits are $1,000 each person and $25,000 per accident. Standard limit on all policies with no option to decrease or increase Additional Residence Premises - Occupied by Insured Located on the Policy Amendment Form Available for HO-3 and HO-4 policies What this endorsement does: Extends Section II coverage, Coverage E Personal Liability and Coverage F Medical Payments to Others, to additional residence premises, owned and occupied by the Named Insured. Requirements: May only be in California. May only be a one-or two-family dwelling. The limits of liability for Coverage E and for Coverage F are uniform for all exposures covered under the policy. There can be no other type of homeowners policy insuring it, with the exception of a Fire Policy with no Liability Coverage E provided. Maximum: five additional residences occupied by the insured. Each location must meet the Loss History Eligibility Guideline. Attach the CLUE report of each location to the application or Form A. Premium: Coverage F limits are $1,000 each person and $25,000 per accident. Additional premium is charged when this endorsement is selected Increased Coverage D - Loss of Use Located on the Policy Amendment Form Available for HO-3 and HO-4 policies What this endorsement does: Increases the limit of liability for Coverage D Loss of Use. Requirements: Maximum Increase: 50% of coverage A. If more than 50% of coverage A is needed, Underwriting approval is required Revised: 10/01/16

87 Premium: Additional premium is charged when this endorsement is selected. Premium for each additional $1,000 click here. 7.8 General Endorsement HO 299 (HO 299C) General Endorsement Located on Form A Available for HO-3, HO-4, and HO-6 policies What this endorsement does: Provides manuscripted endorsements such as: Chattel Mortgagee (give name, address, loan # and what the chattel is for) Third, fourth, fifth Mortgagee, etc. Cal Vet financed insureds Animal and watercraft liability (HO 75) exclusions. Named Insureds, Additional Insureds (HO 41) and Mortgagees whose names are too long. Premium: There is no charge for this endorsement. For process and procedures click here Revised: 10/01/16

88 Section 8: Endorsements - DP Mandatory Endorsements BFU NS Lenders Loss Payable What this endorsement does: This endorsement is added when a mortgagee is named on the policy. The endorsement amends the policy by requiring payment for a covered property loss to be paid to the Mortgagee and provides notification of cancellation to the mortgagee. Requirements: When adding a lender, the 438BFUNS is added. When deleting a lender, the 438BFUNS is deleted. Premium: None DL (edition date 07/29/2005) and DW California Special Provisions What this endorsement does: These endorsements amend Conditions under Section I & II to comply with the state of California statutes. Premium: None ILN California Fraud Statement What this endorsement does: This endorsement is required by the state of California to advise insured that a knowingly false statement of claim with the intent for payment by an insured to an insurance company is subject to criminal and civil penalties. Requirements: None Premium: None DL Workers Compensation Residence Employees-California What this endorsement does: This endorsement agrees with respect to Residence Employees to pay when due all benefits required by California Workers Compensation Laws to comply with the state of California statutes. Requirements: None Premium: Included in liability premium DP Actual Cash Value Loss Settlement Windstorm or Hail Losses to Roof Surfacing Mandatory if roof is over 14 years of age (over 24 years of age if the roof is tile, slate or metal) OPTIONAL if roof is less than 14 years of age (less than 24 years of age if tile, slate or metal) What this endorsement does: This endorsement changes Section I loss settlement Provisions with respect to a covered loss to roof surfacing caused by windstorm and/or hail from replacement cost to actual cash value (ACV) Revised: 10/01/16

89 Requirements: This endorsement is mandatory if the age of the roof is over 14 years of age (over 24 years of age if the roof is tile, slate or metal) and is optional for roofs newer than 15 years old and (newer than 25 years old if the roof is tile, slate or metal). Premium: To develop the endorsement premium credit, multiply the base premium for Coverage A before the deductible factor is applied, applying the credit to the base premium DP Premises Alarm or Fire Protection System What this endorsement does: This endorsement is mandatory when there is a central or local burglar alarm and/or sprinkler system. The endorsement acknowledges the installation of a local or central burglar, fire alarm system and/or automatic sprinkler system in the residence premises. If the insured maintains the system, a credit will be applied on the policy. Requirements: Documentation for a burglar alarm credit must be submitted with the application. Proof can be a copy of a receipt or a copy of a service contract with the Alarm Company. A current billing statement is also acceptable. Note: By agreeing to the terms of the policy, if the system is modified or removed, the insured agrees to notify the company so the discount can be adjusted or removed. Premium: Provides a percentage discount depending on type of premises alarm or fire protection system. Refer to Dwelling Protection Devices under the Discount Section of the Rating Information for detail credits DP Limited Fungi, Wet or Dry Rot or Bacteria What this endorsement does: The policy provides coverage caused by Fungi, Wet or Dry Rot or Bacteria when it is hidden within walls, ceilings, or beneath the floors, unknown to the insured, resulting from an accidental discharge or overflow of water from a plumbing, heating, or air conditioning system, or a household appliance. This endorsement places a limit of $10,000 for damages at all locations and regardless of the number of claims made. Coverage only applies when the loss is the result of a Peril Insured Against during the policy period and only if all reasonable steps were taken to preserve the property from further damage. The $10,000 limit includes: The costs of removing the fungi wet or dry rot, or bacteria. The costs to tear out and replace any part of the building to gain access to the fungi, wet or dry, or bacteria. The cost of testing of air or property to confirm the absence, presence or level of fungi, wet or dry rot, or bacteria. Note: It also changes the cause from accidental water discharge resulting in Fungi damage in Section I Perils Insured Against to property being damaged by constant or repeated seepage or leakage of water or the presence or condensation of humidity, over a period of weeks, months, or years, while it has been hidden within walls, floors and ceilings, and unknown to the insured. This coverage applies to Section I coverage only. It is excluded from Section II coverage. Premium: None Revised: 10/01/16

90 8.1.8 DL Premises Liability What this endorsement does: This endorsement limits Section II Coverage to the Insured Location shown in the Declarations. This endorsement is mandatory on all policy forms. Requirements: None Premium: Included DL Personal Liability Additional Policy Conditions What this endorsement does: This endorsement amends Conditions under Section II to comply with the state of California statutes. Requirements: None Premium: None DL Personal Injury What this endorsement does: This endorsement amends the definition of bodily injury under Coverage E to include personal injury to others, such as false arrest, malicious prosecution, wrongful eviction, slander, libel, or violations for rights of privacy. Requirements: None Premium: Additional premium is charged when this endorsement is selected. 8.2 Additional Insured Endorsement DW Additional Insured Location What this endorsement does: This endorsement provides coverage to protect the interest in the dwelling, and the premises liability, of those persons who are named on the deed of trust. An additional insured will be notified in writing if the policy is canceled or non-renewed. Requirements: Only a non-occupant co-owner of the insured premises can be named as an Additional Insured. The name and the address as well as the specific interest of the person (who has the interest in the residence premises) are required to complete the application. Requests to add non-individuals such as municipalities, businesses, corporations, or companies as an Additional Insured make the entire risk ineligible. Premium: None 8.3 Building/Other Structures Endorsements DW Limited Replacement Cost for Coverage A Dwelling What this endorsement does: This endorsement includes Limited Replacement Cost Dwelling Coverage, which will pay an amount of insurance up to 125% or 150% of the Coverage A limit of liability for repair or replacement of the dwelling in the event of a covered loss. This amount is available when loss to property insured under Coverage A exceeds the Coverage A limit of liability shown in the Declarations. The additional amount cannot be applied to any other coverage nor does it increase the Coverage A limit Revised: 10/01/16

91 Requirements: This endorsement is available in either the 25% (125% total) or the 50% (150% total). Coverage A must be insured to 100% replacement cost using ISO 360Value TM replacement cost estimator tool at policy inception or at time of endorsement. The insured must notify us, within 30 days of completion, of any improvements, alterations or additions to the building insured under Coverage A which increases the replacement cost of the building by 5% or more. Upon each ensuing renewal, the applicable inflation factor will be applied. Removal of this endorsement at any time will not affect this recurrence. Premium: For premium calculations click here DW Loss Assessment Coverage What this endorsement does: This endorsement provides protection for special assessments for which the insured is liable as a result of membership in a property owners association. The basic limits of coverage provided by this endorsement are $1,000 for property related loss assessments (Section I) and $1,000 for liability related loss assessments (Section II). Increased limits can be purchased for property (Section I) related loss assessments in increments of $5,000 up to a maximum of $50,000. Note: This endorsement excludes coverage for loss assessments resulting from earthquake. Special Limit: The total limit available under this endorsement is no more than $1,000 for (Section I) of the assessment that results from a deductible in the policy of insurance purchased by a corporation or association of property owners. Premium: Additional premium is charged when this endorsement is selected. Note: $1,000 of Loss Assessment liability is included in the policy DW Other Structures on the Insured Location Increased Limits What this endorsement does: Provides additional Section I coverage for a specific structure detached from the main dwelling at the insured premises, when the automatic limit under Coverage B is not enough to cover such structure. Examples of structures are detached garage, workshop, green house, tool shed, swimming pool, and hot tub furnished by the property owner (named insured). Requirements: Risks with more than 2 detached building structures on the premises or any one building structure which has a replacement cost of more than 100% of Coverage A require underwriting approval. A description of the on-premises structures, and the limit of liability for each, is required to complete the application. Premium: The premium for the increase in Coverage B is rated by developing the Base Rate after Deductible for Coverage B by the combined Coverage B limit factor DP Ordinance or Law Coverage Increased Coverage What this endorsement does: The policy automatically provides up to 10% of the Coverage A limit of liability. This endorsement will provide coverage for increased cost necessary to repair or replace damaged property in compliance with the enforcement of an ordinance or law. This increase is offered in increments of 25%, available to cover costs due to changes to building code /zone laws, which may be applicable at the time of replacement or repair damage. Maximum total increase allowed is 100% of Coverage A Revised: 10/01/16

92 Requirements: The new total percentage amount of coverage is required to complete the application. Premium: Additional premium is charged when this endorsement is selected DP Water Back Up and Sump Discharge or Overflow What this endorsement does: This endorsement allows for coverage of up to $5,000 for direct physical loss, not caused by the negligence of any insured, to property covered under Section I caused by the water backup through sewers, drains, or water overflow from a sump pump. Requirements: The coverage does not apply to direct physical loss of sump pump or related equipment, which is caused by mechanical breakdown. Note: There is a special deductible of $1,000 which applies and replaces any other deductible provision in the policy with respect to this coverage Premium: The premium is $ DW Vacancy Coverage (Not available on New Business) What this endorsement does: This endorsement deletes the 60-day vacancy restriction applying to coverage for breakage of glass or safety glazing material and for vandalism or malicious mischief. Requirements: This endorsement is not available on New Business. Prior approval from Underwriting is required. Contact your underwriter and provide full details on the reason for, and length of the vacancy. Note: The premium for this endorsement is fully earned. There will be no returned premium in the event this endorsement is canceled. Premium: The premium is $ DP Windstorm or Hail Broad Form and Special Form What this endorsement does: This endorsement provides coverage for damage caused by the perils of Windstorm or Hail to Plants, Trees, and Shrubs. The endorsement limit is 5% of the Coverage A limit not to exceed $500 per item. This coverage is optional. Requirements: None Premium: Additional premium is charged when this endorsement is selected DP Windstorm or Hail Radio & TV Antennas, Awnings & Signs What this endorsement does: This endorsement insures Radio or television antennas and aerials, including their lead-in wiring, masts and towers, awnings and signs for direct physical loss caused by windstorm or hail. This coverage is optional. Requirements: None Premium: Additional premium is charged when this endorsement is selected Revised: 10/01/16

93 8.4 Personal Property Endorsement DP Limited Theft Coverage What this endorsement does: This endorsement insures personal property (landlord furnishings) against direct physical loss to personal property owned by the insured caused by theft or vandalism (as a result of theft or attempted theft) up to the limit specified in the endorsement. Coverage is not provided if the loss is caused by the tenant. Requirements: None Premium: Additional premium is charged when this endorsement is selected Revised: 10/01/16

94 Section 9: Personal Umbrella Policy (PUP) 9.1 General Information Eligible Binding Period The policy must be written for a term of one year Premium Payment Plan The total annual premium must be paid in full prior to policy issuance. The installment plan is not available for Umbrella Policies. Current options are as follows: Electronic Check Credit Card (Visa & Master Card) Check Cash Money Order Cancellation of Policy To process verbal cancellation requests, use the Online cancellation tool found on WebDocs. WEBDOCS/ Main.aspx o The employee must verify that person calling to request the cancellation is the policyholder o Only the employee taking the call can enter the information in the Online Cancellation tool o Enter all the required information in the Online Cancellation Tool Once all the information is completed in the Online Cancellation Tool, the request will automatically be transmitted to Billing Services and the insured will receive a Confirmation letter Any form of cancellation may not be back dated more than 30 days from the date of notice. The effective date of cancellation is determined by the following rules: o Valid requests for cancellation of a policy received by the Bureau within 30 days after the desired cancellation date shall be made effective as requested. o Valid requests for cancellation of a policy received by the Bureau more than 30 days after the desired cancellation date shall be made effective 30 days prior to the date the request is received. In the event of cancellation for cause by the Bureau of a new policy in force less than 60 days, notice of intent to cancel must be given to the insured 20 days prior to the effective date of cancellation Midterm Cancellations Cause of midterm cancellations: Non-payment of premium. Discovery of fraud or material misrepresentation of fact Non-Renewals Policies in force more than 60 days may be dropped at renewal by the Bureau, providing notice of intent to do so is given to the insured at least 45 days prior to expiration of that policy. 9.2 Eligibility Guidelines Named Insured Who needs a Personal Umbrella Policy: An individual who needs to protect higher assets. An individual who wants security against catastrophic losses. An individual who has special or unique coverage needs. The Personal Umbrella Policy does not provide: Directors and Officers Liability Insurance for business exposures or profit organizations (see exclusion 15, page 14 in the PUP Policy Booklet). Aircraft Insurance Professional Liability Insurance Revised: 10/01/16

95 Punitive or exemplary damages or fines Submitting a PUP Application not requiring Insurance Services approval click here Applicant In order to maintain profitability, the sales agent and underwriter must carefully select the risk we insure. The following underwriting eligibility guidelines are intended to assist you in the risk selection process. The underwriter evaluates the general aspects of every risk to determine its underwriting profile, uniformly reviewing characteristics including underlying coverage and limits; loss and special risk attributes. Please contact Insurance Services for consideration of otherwise good risks that fall outside of these guidelines Limits of Liability Minimum $1,000,000 Maximum $5,000,000. Agents may bind a policy with a liability limit of up to $5,000,000 with the exception of risks requiring PUP Underwriting Approval. See Prior Approval Situations Underlying Policy Requirements Members who have the following policies: Auto o All primary vehicles must be insured under a CSAA IG policy. CSAA IG policies written as DBA are also ineligible. o Minimum Limit of Liability is $500,000/$500,000 Bodily Injury and $100,000 Property Damage. A Combined Single Limit for each vehicle is also acceptable. o Proof of liability must be submitted with application. Motorcycle o All motorcycles must have an underlying policy that includes guest passenger liability. o Minimum limit of liability is BI $500,000/$500,000 and PD $100,000 for each motorcycle. $500,000 Combined Single Limit for each motorcycle is also acceptable. o Special Acceptance Premium applies to all motorcycles. o Proof of liability must be submitted with application. Homeowners o The primary residence must be covered by CSAA IG policy. o The Minimum Limit for Personal Liability Coverage is $500,000 for all underlying homeowner policies. o Proof of liability must be submitted with application. Rental Dwellings o All rental dwellings must have an underlying policy that includes "personal injury" liability coverage. This coverage can be extended from the AAA NCNU homeowners policy. Personal injury includes such exposures such as false arrest, detention or imprisonment, malicious prosecution, libel, slander, and wrongful entry or eviction or other invasion of the right to private occupancy. o Applicants may extend coverage to a maximum of 6 rental dwelling locations with no single dwelling greater than a fourplex unit. Once the policyholder has 6 rental dwelling locations listed on the policy, a seventh cannot be added unless approved by PUP Underwriting Operations. o The Minimum Limit for Personal Liability Coverage is $500,000 for all underlying rental dwelling policies. o Proof of liability must be submitted with application. Watercraft o Minimum limit of liability is $500,000 for each watercraft. o Watercrafts over 250 hp or 50 feet in length are ineligible. Refer to special acceptance category. o Personal Watercraft see special acceptance category. o Proof of liability must be submitted with application. Recreational Vehicles Revised: 10/01/16

96 o Ownership of any type of all-terrain vehicle, dune buggy, golf cart, snowmobile or any other motorized land vehicle that is designed for recreational use off public roads requires PUP Underwriting Approval. o All eligible incidental Low Powered Motor Vehicles are rated as a recreational vehicle. o Minimum limit of liability is BI $500,000/$500,000 and PD $100,000 for each vehicle. $500,000 combined single limit for each vehicle is also acceptable. o Proof of liability must be submitted with application. Driving Record Activity: Person with any of the following driving record activity makes the risk ineligible. o A person convicted within the last 5 years for any of the following: Driving while license is suspended or revoked Drinking while driving Hit and run Speed contest or exhibition of speed Reckless driving Open container Liquor in vehicle o A person convicted within the last 10 years for any of the following: Driving under the influence of alcohol or drugs Vehicular manslaughter Habitual traffic offenses o A person with a drivers license suspension within the past 3 years. o A person with 2 or more moving violation convictions in the past 3 years. o Convictions and Accidents received prior to 12/11/2011: A person who in the past 3 years had an accident in which the driver was 51% or more at fault, the total damages exceeded $750 and there were injuries to any person or death. A person who in the past 3 years had a moving violation conviction and an accident in which the driver was 51% or more at fault and the total damages exceeded $750. A person who in the past 3 years had two or more accidents in which the driver was 51% or more at fault and the total damages exceeded $750. A household with more than 2 incidents in the past 3 years. An incident is defined as moving violation convictions or an accident in which the driver was 51% or more at fault and total damages exceeded $750. o Convictions and Accidents received on or after 12/11/2011: A person who in the past 3 years had an accident in which the driver was 51% or more at fault, the total damages exceeded $1,000 and there were injuries to any person or death. A person who in the past 3 years had a moving violation conviction and an accident in which the driver was 51% or more at fault and the total damages exceeded $1,000. A person who in the past 3 years had two or more accidents in which the driver was 51% or more at fault and the total damages exceeded $1,000. A household with more than 2 incidents in the past 3 years. An incident is defined as moving violation convictions or an accident in which the driver was 51% or more at fault and total damages exceeded $1,000. Note: Any accident with Medical Payments or BI payments is considered an injury accident. Loss History: o Persons with any of the following loss history make the risk ineligible. Persons with any open, pending or closed liability claims or lawsuits under any homeowners or personal liability policy are ineligible. Persons with any Homeowners liability claims or liability losses that could be paid under a homeowners policy in the last 3 years. Swimming Pools o Applicants with any of the following make the risk ineligible: Unfenced swimming pool Applicant will have more than 8 pool parties with 10 or more guests within a year Diving board is more than 3 feet above water Depth of swimming pool is less than 8 feet Revised: 10/01/16

97 Note: If a diving board or slide is present, then a completed swimming pool/slide questionnaire is required. The pool with a diving board questionnaire on quote sheet is acceptable if completed Unacceptable Hazards and/or Liability Exposures Any day, home or child care operation in any occupied residence. Risks where a trampoline is present. Applicants/Named Insureds with any dogs or other animals, reptiles, and/or pets with any prior biting history are ineligible. o Prior bite history means any history of biting, attacking, or otherwise injuring any person or animal on one or more occasions, as established by any of the following: a. The applicant's/insured's knowledge of such events; b. Court records; c. Insurance records, whether or not a claim was paid; or d. The records of a local public safety, law enforcement, or similar agency. Applicants/Named Insureds with Vicious Dogs or exotic and/or dangerous animals/pets are ineligible. o o A Vicious Dog is defined as a dog with ancestry (pure or mix breed) properly classified as any of the following breeds: Rottweiler Chow Doberman Pit-bull, Pit Bull mix, American Pit-bull Terrier, American Staffordshire Terrier and Stafford Bull Terrier Wolf Mix or Wolf Dog Presa Canario Akita A Vicious Dog also means any dog used or bred for fighting with any other dog; or any dog trained to attack persons or animals. However vicious dog does not include a dog used as a service or guide dog and licensed by law as such. Risks with more than three dogs of any breed. Autos used for business unless such use is covered by AAA NCNU. Commercial property including buildings with more than four units. Underlying policies that contain exclusionary endorsements, on, but not limited to: drivers, vehicles, other structures and animals. Farming exposure(s) away from the residence premises. See "Swimming Pools" above for additional ineligible liability exposures Prior Approval Situations Insurance Services approval is required prior to binding a Personal Umbrella Policy under the following circumstances regardless of the coverage amount: Applicants with the following occupations/professions: o Politicians, political activists or judges (answer question #1 below) o Public lecturers (answer question #2 below) o Radio and television broadcasters (answer question #3 below) o Newspapers reporters, editors or publishers (answer question #4 below) o Professional actors and entertainers (answer question #5 below) o Authors and writers (answer question #6 below) o Professional athletes (answer question #7 below) o o Any person who holds an elected or appointed office (answer question #1 below) Any applicant who is a member of a board of directors or is a director or officer for any type of non-profit organization. (Answer question #8 below) Questions for applicant who is a member of a board of directors or is a director or officer for any type of non-profit organization: Revised: 10/01/16

98 Please obtain the following required information and submit to Insurance Services (PUP Desk) for approval. 1. Politicians (including Judges) and Political Activists Position held? Any controversial stands/platforms? 2. Public lecturers To whom? For whom? How often? Subject matter presented? Controversial? 3. Broadcasters or Telecasters Local, regional, or national station? Type? Subject matter addressed? Controversial? Additional opinions expressed? 4. Newspaper reporters, Editors or Publishers Local, regional, or national publications? Column type? Subject matter covered? Controversial? Additional opinions expressed? 5. Professional Actors or Entertainers How well known? TV, film, or theatre? Past roles/credits? Current roles/credits? 6. Authors and Writers Breadth of circulation? Type of writing (i.e. non-fiction, fiction, technical, etc.)? Past publications? Current work(s)? Self-published or commercially published? 7. Professional athletes Breadth of notoriety? Which sport? Controversial figure? TV/public appearances? 8. Directors and Officers Is this a non-profit organization? What is the name of the organization? Was our insured elected or appointed to the position? What are our insured s duties? Is our insured in charge of any funds? Is our insured in charge of any decision making? If yes, what type? What is the name of the insurance carrier and liability limits for this organization? Is the insurance policy a Directors and Officers policy? NOTE: If the organization is related to the insured's occupation or if it is a profit organization then it is automatically excluded from the Personal Umbrella Policy and there is no need to submit the application for approval. Underlying homeowners policy with an HO-42 business endorsement attached. If there any foot traffic or employees, a completed HO-42 Questionnaire is required. Ownership of any of the following: o Any type of ATV o Personal watercraft o Motorcycle o Snowmobile o Golf carts Any incidental farming exposure at the premises location. NOTE: The farming exposure must be incidental to the use of the premises as a dwelling and income derived from the farming operations cannot be the insured's primary source of income. A complete description of the farming operation must be provided to underwriting for approval prior to binding Revised: 10/01/16

99 9.2.8 Renewals Driving Record Activity: Persons convicted within the last 5 years for any of the following: o Driving while license is suspended or revoked o Drinking while driving o Hit and run o Speed contest or exhibition of speed o Reckless driving o Open container o Liquor in vehicle Persons convicted within the last 10 years for any of the following: o Driving under the influence of alcohol or drugs o Vehicular manslaughter o Habitual traffic offenses Any one operator with either of the following within the past 3 years: o 2 or more principally at-fault accidents o A combination of principally at-fault accidents and minor moving violation convictions totaling two or more Any household with either of the following within the past 3 years: o 3 or more principally at-fault accidents, or o A combination of principally at-fault accidents and minor moving violation convictions totaling 3 or more. Any one operator with a drivers license suspension within the past 3 years. Loss History: Any homeowners liability claims in the past 3 years. Underlying Policy Requirements: Any autos, ATV's, recreational vehicles, motorcycles, boats, personal watercraft, or real properties that are not covered by an acceptable underlying policy with the minimum required limits. Any property risk that undergoes a substantial increase in the hazards insured against. Some examples would be, but not limited to physical deterioration in the condition of the property, an ineligible business exposure on premises, the acquisition of dangerous animals, etc. Renewal Processing: The policy will be processed and a Renewal Declarations and invoice sent to the policyholder. The entire renewal premium is due within 30 days of the renewal effective date. Copy of the declarations can be reviewed and obtained on Fastlane The renewal commission will be paid during the renewal effective month. 9.3 Coverage Product Offerings Overview o AAA offers Personal Umbrella Policy o The AAA Northern California, Nevada, and Utah Insurance Exchange Personal Umbrella Policy offers coverage for many of today's personal liability exposures for many individuals. This coverage is provided as a separate insurance policy offered by the Bureau and is available to AAA members who insure their auto(s) home(s) with AAA NCNU. Purpose o To increase the primary liability coverage limits on basic policies such as auto and homeowners Revised: 10/01/16

100 o Adds a broadening measure of protection over the "underlying insurance" policies issued by the AAA NCNU. Note: A Personal Umbrella Policy may be issued for $1, 2, 3, 4, or 5 million limit of liability subject to the rules and underwriting guidelines in this manual. The policy provides the insured with blanket catastrophe personal insurance for excess limits over underlying Automobile and Homeowners Liability policies Other Insurance The coverage provided under this Umbrella Policy is excess over all other valid and collectible insurance except insurance written specifically as excess coverage over the limits of liability of this policy. This policy will not contribute with any other insurance. The coverage provided under this Umbrella Policy is excess following form liability coverage over the "underlying insurance" policies issued by insurers other than CSAA-IIB or our subsidiary companies. Following form means that we will use the definitions, coverages, exclusions, conditions and other provisions of such "underlying insurance" and will cover damages only to the extent that coverage is afforded to an insured under that policy. Credit for existing insurance is not allowed Required Underlying Insurance The applicant and all members of the household are required to maintain "underlying insurance" in the amounts shown below. All underlying liability policies on rental property are required to include personal injury coverage and cannot be written on a commercial policy. Personal injury includes such exposures such as false arrest, detention or imprisonment, malicious prosecution, libel, slander, and wrongful entry or eviction or other invasion of the right to private occupancy. Commercial policies include CGL and BOP coverage. "Underlying insurance" is required for: o Each auto, watercraft and recreational vehicle owned, leased, furnished or available for regular use by the applicant(s) or any resident of the applicant(s) household. o All residential premises owned, leased by or leased to the applicant or any resident of the applicant(s) household Revised: 10/01/16

101 UNDERLYING COVERAGES MINIMUM UNDERLYING LIMITS OF LIABILITY Bodily Injury and Property Damage OR Combined Single Limit BODILY INJURY per person/per occurrence PROPERTY DAMAGE per occurrence COMBINED SINGLE LIMIT per occurrence Auto Liability (including motorcycles motor driven cycles or motorized bicycles registered for road use) Recreational Vehicle Liability (including motorcycles registered for off road use) Personal Liability including Personal Injury $500,000/ $500,000 $500,000/ $500,000 $100,000 $500,000 $100,000 $500,000 $500,000 Watercraft Liability $500,000 Employer s Liability $100, Revised: 10/01/16

102 9.4 Rating Information Coverage and Rating Information Coverage and Rating Information Rating Factor Limits of liability $1,000,000 (Includes 1 home and 1 auto) each additional $1,000,000 of coverage Additional residences occupied by Insured (including unimproved vacant lots) Residences rented to others (per unit) (Requires Property CLUE for all locations) Additional Autos Young drivers (less than 25 years old) Recreational vehicles Watercraft Category I less than 26 feet in length and 50 hp or less (No charge for non-motorized watercraft such as: canoes, rafts, etc.) Category II 26 feet in length to 50 feet in length OR 51 to 100 hp Category III 50 feet in length or less AND 101 to 250 hp Swimming pools/spas/hot tubs Diving Board and/or slide (Questionnaire F1291 required) Premium $135 * $ 5 each $ 10 each $ 50 each $ 30 each $ 20 each $ 30 each $ 50 each $ 75 each $ 25 $ 25 Additional Exposure Charges: Children (Infants to 9 years old) Children (10 to 12 years old) Young Adults (13 to 24 years old) 1 Young Adult 2 Young Adults 3 or more Young Adults Frequency of Pool Parties 1 to 2 a year 3 to 4 a year 5 to 8 a year $ 15 (per item) $ 10 (per item) $10 (per item) $ 20 (per item) $ 25 (per item) $ 10 (per item) $ 20 (per item) $ 25 (per item) Total premium charge for swimming pool with a diving board and/or slide is not to exceed $ Revised: 10/01/16

103 Special Acceptance Categories and Premiums The following categories require Insurance Services approval prior to binding. Watercraft in access of 50 feet in length or 250 hp (Must meet good driver criteria for acceptance) Number of Young Operators More than 2 Young Operators (less than 25 years old) (Provide names and dates of birth on application) Personal Watercraft (jet-skis, wave runners, etc.) (Must meet good driver criteria for acceptance) Number of Young Operators More than 2 young Operators (less than 25 years old) Incidental Office Occupancy (with foot traffic) (Complete HO-42 questionnaire) 1 to 2 per week (specify number) 3 or more per week: Ineligible for Coverage Motorcycles, (Must meet good driver criteria for acceptance). Motorcycles insured by ACA Insurance Co. do not require special acceptable approval however, the special acceptance premium applies. Number of Young Operators (less than 25 years old) ATV s, Snowmobiles (Must meet good driver criteria for acceptance) Number of Young Operators D & O (Complete questionnaire) (less than 25 years old) Officers (President, Vice President, Secretary, Treasurer) Other than officers (i.e. Board members) Golf Cart Verify use Ineligible if driven on public roads Occupation: Politicians, Political Activists, Judges, Public Lectures, Radio and Television Broadcasters, Newspaper Reporters, Editors, Publishers, Professional Actors and Entertainers, Authors Writers, Professional Athletes, any person who holds an elected or appointed office. Rentals over 6 locations (Require Property CLUE for all locations). Decline if any liability losses are present. $ 75 (per item) $ 10 each $ 20 each $ 75 (per item) $ 10 each $ 20 each $ 10 each $ 50 (per item) $ 25 each $ 30 (per item) $ 25 each $ 25 (per item) $ 15 (per item) Not Applicable 10% increase Not Applicable Revised: 10/01/16

104 Premium Coverage and Rating Examples Scenario 1: $1,000,000 (Includes 1 home and 1 auto) Plus any additional factors (e.g. 1 young driver = $30) Premium Calculations: $ base premium $ young driver Total $ NOTE: 2nd million is 50% of the 1st million subject to $100 minimum. Example: 2nd million premium: Divide the 1st million ($165) 2 = $82.50 Next million is subject to minimum of $100. $82.50 will now become $100 NOTE: 3rd, 4th, or 5th million is 50% of the previous million. Scenario 2: Applicants are asking for 5 million coverage with following exposure: 1 home, 5 auto, 2 young drivers, 2 recreational vehicles and 3 watercraft (category II jet-skies). Premium Calculations: $ home and auto (base premium) $ additional cars ($50.00 each) $ young drivers ($30.00 each) 2 recreational vehicles $ jet skies (category II $50.00 each) $ Base premium Total $ Special Premium: $ jet skies ($75.00 each) $ young operators ($10.00 each) Total $ Special Premium $ = $ $ Total 1 st million premium: $ nd million premium: 1 st million $830 2 $ rd million premium: 2 nd million $415 2 $ th million premium: 3 rd million $208 2 $ th million premium: 4 th million $104 2 $ $52.00 now become $100 Premium Calculations: $1, Discounts No discounts available Revised: 10/01/16

105 9.5 Changes to the Personal Umbrella Policy General Guidelines Midterm changes are allowed during the policy year; however, they must meet the underwriting guidelines and follow the approval procedures. A change to an insured's Auto or Homeowners policy may affect the insured's Personal Umbrella Policy. Auto Policy o You must amend the Personal Umbrella Policy when an insured adds, changes or deletes the following on the insured's Insurance Exchange Auto policy: An auto or driver A mailing address A telephone number A motor home A trailer An exclusion Homeowners Policy o You must amend the Personal Umbrella Policy when an insured adds, changes or deletes the following on his or her Homeowners policy: An additional residence(s) occupied by the insured An additional residence(s) rented to others Any watercraft A pool, diving board, hot tub, spa A snowmobile A golf cart HO-40 Other Structures Rented to Others Endorsement HO-42 Office, Professional, Private School or Studio Occupancy Residence Premises Endorsement Completing the Request for Policy Amendment Form: When an Insured makes a change to his or her automobile and / or homeowner policy, (ask the Insured if they have a Personal Umbrella Policy) F1177 form must be completed. The PUP policy number if cross referenced can be found on the second page of IIQ, homeowners screen, or ADES. Once the policy number is found, use Fastlane to provide you with the details of the Insured's policy. The insured's signature is not need when the Personal Umbrella Policy is amended: o o Determine the changes the insured wants to make. It is required to fill in the Policy Amendment Form (F1751C). The Effective Date of Change field should be left blank if the change request requires Main Office approval. Midterm change approval and binding procedures click here. o Advise the insured you are submitting the policy amendment form for processing. When processing is complete, a declaration will be sent to the insured. o Send the form to Insurance Services for processing. The following fields must always be completed: o Policy holder's (name last name, first names) o Effective date of change o Umbrella policy number o Request by: who requested the update (e.g. Mr. Fields by phone) o Received by: name and extension number of Iss. Rep. o Date: date Insure made request (MM/DD/CCYY) o Time: must show full time (e.g. 9:48AM) o D.O.: Rep DO# if different. 9.6 Endorsement Premium Adjustment Endorsement Premium Adjustment Midterm changes resulting in an additional premium must be paid in full. The "insured" will be billed directly when the change is processed. Return premiums will be credited to the account or, if appropriate, a return premium check will be sent. Premium changes are calculated pro-rata Revised: 10/01/16

106 9.7 Whole Dollar Premium Rule Whole Dollar Premium Rule All premiums shown on the policy and endorsements shall be rounded to the nearest whole dollar. A premium of fifty cents or more shall be rounded to the next higher whole dollar. A premium of forty-nine cents or less shall be rounded to the next lower whole dollar. 9.8 Premium or Coverage Revision Premium or Coverage Revision Any premium or coverage revision applicable to the Personal Umbrella program shall be made in accordance with the following procedures: The effective date of such revision shall be as announced by the Bureau; The revision shall apply to any policy or endorsement having an effective date on or after the effective date of such revision. 9.9 Definitions Auto Means a land motor vehicle with four or more wheels, a motorcycle, motor driven cycle or motorized bicycle licensed for road use. Motor homes are considered autos Boats See Watercraft Domestic Partner A person with whom a committed relationship of mutual caring has been established as provided in Division 2.5 (starting at Section 297) of the California Family Code, as amended from time to time. The following is a list of requirements for a domestic partner taken from Family Code Section 297, and includes Family Code Sections 298, and 299.2: Both domestic partners must file a Declaration of Domestic Partnership. Both persons have a common residence. Neither person is married to someone else or is a member of another domestic partnership with someone else that has not been terminated, dissolved, or adjudged a nullity. Both persons are not related by blood in a way that would prevent them from being married to each other in this state. Both persons are at least 18 years of age. Both persons are members of the same sex, OR One or both of the persons of opposite sex are over the age of 62 and meet the eligibility criteria under Title II of the Social Security Act as defined in 42 U.S.C. section 402(a) for oldage insurance benefits or Title XVI of the Social Security Act as defined in 42 U.S.C. section 1381 for aged individuals. Both persons are capable of consenting to the domestic partnership. Both persons consent to the jurisdiction of the Superior Courts of California for the purpose of a proceeding to obtain a judgment of dissolution or nullity of the domestic partnership or for legal separation of partners in the domestic partnership, or for any other proceeding related to the partners' rights and obligations, even if one or both partners ceases to be a resident of, or to maintain a domicile in, this state. A domestic partner also includes comparable legal unions from jurisdictions other than California Exclusionary Endorsements Exclusions subsequently endorsed onto an underlying policy such as, but not limited to, excluded drivers, animals and structures Low Speed Vehicle A motor vehicle, other than a motor truck, having four wheels on the ground and unladen weight of 1,800 pounds or less, that is capable of propelling itself at a minimum of 20 mph and a maximum speed of 25 mph on paved level surfaces Revised: 10/01/16

107 9.9.6 Personal Umbrella Policy A blanket catastrophe liability policy that provides excess coverage over underlying homeowner and automobile insurance. The policy should not be confused with commercial umbrella, malpractice policies or professional liability policies Personal Watercraft A watercraft less than 13 feet in length designed to be operated by a person sitting, standing, or kneeling on the watercraft rather than within the confines of the hull; examples, Jet Ski or Sea- Doo's Recreational Vehicles A motorcycle, motor-driven cycle or motorized bicycle licensed for off road use only with guest passenger liability coverage. A self-propelled land vehicle designed for use off public roads and not subject to any Motor Registration Law. Examples of recreational vehicles : golf carts, snowmobiles, dirt bikes, 5th wheels, and all terrain vehicles Any trailer Special Acceptance Any category that requires Insurance Services approval and/or limits (refer to page 17) Underlying Insurance The types of personal lines insurance coverages listed in the required underlying insurance section. Specific minimum limits must be maintained to assure that there is no "gap" between the primary coverage and the umbrella policy Watercraft Category I - Less than 26' and 50 horsepower or less. Category II - 26' to 50' or 51 to 100 horsepower. Category III - 50' or less and 101 to 250 horsepower Young Driver All drivers with a valid drivers license or driving permit under 25 years of age, regardless of sex or marital status Revised: 10/01/16

108 Section 10: National Flood Insurance Program 10.1 Flood Program (WYO) Write Your Own (WYO) Flood Insurance Program The Write Your Own (WYO) Flood Insurance Program provides flood hazard information to communities and individuals and flood insurance to property owners in communities that participate in a flood management program Description of Coverage Flood insurance covers direct physical loss arising out of: The partial or complete inundation of normally dry land areas from: o The overflow of inland or tidal waters o Accumulation or runoff of surface waters from any source, or o Mudslides (i.e. mudflows) caused by flood. The collapse or subsidence of land along the shore of a lake or other body of water as a result of erosion or undermining caused by waves or currents of water exceeding the cyclical levels which result in flood, or Sewer (drain) backup, only if caused by flood Standard Deductible The standard deductible may vary depending upon when the structure was built. Optional deductibles are also available. For additional information please refer to the National Flood Insurance Program (NFIP) Manual Eligibility for Coverage Flood insurance is available to any property owner who resides in a community that participates in a flood management program. (A AAA Insurance Company homeowners policy is not required to write flood insurance.) A community's participation status may be obtained by calling the National Flood Services Customer Service Department. The phone number is (800) Note: The Flood Disaster Protection Act of 1973 REQUIRES flood coverage as a condition of receiving any form of federal or federally related financial aid for purposes of buying or constructing in identified flood hazard areas. The mortgagee is responsible for determining whether property is located in a special flood hazard area and for informing the property owner AAA NCNU as a WYO Flood Insurance Carrier AAA NCNU will act as a flood insurance carrier by taking applications and cancellation requests, by completing general change endorsements and notice of loss forms, and by collecting premiums. All forms are to be submitted to National Flood Services (NFS), AAA NCNU's third party vendor, for processing or may be submitted online: NFS will do final underwriting, processing and claims adjusting. The AAA NCNU/NFS Identification Number is Sources of Information Flood Insurance Manual o THE NATIONAL FLOOD INSURANCE PROGRAM (NFIP) MANUAL, published by the NFIP, contains the general rules and definitions used for the program. This manual is the primary source of information for program details and can be found at Flood Insurance Reference Guide o THE FLOOD INSURANCE REFERENCE GUIDE provided in cooperation with NFS contains procedures to be followed when completing a flood application, cancellation, general change endorsement or notice of loss form. It also contains general rules and Revised: 10/01/16

109 definitions used for the program. This guide is a secondary source of information for the program and can be found at NFS Telephone Number and Address. o Questions not answered in the National Flood Insurance Program (NFIP) manual or the Flood Insurance Reference Guide should be directed to the National Flood Services Customer Service Department. The following address and telephone number is to be used: National Flood Services PO Box 2057 Kalispell, MT Telephone: (800) Fax: (406) service@nfsmt.com Revised: 10/01/16

110 Section 11: California Earthquake Authority (CEA) 11.1 California Earthquake Authority (CEA) California Earthquake Authority AAA NCNU is a participating insurer in the California Earthquake Authority (CEA). Even though the CEA provides the actual earthquake coverage, AAA NCNU-IIB services the policy and processes earthquake claims. All forms are to be submitted to Blue Cod Technologies (BCT) AAA NCNU's third party vendor, for processing CEA Rate Manual AAA NCNU offers supplemental coverages. Please refer to the CEA Supplemental Rate Manual for information regarding supplemental coverages. The manual contains eligibility rules as well as rates for the various CEA policies CEA Applications When a CA Homeowner Policy with CEA is bound (uploaded) in SalesX or netpositive(r), the data for the CEA Application will be transmitted automatically to Blue Cod. Note: netpositive(r) should be used to quote and bind a CEA Standalone Policy associated with a CA Rental Property Insurance Policy CEA Payments Payments for all CEA New Business (Full-Term Standalone policies) must be made by credit/debit card or by echeck via Allternet (Blue Cod's CEA Policy Administration System) or netpositive(r). For SalesX users: Payments for all new CEA policies must be processed in Allternet immediately after binding the policy. For netpositive(r) user: Payments for all new CEA policies be processed in netpositive(r) as part of the binding process. If the insured is paying by check, return the paper check to the insured after the policy is uploaded. For process and procedures click here Sources of Information CEA Website: The CEA web site provides useful agent and consumer information about the organization, products offered, coverages, and to calculate premium. To access the web site, click the following address: CEA Customer Service Telephone Number: Inquiries about coverage limits, payment and account status can be directed to the Contact Center at CEA Payment Inquiries: The following address is to be used for payment inquiries: CEA Payment Center P.O. Box 9162 Marlborough, MA Revised: 10/01/16

111 Section 12: Fair Plan Import 12.1 Fair Plan Fair Plan The California Fair Access to Insurance Requirements Plan (FAIR Plan), was established by the California legislature to assure stability in the California property insurance market and to provide basic property insurance to property owners who are unable to obtain it in the normal market. Agents are not permitted to accept applications on behalf of the FAIR PLAN. If a risk does not qualify for insurance with AAA NCNU, the representative must refer the applicant to the FAIR PLAN office located at: Street Address: 3435 Wilshire Blvd., Suite #1200, Los Angeles, CA Mailing Address: P.O. Box 76924, Los Angeles, CA Phone Number: (213) Toll Free Number: (800) Website: Revised: 10/01/16

112 Section 13: Community Service Survey 13.1 Community Service Survey Community Service Survey The California Department of Insurance requires all insurers to gather and report information concerning insurance policyholders to determine whether discriminatory practices exist and to identify underserved areas of the state. Explain to the insured that all California insurers are required to complete this form. Form F1087 "Community Service Survey" must be completed for each policy bound and issued. The completed form should be sent directly to Main Office Records Department. It is not necessary to complete the CSS form if the applicant declines the offer of a policy Revised: 10/01/16

113 Section 14: Construction Definitions 14.1 Construction Types Frame Construction A dwelling with exterior walls of wood or other combustible construction, most often consisting of wood or wood composite products, stucco on wood or plaster on combustible supports, etc. Aluminum or plastic siding over a combustible frame Masonry Construction Exterior walls constructed of masonry materials such as adobe, brick, concrete, gypsum block, hollow concrete block, stone, tile or similar materials. Floors and roofs of combustible construction (disregarding floors resting directly on the ground) Masonry Veneer A dwelling with exterior walls of combustible construction veneered with masonry, for example: brick, tile, stone, concrete, etc Log Home A dwelling constructed of pre-cut solid logs (usually in kit form) that are assembled at the building site by a professional building contractor Superior Construction All examples listed below will receive this classification Non-Combustible Exterior walls and floors and roof constructed of and supported by metal, asbestos, gypsum or other non-combustible materials Masonry Non-Combustible Exterior walls constructed or masonry materials (as previously described) and floors and roof of metal or other non-combustible materials Fire Resistive Exterior walls, floors and roof constructed of masonry or other fire resistive materials Electrical Service Fuses A ribbon-like metal covered with transparent mica "window" with a very low melting point that melts and breaks the circuit when an electric current exceeds specified amperage. The transparent window enables the homeowner or occupant to see when they are blown. Fuses are contained in a metal box that can be found in the garage, utility room, closet, or basement. Fuses typically screw into the circuit box similar to utilizing a base on a light bulb Circuit Breakers A sensitive switch that automatically breaks the circuit if the circuit becomes overloaded. The circuit breaker is reset rather than replaced like a fuse. Circuit breakers are contained in a metal box, called the service box, which can be found in the garage, utility room, closet, basement, or outside walls of newer homes Revised: 10/01/16

114 14.3 Foundations Perimeter Foundation A continuous wall of reinforced concrete poured in a trench to provide a footing or base dug completely around the perimeter of the dwelling upon which the exterior bearing walls are set. The center of the dwelling is supported on spread footings, which consist of concrete piers with posts rising to support the floor joists Pier and Post Foundation Square concrete piers approximately 12 inches across resting on the ground with posts rising to support the floor joists with no continuous perimeter foundation Revised: 10/01/16

115 Slab Foundation A flat single piece of concrete used in modern houses (with no basements). A slab foundation does not require steps to gain entry to the house. The doors are at ground level Wood Foundation Foundations constructed entirely out of wood. (No concrete or cement materials are used) Basement Foundation 14.4 Heating Base Board Heating A series of electric coils encased in a metal shield applied typically just about or at the level of the baseboard hence the name. Baseboards are applied on the wall where it meets the floor Floor Furnace A furnace mounted under a floor with a grill at floor level Revised: 10/01/16

116 Forced Air Heating/Central Heating Furnace with blower which pumps hot air through ducts to each room with a cold air return so that the system recalculates the air inside the house Free Standing Wood Stove A metal or cast iron stove usually installed on ceramic or brick floor, with wall insulation and vented to outside Radiant Heating A network of small pipes laid in concrete slab-type floors through which hot water is pumped and functions as one big low-temperature radiator Wall Heater A vented gas heater mounted flush in a wall and vented to the outside Heat Saver or Heat Reclaimer A heat saver/reclaimer is a device that is inserted in the exhaust vent pipe. This device exchanges heat from the exhaust gasses into hot air that is often then forced back into the room Plumbing Cast-iron Pipe Molded of cast-iron and used for sewer and disposal systems. Cast-iron pipes can be found in the basement, garage or along the exterior walls of the house Copper Pipe Corrosion resistant and an excellent conductor of heat used widely in water piping, especially in hot-water lines, either pure or in alloys such as brass or bronze. The pipes are soldered at connections. Copper pipes can be found underneath sinks or any other plumbing hookup, in basements, garages, or at the water heater Copper Tubing Thin walled and cannot be threaded, connected by methods involving soldering or special mechanical joining techniques. Copper tubing is typically used for appliances like an ice maker in a refrigerator and run from underneath the nearest sink to the back of the appliance Galvanized Pipe Iron or steel pipe coated with zinc to protect it from rust. Galvanized steel is the traditional material for water piping. The pipes are fastened together by threaded fittings. Galvanized pipes can be found underneath sinks or any other plumbing hookup or in basements or garages Revised: 10/01/16

117 Plastic Pipe Made from a number of formulas, each of which has special properties (one commonly used is known as PVC or Polyvinyl Chloride). Many local plumbing codes prohibit plastic piping. Plastic pipes can be found underneath sinks or any other plumbing hookup. Their primary application today is for gray water or sewer disposal Retrofit Cripple Walls These are wooden stud walls typically used between the concrete foundation and the ground floor. The studs are usually shorter than the standard 92 ¼" length of stud framing and often as short as 4"6". Cripple walls are usually found in homes built on very uneven terrain or slopes so that the main floor is level in spite of a stepped foundation. Also many times the builder has added a cripple wall on an even foundation but the home will have a step up dining room, living room, etc. These short walls carry the weight of the house. In an earthquake, these walls will collapse in any swaying motion that typically occurs in an earthquake. If they are not braced, the house may collapse off the foundation resulting in very expensive repair, or a repair that may exceed the value of the house Mud Sill or Mud Sill Plate The bottom horizontal wood framing member laid flat on, anchored to the top of a foundation and on which the rest of the building framing is erected. It is required this part of the frame be bolted or strapped to the foundation. Also known as Sole Plate or Bottom Plate Shear Panels Shear panels are the stronger of the two most common lateral bracing systems for wood frame buildings. Shear panel bracing with plywood should be accomplished with a minimum of 3/8" thick plywood, (also referred to as fields) applying it directly to the studs and a very close nailing pattern of at least every 3" on the perimeter of the plywood and 6" in the center of the sheet. The panels should extend from the sole (bottom) plate to the top plate. Materials other than plywood would require the approval of a civil or structural engineer. Cripple wall shear panels most often will be found in the crawlspace and sometimes can be viewed from the crawlspace access or foundation vents without going under the house. Note: For information on retrofitting of cripple walls and foundation bolting, each office has been supplied with a videotape on this subject Revised: 10/01/16

118 14.7 Roof Types Composition Shingles made of felt or inorganic fiberglass saturated with asphalt and surfaced with mineral granules. Also known as asphalt shingles, these may be made in individual strips, interlocking and self-sealing. They are normally applied on medium or higher pitched roofs over solid sheathing and building paper Shake A roof covering of thick wood shake shingles which have been hand or machine split from a bolt of wood, generally in random dimensions. They are normally installed over a medium or higher pitched roof on spaced sheathing covered with building paper Tar and Gravel Also know as a built up roof, it has three to five layers of roofing felt laminated with coal tar, pitch or asphalt, and topped with a layer of gravel or other aggregate material. This is typically found on flat or low-pitched roofs Tile A term used interchangeably when describing sectional roof coverings composed generally of very hard inflexible materials of different shapes and material compositions. Tile roofs can be composed of clay tile used in Spanish architectural applications, light weight concrete tile composed of various shapes, (wood shake appearance, corrugated appearance, etc.) or metal tile with upper granulated surface Slate Slate is a fine-grained layered rock used in older application such as in the eastern United States or Europe, usually in form of a tile Metal Any roof covering using a metallic material such as galvanized steel, tin, copper, aluminum, etc Wiring Conduit Light steel tubing or gray plastic tubing (PVC), usually 1/2 or 3/4 inch in diameter, in which electrical wiring is installed (indoor or out). Conduit can be found in garages, basements, attics or where the wiring enters the fuse or circuit breaker box Flexible Armored Cable A heavy steel flexible cover, often used for extensions of existing conduit systems (for indoor use only). It is also used on wall and ceiling surfaces, or for concealed runs in hollow spaces of walls, floors and ceilings. Flexible armored cable can be found in garages, basements, attics or where the wiring enters the fuse or circuit breaker box Romex The electric wires are encased in a tough, flexible cable (typically made of plastic). The cable is generally rectangular in shape and is the most common type of residential wiring in use today. Romex can be found in homes, garages, basements, attics or where the wiring enters the fuse or circuit breaker box Knob and Tube Open electric-wiring work in which wires are supported on porcelain knobs and encased in tubes where they pass through beams or partitions. Knob and tube can be found in garages, basements, attics or where the wiring enters the fuse or circuit breaker box. Traditionally, this type of wiring was used in homes built prior to Wood Burning Stove (Solid Fuel Stove Information) Overview The term "solid fuel stoves" refers to free-standing wood burning stoves, free-standing pellet stoves, and wood burning/gas stove combinations. Pictures and detailed descriptions of each Revised: 10/01/16

119 type of stove is provided below: These pictures and descriptions are for illustrative purposes only. A Wood Burning Stove Supplemental Application will determine acceptability Wood Burning Stove Freestanding wood stove heating devices have been in use nearly as long as the advent of cast iron and fire. They are a sitting, standing or insert unit in which solid wood fuel is inserted in the unit via a door or other opening. The heat from the burning fuel is absorbed into the iron walls of the stove unit and is radiated into the cooler surrounding air. Newer units will have a UL certification sticker affixed to the rear, if there was testing of the model at production. Not all wood stoves are UL rated. They can vary from simple homemade units to modern low emission units. Commonly wood stoves are freestanding, with interior open flue pipes, which vent to the exterior of the home Revised: 10/01/16

120 Wood Stove Diagram Revised: 10/01/16

121 Pellet Stove Pellet-burning appliances rely on sophisticated computers and circuit boards to determine how much pellet fuel should be burned. Most models have at least two burn settings and some use thermostats to control the fire. They also use a forced-air system to distribute heat. Pellet-burning appliances are highly efficient and pollute very little. These stoves and inserts burn wood pellets-- compressed wood, which resembles rabbit food. They look physically similar to a wood stove, but are inherently safer. They are a newer device category and most all will feature UL testing and certification. They are cleaner burning. The exterior surface is not heated, and there is less risk of burning material escaping the unit as the compressed wood is generally poured into an overhead chamber, separated from the burning pellets, decreasing the possibility for combustion of surrounding materials Wood/Gas Stove Below is an example of an older wood/gas stove. These units were typical for homes built in the 20's and 30's, and many are still in use today Revised: 10/01/16

122 Safety Issues Wood and Pellet stove designs have changed significantly over the years, and particular installation requirements vary by model, venting materials used, construction of the fireproof hearth and building design limitations. Issues to be concerned about when insuring homes with solid fuel stoves are as follows but not limited to: Fire hazard due to improper installation. Fires occur because stoves are mounted on top combustible materials such as carpeting or installed to close to flammable materials such as drapes. Improper installation or poor maintenance of stove venting. Carbon monoxide poisoning is a major cause of injuries and death due to improper installation and venting. Faulty stove design (e.g. homemade) Hearth The area below, beside and to the rear of a solid fuel stove and fireplace. The structure is designed to give placement for a stove and fireplace and afford fire protection for the surrounding area Non-combustible Material Includes brick, tile, marble tile, granite limestone, stone or similar hearth materials Floor Protection Describes the hearth structure of the floor at the rear, sides and front of the unit Combustible Material Include wood or pellets, newspapers, wall coverings, flammable liquids, clothing and any other items which can be ignited by sparks or loose burning materials. Thimble for Direct-Vent Piping Wall and ceiling thimbles provide a complete pass through and fire stop Dampers Barometer Damper - This is the swing type damper you see on oil burners and they even out the draft. Thermostatic Damper - For stove are inlet. A few companies make a device, which retrofit over an existing manual damper and make it thermostatic. Manual Damper - Adjusted mechanically by the user to control the pace of combustion in the wood burning stove device Revised: 10/01/16

123 Section 15: Glossary 15.1 Glossary Actual Cash Value The replacement cost, new, less depreciation Aggregate Limit Total limits of liability on certain property for loss in any one occurrence Apartment Building Building structure with five or more dwelling units Appraisal A written estimate, not more than two years old, obtained from a recognized dealer or commercial establishment verifying the market value of a given article. A recent bill of sale with a full description, not more than two years old, obtained from a recognized dealer or commercial establishment is acceptable in lieu of an appraisal Appurtenant Structure See Detached Structure Basement Foundation Base Board Heating A series of electric coils encased in a metal shield applied typically just about or at the level of the baseboard hence the name. Baseboards are applied on the wall where it meets the floor Beneficiary The recipient of funds, property, or other benefits, as from an insurance policy, trust or will Burglar Alarm A device that effectively alerts the insured, neighbors and/or law enforcement agencies, that an intruder is entering the residence premises. For purposes of the Protective Device Discount, a "local Burglar Alarm" is defined as covering all accessible exterior doors and windows. A "central Revised: 10/01/16

124 burglar alarm" is one that reports directly to an alarm company central station and/or a police department Cast-iron Pipe Molded of cast-iron and used for sewer and disposal systems. Cast-iron pipes can be found in the basement, garage or along the exterior walls of the house Chattel Mortgage An individual or organization holding loans on personal property (for example, a computer, a piano, or fine arts) held by the insured Circuit Breakers A sensitive switch that automatically breaks the circuit if the circuit becomes overloaded. The circuit breaker is reset rather than replaced like a fuse. Circuit breakers are contained in a metal box, called the service box, which can be found in the garage, utility room, closet, basement, or outside walls of newer homes Class of Personal Property A category in a schedule of personal property, such as cameras or jewelry Condominium A part of the property intended for independent use, including one or more cubicles of air, at one or more levels of space, with direct exit to a public street or to a common area or limited common area leading to such street. Common areas include the land on which the building is located, the foundation columns, girders, main walls, roofs, corridors, lobbies, stairways and entrances and exits of building. Limited areas are those areas or facilities reserved for certain units to the exclusion of other units in the building Conduit Light steel tubing or gray plastic tubing (PVC), usually 1/2 or 3/4 inch in diameter, in which electrical wiring is installed (indoor or out). Conduit can be found in garages, basements, attics or where the wiring enters the fuse or circuit breaker box Copper Pipe Corrosion resistant and an excellent conductor of heat used widely in water piping, especially in hot-water lines, either pure or in alloys such as brass or bronze. The pipes are soldered at connections. Copper pipes can be found underneath sinks or any other plumbing hookup, in basements, garages, or at the water heater Copper Tubing Thin walled and cannot be threaded, connected by methods involving soldering or special mechanical joining techniques. Copper tubing is typically used for appliances like an ice maker in a refrigerator and run from underneath the nearest sink to the back of the appliance Cripple Walls These are wooden stud walls typically used between the concrete foundation and the ground floor. The studs are usually shorter than the standard 92 ¼" length of stud framing and often as short as 4"6". Cripple walls are usually found in homes built on very uneven terrain or slopes so that the main floor is level in spite of a stepped foundation. Also many times the builder has added a cripple wall on an even foundation but the home will have a step up dining room, living room, etc. These short walls carry the weight of the house. In an earthquake, these walls will collapse in any swaying motion that typically occurs in an earthquake. If they are not braced, the house may collapse off the foundation resulting in very expensive repair, or a repair that may exceed the value of the house Dampers Barometer Damper - This is the swing type damper you see on oil burners and they even out the draft Revised: 10/01/16

125 Thermostatic Damper - For stove are inlet. A few companies make a device, which retrofit over an existing manual damper and make it thermostatic. Manual Damper - Adjusted mechanically by the user to control the pace of combustion in the wood burning stove device Dead Bolt A single cylinder lock with a one-inch throw and casehardened insert that prevents a burglar from simply slipping the door open with a credit card Deductible The amount of a covered loss that the insured is required to pay Detached Structure A structure that is detached from the main dwelling, for example, detached garage, workshop, green house, tool shed, swimming pool, guest house or cottage (rented to others or not rented). This is also known as Appurtenant Structure, Other Structure Duplex A building comprised of two separate attached living units Electrical Service See Construction Definitions Escrow A written agreement, such as a deed or bond, put into the custody of a third party and not in effect until certain conditions are fulfilled by the grantee. Homes go through escrow as part of the sale process, allowing all of the paperwork to be completed and monies exchanged. Title companies usually handle this process Free Standing Wood Stove A metal or cast iron stove usually installed on ceramic or brick floor, with wall insulation and vented to outside Fire District A permanent, organized department under state or local laws that can respond 24 hours a day to any alarm with at least one piece of suitable fire equipment and a minimum of four firefighters. The State Department of Forestry fire station can be considered if it has a contract to protect the area Fire Extinguisher A portable apparatus containing chemicals that can be discharged in a jet to extinguish a small fire Fire Resistive Building Independent protected steel frame supporting roof, floor and wall loads and with other structural parts of masonry materials; or independent masonry frame supporting floor, wall and roof loads; or monolithic reinforced concrete throughout; or masonry bearing walls and protected steel or reinforced concrete columns supporting roof, floor and wall loads and all other structural parts of masonry materials Flexible Armored Cable A heavy steel flexible cover, often used for extensions of existing conduit systems (for indoor use only). It is also used on wall and ceiling surfaces, or for concealed runs in hollow spaces of walls, floors and ceilings. Flexible armored cable can be found in garages, basements, attics or where the wiring enters the fuse or circuit breaker box Forced Air Heating/Central Heating Furnace with blower which pumps hot air through ducts to each room with a cold air return so that the system recalculates the air inside the house Revised: 10/01/16

126 Floor Furnace A furnace mounted under a floor with a grill at floor level Foundations See Construction Definitions Fire Resistive Exterior walls, floors and roof constructed of masonry or other fire resistive materials Frame Construction A dwelling with exterior walls of wood or other combustible construction, most often consisting of wood or wood composite products, stucco on wood or plaster on combustible supports, etc. Aluminum or plastic siding over a combustible frame Fuses A ribbon-like metal covered with transparent mica "window" with a very low melting point that melts and breaks the circuit when an electric current exceeds specified amperage. The transparent window enables the homeowner or occupant to see when they are blown. Fuses are contained in a metal box that can be found in the garage, utility room, closet, or basement. Fuses typically screw into the circuit box similar to utilizing a base on a light bulb Galvanized Pipe Iron or steel pipe coated with zinc to protect it from rust. Galvanized steel is the traditional material for water piping. The pipes are fastened together by threaded fittings. Galvanized pipes can be found underneath sinks or any other plumbing hookup or in basements or garages Grantor The person by whom a grant or conveyance is made Hearth The area below, beside and to the rear of a solid fuel stove and fireplace. The structure is designed to give placement for a stove and fireplace and afford fire protection for the surrounding area Heating See Construction Definitions Revised: 10/01/16

127 Heat Saver or Heat Reclaimer A heat saver/reclaimer is a device that is inserted in the exhaust vent pipe. This device exchanges heat from the exhaust gasses into hot air that is often then forced back into the room Impound Account An account that the homeowner maintains with the mortgagee, in which the homeowner makes a monthly payment to the lender consisting of the house payment plus the Homeowners insurance payment. The Mortgagee is the payor of the Homeowners policy and pays for it in full upon receipt of the first bill Inaccessible Locations which cannot be reached by either the insured or emergency vehicles year round, due to weather conditions or the physical characteristics of the location. Examples include; roads too narrow to allow emergency vehicles to pass or a dwelling located across a ravine or river with only a footbridge as access Inception Date The date the policy first became effective (MM/DD/YYYY) Knob and Tube Open electric-wiring work in which wires are supported on porcelain knobs and encased in tubes where they pass through beams or partitions. Knob and tube can be found in garages, basements, attics or where the wiring enters the fuse or circuit breaker box. Traditionally, this type of wiring was used in homes built prior to Lender A person or entity that loan money temporarily on the condition that the amount borrowed will be repaid, often with an interest fee Livestock A domesticated farm animal such as; Cattle, Sheep, Swine, Goats, Horses, Mules, and Donkeys Log Home A dwelling constructed of pre-cut solid logs (usually in kit form) that are assembled at the building site by a professional building contractor Loss Payee A person or entity that has a financial interest in specified personal property and who, in the event of a loss to such personal property, would receive the fair percentage of the settlement Revised: 10/01/16

128 Masonry Construction Exterior walls constructed of masonry materials such as adobe, brick, concrete, gypsum block, hollow concrete block, stone, tile or similar materials. Floors and roofs of combustible construction (disregarding floors resting directly on the ground) Non-Combustible Exterior walls and floors and roof constructed of and supported by metal, asbestos, gypsum or other non-combustible materials Masonry Non-Combustible Exterior walls constructed or masonry materials (as previously described) and floors and roof of metal or other non-combustible materials Masonry Veneer A dwelling with exterior walls of combustible construction veneered with masonry, for example: brick, tile, stone, concrete, etc Mortgagee A person or entity who loans money temporarily on the condition that the amount borrowed will be repaid, often with an interest fee Mud Sill or Mud Sill Plate The bottom horizontal wood framing member laid flat on, anchored to the top of a foundation and on which the rest of the building framing is erected. It is required this part of the frame be bolted or strapped to the foundation. Also known as Sole Plate or Bottom Plate Other Structure See Detached Structure Peril The cause of a loss. Example: fire, theft, wind storm, etc Revised: 10/01/16

129 Pellet Stove Pellet-burning appliances rely on sophisticated computers and circuit boards to determine how much pellet fuel should be burned. Most models have at least two burn settings and some use thermostats to control the fire. They also use a forced-air system to distribute heat. Pellet-burning appliances are highly efficient and pollute very little. These stoves and inserts burn wood pellets-- compressed wood, which resembles rabbit food. They look physically similar to a wood stove, but are inherently safer. They are a newer device category and most all will feature UL testing and certification. They are cleaner burning. The exterior surface is not heated, and there is less risk of burning material escaping the unit as the compressed wood is generally poured into an overhead chamber, separated from the burning pellets, decreasing the possibility for combustion of surrounding materials Revised: 10/01/16

130 Perimeter Foundation A continuous wall of reinforced concrete poured in a trench to provide a footing or base dug completely around the perimeter of the dwelling upon which the exterior bearing walls are set. The center of the dwelling is supported on spread footings, which consist of concrete piers with posts rising to support the floor joists Pier and Post Foundation Square concrete piers approximately 12 inches across resting on the ground with posts rising to support the floor joists with no continuous perimeter foundation Revised: 10/01/16

131 Plastic Pipe Made from a number of formulas, each of which has special properties (one commonly used is known as PVC or Polyvinyl Chloride). Many local plumbing codes prohibit plastic piping. Plastic pipes can be found underneath sinks or any other plumbing hookup. Their primary application today is for gray water or sewer disposal Plumbing See Construction Definitions Primary Dwelling The location which is the legal residence of an individual Protection Class A value ranging from 1 to 10 given to property locations by the Insurance Services Organization representing the degree of fire protection Radiant Heating A network of small pipes laid in concrete slab-type floors through which hot water is pumped and functions as one big low-temperature radiator Recognized Fire Department See Fire District Residence Employee A full time employee of the insured, who resides at the insured location year round, whose duties are related to the maintenance or use of the residence premises. Examples would be; caretaker, butler, maid, au pair Retrofits See Construction Definitions Remote A location which contains less than three dwelling units in a one square mile area Roof Types See Construction Definitions Romex The electric wires are encased in a tough, flexible cable (typically made of plastic). The cable is generally rectangular in shape and is the most common type of residential wiring in use today. Romex can be found in homes, garages, basements, attics or where the wiring enters the fuse or circuit breaker box Satellite Dish A device used to receive television signals that may be portable, attached to the dwelling or anchored to the ground. Each type is covered differently. Portable dishes are insured under Coverage C. Those attached to a dwelling are insured under Coverage A, and those anchored to the ground and detached from the house are insured under Coverage B. Select appropriate coverage (Coverage A, Coverage B or Coverage C) to properly insure the Satellite Dish Seasonal Residence A seasonal residence is defined as a residence used as a supplement to the insured's primary residence that is used for recreational or vacation purposes and is occupied less than 50% of the time Secondary Residence A secondary residence is defined as an additional residence used for other than recreational purposes Revised: 10/01/16

132 Shear Panels Shear panels are the stronger of the two most common lateral bracing systems for wood frame buildings. Shear panel bracing with plywood should be accomplished with a minimum of 3/8" thick plywood, (also referred to as fields) applying it directly to the studs and a very close nailing pattern of at least every 3" on the perimeter of the plywood and 6" in the center of the sheet. The panels should extend from the sole (bottom) plate to the top plate. Materials other than plywood would require the approval of a civil or structural engineer. Cripple wall shear panels most often will be found in the crawlspace and sometimes can be viewed from the crawlspace access or foundation vents without going under the house. Note: For information on retrofitting of cripple walls and foundation bolting, each office has been supplied with a videotape on this subject Slab Foundation A flat single piece of concrete used in modern houses (with no basements). A slab foundation does not require steps to gain entry to the house. The doors are at ground level Smoke Alarm A device that runs either on electric current or on batteries, that sounds an alarm upon detecting smoke in the dwelling Title Company A third party in whose custody a written agreement such as the deed is placed, until certain conditions are fulfilled by the grantee to complete the purchase of a home, for example, an intermediary between a Mortgage Company and a homeowner Townhouse A structure containing one or more family units which are joined usually by a common foundation and roof. Each unit is a separate building having an independent firewall separating it from adjoining units. Each unit and the land on which it is located are individually owned with each owner having a recordable deed. Unlike a condominium unit, a townhouse is not a cubicle of air in a building. There may or may not be an association of owners and common ownership of land other than that on which a townhouse is located Trust A property interest held by one person for the interest of another Trustee A person holding and administering a trust Unprotected The term applies to cities, towns, or locations without fire protection Revised: 10/01/16

133 Wall Heater A vented gas heater mounted flush in a wall and vented to the outside Watercraft Liability Coverage E and F are extended to cover outboard which is 25 horsepower, inboard and inboard/outboard boats is 50 horsepower or under or a sailboat under 26 feet is 50 horsepower Water Heater Wiring See Construction Definitions Revised: 10/01/16

134 Wood Burning Stove Freestanding wood stove heating devices have been in use nearly as long as the advent of cast iron and fire. They are a sitting, standing or insert unit in which solid wood fuel is inserted in the unit via a door or other opening. The heat from the burning fuel is absorbed into the iron walls of the stove unit and is radiated into the cooler surrounding air. Newer units will have a UL certification sticker affixed to the rear, if there was testing of the model at production. Not all wood stoves are UL rated. They can vary from simple homemade units to modern low emission units. Commonly wood stoves are freestanding, with interior open flue pipes, which vent to the exterior of the home Revised: 10/01/16

135 Wood Stove Diagram Revised: 10/01/16

136 Wood/Gas Stove Below is an example of an older wood/gas stove. These units were typical for homes built in the 20's and 30's, and many are still in use today Wood Foundation Foundations constructed entirely out of wood. (No concrete or cement materials are used) Revised: 10/01/16

137 Section 16: California Property Agent Guide - Procedures 16.1 HO-3 and HO-4 Binding and New Business Submission Requirements Process for HO-3 and HO-4 Binding and New Business Submission Acceptable applications completed in person, by fax or by mail are not to be bound unless: At least one named insured has signed/dated the application and all associated forms. The agents has signed and acknowledged the transaction. The appropriate down payment is submitted. Note: Insureds who want to cancel their existing policy mid-term to take advantage of a new rating plan and/or points that have fallen off, are not eligible to have a new policy written. Existing insureds are being assessed the correct premium based on the rating plan in effect for their policy period and must wait until renewal to take advantage of the new rates and/or point reduction. Do not bind property within a mile of a brush fire, wildfire or firestorm, until the moratorium is lifted. In the event of a catastrophe, either natural or manmade, the company may invoke a moratorium on new business in the affected areas. An Alert will be issued when the moratorium is lifted. An applicant has the option of paying the applicable down payment or payment in full by credit card or by check. The only exception to the down payment submission is when the policy is being paid through escrow. The effective date may be either the date of binding or a future date depending on the applicant's request. An application cannot be backdated. Note: It is still required to obtain one named insured signature on the application and required associated documents even if the policy is bound by obtaining the insured's credit card authorization. If this occurs, the agent must explain on the application (or key notes section in Sales X) that the transaction was bound with credit card authorization and no signature. It is important that the agent follow up on the credit card signature after binding. All applications should be uploaded, faxed or mailed within 24 hours of binding. If the policy transaction occurred late Friday, the application may be uploaded, faxed or mailed the next business day. In particular to the DSU model, at least one named insured's voice signature authorization is required for binding provided that the verbatim script is answered clearly and concisely and a valid credit card is secured as down payment. The effective date may be either the date of binding or a future date depending on the applicant's request. Policies with a future effective date will be bound on the date that voice authorization is complete with exception being when a policy is written in escrow. In an escrow situation, binding is permitted only after the applicable escrow information is received. All current guidelines including inspection and Coverage A valuation requirements apply when binding face-to-face, by fax or by mail. Potential forms that are associated with the new business process and require at least one named insured signature for either an HO-3 or HO-4 Policy are: F1076B HO-3 California Homeowners Policy Application F1076C HO-4 California Homeowners Policy Application F1122 Personal Property Inventory (No Signature Required) F1098 Optional Coverage Form B F1039A California Residential Disclosure Insurance Form F347A, B, C Offer of Earthquake Coverage F1503 Applicant Loss History Certification Evidence of Insurance Process - HO-4 (w/ho-192 Endorsement) If you receive a lender request to be named as a loss payee on an HO-4 Condo Policy, process the request as long as you verify one (1) named insured listed on the EOI request matches the policy. (No grant deed verification is necessary) Do not make any changes to the named insured(s) on the policy without insured's authorization and appropriate documentation. Examples of appropriate documentation: Lender EOI Borrowers Authorization Form Note: Per FannieMae requirements, the Building Property Coverage should be at least 20% or more of the appraised property value and the amount should be the same for both HO-192 and Condo EOI. Provide copy of the completed form to the Title Company and insured Revised: 10/01/16

138 To ensure we have proof of the request, send the EOI and any applicable documentation to Fastlane. Note: If the applicant did NOT qualify for a Homeowners policy, explain the reason of decline and provide the Adverse Underwriting Decision Notice Binding Face-to-Face, by Fax, by Mail Pre-Qualify the risk by analyzing and asking the appropriate questions Quote Risk o If acceptable, bind policy and follow new business submission requirements *For homes closing escrow or if unable to obtain signatures at time of binding, all required signatures and documents should be obtained within 7 days of binding date and sent to Records o If unacceptable, explain the reason of decline and provide the Adverse Underwriting Notice (If exception is warranted, contact Underwriting) Provide the Insured with a copy of the signed application and/or applicable forms Submitting an Application A signed application with applicable forms should be ed, faxed or mailed to Records at time of binding.* The following needs to be submitted to Records along with the signed application: The Named Insured's signature(s) o Either spouse or both. If not married, all signatures are needed. Voice signature authorization is acceptable provided the verbatim script is answered clearly and concisely. Agent signature ISO 360Value TM Property Replacement Valuation o System replacement cost worksheet. Reminder: Please record the policy number in the cost estimator on the website. CLUE Property for all Named Insured's California Residential Disclosure Form Offer of Earthquake Insurance Form Any other required documentation for applicable discounts, scheduled item appraisals, or endorsements A copy of the invoice the agent sent to the payer if the down payment is Escrow/Mortgagee billed A copy of the Evidence of Insurance if one was issued The required payment (unless Mortgagee billed) 16.2 HO-6 Binding and New Business Submission Requirements Process for HO-6 Binding and New Business Submission The Point of Sale (POS) platform for this program is netpositive(r). Acceptable applications completed in person, by fax or by mail are not to be bound unless: At least one named insured has signed/dated the application and all associated forms. The agent has signed and acknowledged the transaction. The appropriate down payment is submitted. Note: Insureds who want to cancel their existing policy mid-term to take advantage of a new rating plan and/or points that have fallen off, are not eligible to have a new policy written. Existing insureds are being assessed the correct premium based on the rating plan in effect for their policy period and must wait until renewal to take advantage of the new rates and/or point reduction Binding Face-to-Face, by Fax, by Mail Pre-Qualify the risk by analyzing and asking the appropriate questions Quote Risk o If acceptable, bind policy and follow new business submission requirements *For homes closing escrow or if unable to obtain signatures at time of binding, all required signatures and documents should be obtained within 7 days of binding date and sent to Records Revised: 10/01/16

139 o If unacceptable, explain the reason of decline and provide the Adverse Underwriting Notice (If exception is warranted, contact Underwriting) Provide the Insured with a copy of the signed application and/or applicable forms Submitting an Application A signed application with applicable forms should be ed, faxed or mailed to Records at time of binding.* The following needs to be submitted to Records along with the signed application: The Named Insured's signature(s) Either spouse or both. If not married, all signatures are needed. Voice signature authorization is acceptable provided the verbatim script is answered clearly and concisely. Agent signature ISO 360Value TM Property Replacement Valuation System replacement cost worksheet. Reminder: Please record the policy number in the cost estimator on the website. CLUE Property for all Named Insured's California Residential Disclosure Form Offer of Earthquake Insurance Form Any other required documentation for applicable discounts, scheduled item appraisals, or endorsements A copy of the invoice the agent sent to the payer if the down payment is Escrow/Mortgagee billed A copy of the Evidence of Insurance if one was issued The required payment (unless Mortgagee billed) 16.3 DP-3 Binding and New Business Submission Requirements Process for DP-3 Binding and New Business Submission Applications are not to be bound on an acceptable risk unless they are complete and signed by the applicant and agent. The appropriate down payment amount, as determined by netpositive(r), is submitted with the application. In a close of escrow situation, send the netpositive(r) produced invoice and forward to the Title Company for down payment processing. At least one Named Insured's signature on the application and any associated forms is required at the time of binding. A policy must be uploaded within 24 hours or the next business day of binding. The effective date may be either the date of binding or a future effective date that is no more than 60 days after the upload date. netpositive(r) Decision Support Tool netpositive(r) includes Underwriting Referral flags that assist with the issuance of applications. It flags pre-selected underwriting characteristics relating to the underwriting eligibility guidelines and categorizing as either: Pre-Approval Referral Post Bound Referral Although the referrals include Pre-Approval the system will allow the agent to bind and issue a policy. The dwelling fire underwriting referral criteria page will print with each application even if there is no referral reason noted. The page will state "no referrals present for review". The referral page will be transferred to the INHOUS system and viewable by Underwriting. It will also print if the user enters comments. netpositive(r) will prompt the agent or employee entering the application that the: application may not qualify based on the criteria that will be listed on the referral (flag) and requests the user to add comments to assist the Field Inspection Underwriter in making a decision or enter the name of the Field Inspection Underwriters who provided the approval. The agent can also contact Underwriting for review and prior approval before binding coverage Binding Face-to-Face, by Fax, by Mail Pre-Qualify the risk by analyzing and asking the appropriate questions Quote Risk o If acceptable, bind policy and follow new business submission requirements Revised: 10/01/16

140 *For homes closing escrow or if unable to obtain signatures at time of binding, all required signatures and documents should be obtained within 7 days of binding date and sent to Records o If unacceptable, explain the reason of decline and provide the Adverse Underwriting Notice (If exception is warranted, contact Underwriting) Provide the Insured with a copy of the signed application and/or applicable forms Submitting an Application A signed application with applicable forms should be ed, faxed or mailed to Records at time of binding.* The following needs to be submitted to Records along with the signed application: The Named Insured's signature(s) o Either spouse or both. If not married, all signatures are needed. Voice signature authorization is acceptable provided the verbatim script is answered clearly and concisely. Agent signature ISO 360Value TM Property Replacement Valuation o System replacement cost worksheet. Reminder: Please record the policy number in the cost estimator on the website. CLUE Property for all Named Insured's California Residential Disclosure Form Offer of Earthquake Insurance Form Any other required documentation for applicable discounts, scheduled item appraisals, or endorsements A copy of the invoice the agent sent to the payer if the down payment is Escrow/Mortgagee billed A copy of the Evidence of Insurance if one was issued The required payment (unless Mortgagee billed) 16.4 Special Circumstances Special Circumstances Applies to HO-3, HO-4, and DP-3 Moratoriums - Do not bind property within a mile of a brush fire, wildfire, or firestorm, until the moratorium is lifted. In the event of a catastrophe, either natural or manmade, the company may invoke a moratorium on new business in the affected areas. An alert will be issued when the moratorium is lifted. Evidence of Insurance Process - If you receive a lender request to be named as a loss payee on a policy the request may be processed after verifying the named insured listed on the EOI request matches the policy (no grant deed verification is necessary). Do not change the Named Insured's on the policy without the insured's authorization and appropriate documentation (i.e. Lender EOI, Borrowers Authorization form). o To complete the process, provide a copy to the Title Company and the Insured. Send the appropriate documentation to Records. Note: Fannie Mae requires the Building Property Coverage should be at least 20% of Coverage C Re-finance Re-finance When insureds refinance their home loans, the procedures are as follows: Verify that the square footage is accurate. Verify that the Coverage A is updated. Run a Quote Sheet. If the renewal date is more than 180 days from the refinance date and the mortgagee requires a pre-paid policy for the year, obtain Area Management approval. If the claims history does not meet new business guidelines for loss activity, obtain Underwriting approval. Attach Claims printout. Prepare the Rush Package for the insured Revised: 10/01/16

141 Send payment to Insurance Billing Services with a note, requesting that the money be suspended due to a Refinance Evidence of Insurance Process for Refinances Evidence of Insurance Process for Refinances Upon receipt of the Evidence of Insurance (EOI) request from the title company: Verify vesting on request matches Named Insured information on the policy. If name(s) to be added/deleted/changed, contact existing insured and proceed accordingly. See below (Evidence of Insurance - Miscellaneous) for additional information. Verify billing instructions (i.e., impound/no impound). Prepare EOI and invoice, per the instructions on the request. If the lender requires more months than remain on the current policy, prepare second EOI: o Increase Coverage A using inflation factor for that quarter o Apply any claims points that will affect renewal premium o Run a quote for the renewal premium Archive EOI's in WebDocs. Key change in HDES. Occasionally, lenders require coverage in an amount higher than what is shown on the policy. If that is the case: Contact the Named Insured. If s/he indicates that renovations/remodels in excess of $5000 have been made, or if square footage has been added, run a new ISO 360Value TM home profile, increase coverage to the new amount, and send documents to Imaging. If insured agrees to increase coverage to an amount greater than ISO 360Value TM amount, note the reason for the coverage amount on the Policy Amendment Form and send to Imaging Evidence of Insurance Process - Miscellaneous Evidence of Insurance Process - Miscellaneous If you receive a request for the following: Multiple named insured's on the policy and EOI request shows one (1) insured One (1) named insured on policy and EOI request shows multiple insureds "Trust" name in vesting and no HO-41 exists on the policy Lender request to be named as a loss payee on an HO-4 Condo Policy Process the request as long as you verify one (1) named insured listed on the EOI request matches the policy. (No grant deed verification is necessary) Do not make any changes to the named insured(s) on the policy without insured authorization and appropriate documentation. Examples of appropriate documentation: Lender EOI Borrowers Authorization Form Note: Per FannieMae requirements, the Building Property Coverage should be at least 20% or more of the appraised property value and the amount should be the same for both HO-192 and Condo EOI. Process a policy amendment to the HO-192 Building Property Coverage to match the FannieMae requirement if necessary. Provide copy of the completed form to the Title Company and insured. To ensure we have proof of the request, send the EOI and any applicable documentation to Fastlane Cancellation Withdrawal Cancellation Withdrawal Applies to HO-6 and DP-3 Policies will be canceled at the request of the insured either by calling or in writing. If the cancellation request is in writing, written proof can be in any of the following forms: o F1130, Request for Policy Name Change or Cancellation signed by the Named Insured. o Letter requesting cancellation signed by the Named Insured showing date of cancellation and reason. If the request is an over-the-phone verbal cancellation, please verify the following: Revised: 10/01/16

142 o o o o The caller is a named insured (One named insured can request a cancellation even if there are two named insureds. Obtain first and last name of caller (must be named insured) Property location Current mailing address of the caller in order to send cancellation acknowledgement letter and return premium check if any refund is to be issued. Note: When handling an over-the-phone verbal cancellation, the following example should be read: "OK, let me confirm - you are requesting that the entire AAA NCNU homeowners policy covering you and your wife Mary to be canceled completely as of XX/ XX/ XXXX. The reason for the cancellation is ("repeat the reason for cancellation") and you want any unused premiums sent you at XXXX address." Cancellations may not be back dated more than 30 days from the date of notice, (except when a No Contact renewal offer was unwanted, see number 5) unless proof is provided, for example, proof of sale of home (escrow closing paper) or new policy declaration. If the cancellation is to be back dated more than 30 days, the request should be handled using a paper cancellation request form. When an insured advises non-acceptance of a No Contact renewed policy, a cancellation should be backdated to the effective renewal date. Signature(s) and documentation is not required as long as no payments, changes or claims were made on the renewed policy. Cancellations due to insured death: o The documentation needed for a cancellation due to death of a single named insured relates to who is the authorized person for the estate. Therefore, a copy of a death certificate is not sufficient and no longer required for any policy changes and/or cancellation. o o A homeowners policy will continue until expiration while the home is still in the deceased Named Insured's name. When there is more than one named insured and one has passed away, we would not need any documentation other than to note in ADES or in InHous why the named insured was removed. Continue the current practice of obtaining documentation on who is the authorized person for the estate, such as executor, or in the case of a Living Trust, the successor trustee. This is important for many reasons, one of which is respecting the privacy of our policyholders. Send copies of the documentation to the Records Department Mail Stop B06S. Once we have this documentation, change Item 1 of the homeowners policy to reflect that the named insured is deceased and then list the executor. Verify what mailing address the executor would like us to use. Example of how to change Item 1: SMITH, JOHN* DECEASED % JACK SMITH EXECUTOR 123 MAIN STREET o o Update any contact information and any other appropriate changes. After we have obtained documentation on the executor and changed the name on the policy, we can accept changes and a cancellation request from the executor to cancel the home policy when the home is sold. Proof of acceptable documentation (i.e. proof of other coverage, bill of sale, escrow closing papers, etc.) to support backdate of over thirty days will still be required. For verbal cancellations, a confirmation letter will be sent to the insured. Policies canceled by the Bureau include the following: o If a policy in force less than 60 days is being canceled by the Bureau, a notice must be given to the insured within the 60 day underwriting period and not less than 20 days prior to the effective date of cancellation. Risks located in areas eligible for coverage in the California Fair Plan must be given 30 days notice of cancellation. o o Policies in force more than 60 days may be non renewed by the Bureau, providing notice of intent to do so is given to the insured not less than 45 days prior to effective date of the non-renewal. Midterm cancellations are only allowed for: Non payment of premium Material misrepresentation of fact Substantial change to risk Revised: 10/01/16

143 16.9 Reinstatements without Lapse Payment Requirements Applies to HO-3, HO-4 and HO-6 Insureds can pay cash, write a check, or pay by credit card. Obtain the following for: Pending Cancellation Status If the policy is canceled, but is still showing "pending cancellation" and it is the first reinstatement in the past 3 years, obtain the past due and current minimum amounts shown in HIQ (PF5). If this is the 2nd reinstatement in the last 3 years, the "TOTAL-BALANCE" must be paid in full for the remainder of the policy period. Final Cancellation Status If the cancellation has already been processed and it is the first reinstatement in the past 3 years, collect the TOTAL-BALANCE amount shown in HIQ (PF5). If this is the 2nd reinstatement in the past 3 years, the "TOTAL-BALANCE" and Pro-rata Cancellation amount, must be paid in full for the remainder of the policy period. If there is no balance due and the insured received a return check, obtain the return premium amount. Branch Office and Contact Center - Return Premium (Pro-Rata) Instructions If insured is at the branch office and has the return premium check, rep will need to: o Obtain the check o IBS at >IBS - DO to void the check and o Properly dispose (shred) the check If the rep is unable to obtain the refund check at the time of reinstatement, rep will need to: o Ask insured to properly dispose the check and o IBS to place a stop payment. Note: Once IBS is notified, the return premium amount will be credited back to the policy. If the check has cleared, insured would need to pay the amount back. For Contact Center, rep is to ask insured for the return premium amount by Credit Card or Debit payment. Dropped Policies If a policy was dropped at renewal, obtain the earned premium amount (if any) that was mailed to the insured. No amount needs to be collected if there is no earned premium that was mailed Branch Office Procedures Branch must: Obtain a signed Homeowners Policy Reinstatement form o Complete the Amount Due Calculation section. o Fill in all dates and the time in the Acknowledge section. o Obtain the insured s signature in the Acknowledge section. Note: The reinstatement may be rescinded (voided) if an insured had a loss during the lapse period but did not disclose it when the form was signed. Fax or the Homeowners Policy Reinstatement form Fax or the form to Insurance Billing Services (IBS) the same day that the reinstatement was completed. IBS Fax Number: IBS >IBS - DO Note: IBS must receive the form the same day the payment is processed by the Branch Office Contact Center Procedures Contact Center must: Read the Reinstatement Loss Affidavit script and obtain necessary information. Obtain voice signature. Complete a Homeowners Policy Reinstatement in WebDocs under the AAA-Home tab. Select 1 st option from the drop down list: Insured says payment mailed before cancel date. Payment posted within 7 days of cancel date. No postmark Fill in all dates and the time in the Acknowledge section Revised: 10/01/16

144 On the Signature of Named Insured line, enter voice signature by (name of name insured). Click on the yellow disc at the bottom of the WebDocs form to complete transaction. Note: The reinstatement may be rescinded (voided) if an insured has a loss during the lapse period but did not disclose it when the form was signed Insurance Billing Services Procedures Once the Reinstatement form is received: Billing Services will reinstate the policy and send completed form to Fastlane for imaging. Note: Expected turnaround time for reinstatement is approximately 3 business days HO-3 & HO-4 homeowner policies canceled or dropped due to AAA NCNU's error or oversight If a policy has been canceled due to AAA NCNU's error or oversight because of any of the following reasons, use the Reinstatement Tool to approve and process the reinstatement. No payment or signature from the insured is needed to reinstate these polices and you don't have to contact Billing Services to discuss or get approval. Payment was received on time but was misapplied or incorrectly coded Address is incorrect on the policy in question but correct on other products of the insured Return premium credit was not applied to the amount due in a timely manner due to AAA NCNU's error or oversight AAA NCNU canceled the wrong policy or AAA NCNU canceled the policy instead of making a requested change or adjustment AAA NCNU employee gave wrong payment amount or due date to the insured AAA NCNU did not change mortgage company information or billing instructions (only applies to HO-3 policies) Mortgage company requests reinstatement of policy billed to insured (only applies to HO-3 policies) WebDocs Access If you are authorized to process reinstatements and need access to WebDocs, you must submit an E2302 IT Work Order Request. Complete instructions for reinstating the above are included in the Reinstatement Tool User Guide and Reasons and Examples Supplement document Insurance to Value Requirements New Business Open ISO 360Value TM as a separate browser, login with your User ID and start the valuation. Enter the address of the insured and accurate data about the home into the ISO 360Value TM tool to calculate the replacement cost estimate. Make sure to enter data for all the "required" questions in the tool (*Questions with asterisk under Primary Information in the tool*) After the Replacement Cost is calculated and you proceed to print the report, you will see a dialogue box asking if you would like to print the detailed report rather than the summary report. Click "No." Both the reports are compliant with the new regulations. However, we recommend providing the Summary Report. State regulations require you to provide a copy of the valuation report to the customer when binding a policy. Both the reports are compliant with the new regulations. However, we recommend providing the Summary Report. If the transaction is being done face-to-face, you must provide the report to the customer immediately. If binding over the phone, you must mail, or fax a copy of the report to the customer within 3 business days of communicating the estimate. If an copy is being sent to the insured a hard copy MUST also be mailed to them within 3 business days. State regulations also require proof that the report was provided to the customer. To satisfy this requirement, after you calculate the valuation, you must make a note under Attachments->Notes in the ISO 360Value TM tool (See picture below), confirming that you provided the valuation to the customer and the date and method you used. Examples: "handed copy to Revised: 10/01/16

145 customer on 7/1/2011"; "mailed copy to customer on 7/1/2011"; "faxed copy to customer 7/1/2011." Package must also be sent to Fastlane for Imaging Mid-Term /Renewal Open ISO 360Value TM as a separate browser, login with your User ID and start the valuation. Edit the most recent version of the property record. Make the necessary updates to home's features and re-calculate the dwelling's replacement cost estimate. Follow steps from "New Business" above to print report and to make "notes" in the system. Renewal Business policies undergoing the Cov. A correction process in Oklahoma City must also have the ISO 360Value TM Summary Report included in the revised renewal offer Contact Centers/District Service Units If you are in the DSU/Servicing team, make sure that the ISO 360Value TM Summary Report is part of the NB/RB/Mid Term policy package that is sent to the to the DSU Admin. The DSU Admin will send the package to the Fastlane team for imaging Quotes You are not required to provide the customer with a copy of the report on quotes. Once the customer binds, however, you must provide a copy per instructions above Prior Claims Rating Factors Persistency and Prior Claims Points Years Insured Number of Prior Claims Points Revised: 10/01/16

146 with AAA NCNU Years Insured with AAA NCNU Number of Prior Claims Points Years Insured with AAA NCNU Number of Prior Claims Points Years Insured with AAA NCNU Number of Prior Claims Points Revised: 10/01/16

147 Experience Rating Experience claim points apply to renewal policies for closed claims made on the AAA NCNU policy and that occurred within the three-year period ending 55 days prior to the renewal date. For policies that have been in effect for the following years, the subsequent discount is applied under the Experience rating factor: 3 years with no claims point, up to 2% discount is applied. 4 years with no claims point, up to 5% discount is applied. 5 years with no claims point, up to 8% discount is applied. 6 or more years with no claims point, up to 10% discount is applied. Experience Rating Factors (Persistency and Experience Claims Points) Years Insured with AAA NCNU Claims Points Revised: 10/01/16

148 Years Insured with AAA NCNU Claims Points Years Insured with AAA NCNU Claims Points Revised: 10/01/16

149 16.12 HO 40 Other Structures-Rented To Others HO 40 Other Structures-Rented To Others Locate imaged copies of any Form A's in Fastlane. The structure number, description of the structure and limit of liability will be found on the Form A. When changing or deleting structure(s), verify the correct structure number(s) and description(s) on the imaged copies of the Form A to make sure the change is being made to the correct structure. Note: A complete description of the structure must be listed in remarks. This should be as detailed as possible such as the type of structure, square footage, siding, etc. Keying Endorsement into System: Add the endorsement M/End (Multiple Endorsement Indicator) is "1" Struc. No. (Structure Number) will be "1" for the first structure Struc. No. (Structure Number) will be "2" for the second structure Struc. No. (Structure Number) will be "3" for the third structure. (When keying, the structure number will be pre-filled by the system beginning with "1".) Chg/Del Ind will be blank Sec II Terr. -Fill in appropriate territory code. Number Families is "1" for a single family structure Number Families is "2" for a two family structure Total limit of liability is the calculated replacement cost of the structure Change the endorsement M/End (Multiple Endorsement Indicator) is "1" Struc. No. (Structure Number) Locate appropriate structure number on previous Form A's in Document Retrieval. Can be 1, 2 or 3. Chg/Del Ind will be the same as Struc. No. Sec II Terr. - Fill in appropriate territory code Number Families is "1" for a single family structure Number Families is "2" for a two family structure Total limit of liability is the calculated replacement cost of the structure Delete the endorsement M/End (Multiple Endorsement Indicator) is "1" Struc. No. (Structure Number) Locate appropriate structure number on previous Form A's in Document Retrieval. Can be 1, 2, or 3. Chg/Del Ind will be the same as Struc. No. Sec II Terr, number of families and total limit of liability will be blank. The premium is developed from the following tables: Coverage F limits are $1,000 each person and $25,000 per accident Premium/$1,000 HO-40 Other Structures Rented to Others Protection Class Rate Coverage E Amount 1 Family 2 Family 1 8 $ $ 100,000 $13 $ , , , ,000, Revised: 10/01/16

150 16.13 HO 41 Additional Insured or Additional Interest - Designated Premises Keying Endorsement into System Add the endorsement M/END (Multiple Endorsement Indicator) is "1" for the first HO 41 endorsement. M/END (Multiple Endorsement Indicator) is "2" for the second HO 41 endorsement. Enter NAME(s) of Additional Insureds, not exceeding 35 positions. Change the endorsement M/END (Multiple Endorsement Indicator) must be "1" or "2". Enter NAME(s) of Additional Insureds, not exceeding 35 positions. Delete the endorsement M/END (Multiple Endorsement Indicator) must be "1" or "2". NAME field must be blank HO 48 Other Structures - Not Rented How to determine limit of liability Replacement cost can be calculated using ISO 360Value TM. If used, attach a print out of the ISO 360Value TM regular valuation report or detailed valuation report to the Form A and send to records to be imaged. Note: The Form A must be sent to records to be imaged even if the ISO tool is not used. Inflation Factor does not apply at renewal. Advise insured coverage should be reviewed annually to determine if the replacement cost is sufficient How to determine what structures are endorsed on the policy Locate imaged copies of any Form A's in Fastlane. The structure number, description of the structure and limit of liability will be found on the Form A. When changing or deleting structure(s), verify the correct structure number(s) and description(s) on the imaged copies of the Form A to make sure the change is being made to the correct structure. Note: A complete description of the structure must be listed in remarks. This should be as detailed as possible such as the type of structure, square footage, siding, etc Keying Endorsement into System Add the endorsement M/End (Multiple Endorsement Indicator) is "1" Struc. No. (Structure Number) will be "1" for the first structure Struc. No. (Structure Number) will be "2" for the second structure Struc. No. (Structure Number) will be "3" for the third structure. (When keying, the structure number will be pre-filled by the system beginning with "1".) Chg/Del Ind will be blank Total limit of liability is the calculated replacement cost of the structure Change the endorsement M/End (Multiple Endorsement Indicator) is "1" Struc. No. (Structure Number) Locate appropriate structure number on previous Form A's in Document Retrieval. Can be 1, 2 or 3. Chg/Del Ind will be the same as Struc. No. Total limit of liability is the calculated replacement cost of the structure Delete the endorsement M/End (Multiple Endorsement Indicator) is "1" Struc. No. (Structure Number) Locate appropriate structure number on previous Form A's in Document Retrieval. Can be 1, 2, or 3. Chg/Del Ind will be the same as Struc. No. Premium: When an additional amount of insurance is written on a specific other structure, the premiums listed below per $1,000 of insurance shall apply separately to each structure. Use Protection Class applicable to Coverage A Dwelling. HO-48 Other Structures Not Rented Revised: 10/01/16

151 Protection Class Rate 1 8 $ $ HO 51 Building Additions and Alterations (Form 4 Only) HO 51 Building Additions and Alterations (Form 4 Only) Use the premium for each additional $1,000 found in the following chart Revised: 10/01/16

152 C/O I Construction/Occupancy Group I Apartment units 1 4 family dwellings of any construction and any apartment unit in a fire resistive building. C/O II Construction/Occupancy Group II Apartment units in all other buildings HO 192 Condominium or Townhouse Units - Owner Steps to calculate 100% replacement value Open ISO 360Value TM as a separate browser, login with your User ID and start the valuation. Enter the address of the insured and accurate data about the home into the ISO 360Value TM tool to calculate the replacement cost estimate. OR Edit the most recent version of the property record. Make the necessary updates to home's features, re-calculate the dwelling's replacement cost estimate and move to step 4. Make sure to enter data for all the "required" questions in the tool (*Questions with asterisk under Primary Information in the tool*) After the Replacement Cost is calculated and you proceed to print the report, you will see a dialogue box asking if you would like to print the detailed report rather than the summary report. Click "No." Both the reports are compliant with the new regulations. However, we recommend providing the Summary Report. State regulations require you to provide a copy of the valuation report to the customer when binding a policy. Both the reports are compliant with the new regulations. However, we recommend providing the Summary Report. If the transaction is being done face-to-face, you must provide the report to the customer immediately. If binding over the phone, you must mail, or fax a copy of the report to the customer within 3 business days of communicating the estimate. If an copy is being sent to the insured a hard copy MUST also be mailed to them within 3 business days. State regulations also require proof that the report was provided to the customer. To satisfy this requirement, after you calculate the valuation, you must make a note under Attachments->Notes in the ISO 360Value TM tool (See picture below), confirming that you provided the valuation to the customer and the date and method you used. Examples: "handed copy to customer on 7/1/2011"; "mailed copy to customer on 7/1/2011"; "faxed copy to customer 7/1/2011." Revised: 10/01/16

153 Inflation Factor does not apply at renewal. Advise the insured coverage should be reviewed annually to determine if the replacement cost is sufficient. Note: Package must also be sent to Fastlane for Imaging Change the endorsement Select appropriate Add/Change Indicator Enter amount required for total limit of liability for building property coverage Delete the endorsement Select Delete Indicator Use the premium for each additional $1,000 found in the following chart Revised: 10/01/16

154 Revised: 10/01/16

155 Revised: 10/01/16

156 C/O I Construction/Occupancy Group I Apartment units 1 4 family dwellings of any construction and any apartment unit in a fire resistive building. C/O II Construction/Occupancy Group II Apartment units in all other buildings HO 61 (HW 04 61) Scheduled Personal Property (OTHER THAN BOATS) Requirements To schedule any items not specifically listed in the manual, please submit unbound Form B to your Underwriter for review. To obtain Underwriting approval the following steps are required: Form B must be unbound (no signatures and no effective date). Indicate "For Approval" and the reason. Provide ALL details. Note: Please refer to our insuring agreements for additional exclusions and special conditions Process The Scheduled Personal Property Form B (HO-61) must be fully completed. Sales tax should not be included in the value of the item(s) A complete description of the item must be entered onto the remarks section of the Form B. Signature is not required; however, the "Important Notice" on the Form B must be explained to the insured. Provide a copy of the Form B to the insured. o If an appraisal is required a sales receipt or the stated value from the Insured's previous or current homeowner insurance carrier can be provided in place of an appraisal. Attach a copy of the appraisal, sales receipt, or the stated value to the HO-61. Review the appraisal or sales receipt to determine if the item is owned by the policyholder. Exception: Engagement rings. Send the HO-61 and required appraisal, sales receipt, or stated value from the insured's previous or current HO carrier to Fastlane for imaging Revised: 10/01/16

157 To key the HO-61 endorsement in HDES Key 1 = Delete ENTIRE Endorsement, 2 = Change (ADD/REMOVE INDIVIDUAL ITEMS) Endorsement or 3 = Add Endorsement in the "HO-61" DELETE/CHANGE/ADD ENDORSEMENT field. Key in the M/END (Multiple Endorsement Indicator): 1, 2, or 3. Key Total No. of Classes: 1 or 5. Key a 1, 2 or 3 in the "Class" /CHANGE/ADD ENDORSEMENT field and proceed to enter the fields completed on the form. Fields will be completed based on the /CHANGE/ADD ENDORSEMENT code selected All classes except Boats Key in number of items LP is set to "0" but can be changed to "1" if there is a Loss Payee for the scheduled item. Key CHG/DEL if present: 0, 1, 2, 3 or may be blank. Key the limits of liability Premium The premiums listed below for each class, including blanket coverage, are per $100 and per $1,000 of insurance. This pricing table applies to HO-3 only. Please note that pricing may vary by policy type. Refer to the quoting system for rates. Class Per $100 Per $1,000 Cameras $1.65 $16.50 Coins $1.72 $17.20 Fine Arts Rated by PC Rated by PC Protection Classes 1-8 $0.40 $4.00 Protection Classes 9-10 $0.70 $7.00 Furs $0.70 $7.00 Golfer s Equipment $1.48 $14.80 Jewelry $1.69 $16.90 Musical Instruments $0.65 $6.50 Silverware $0.50 $5.00 Stamps $0.98 $ Boat Description Boat Type The boat types are as follows: Inboard: The motor is inside of the hull of the boat. The drive shaft goes through the hull on the bottom of the boat. Outboard: The motor is usually detachable and is mounted on the stern of the boat (row boats are considered outboard). In/Out Board: The motor is inside the hull but the outdrive is outside the hull bolted to the transom. A jet ski is considered to be an In/Out Board Sailboat: A boat propelled partly or wholly by sail Other: Canoes, Kayaks and rafts under 26 feet o Canoe: A light, open, slender boat that has pointed ends and is propelled by paddles o Kayak: A light, slender boat that has pointed ends with a single or double opening in the center and is propelled by a double-bladed paddle. o Raft: An inflatable craft that floats or drifts on water or propelled by oars Revised: 10/01/16

158 Inboard - A boat in which the engine is inside the hull at the center of the boat and the propeller is underneath the boat. Outboard - A boat in which the engine is outside the hull at the back of the boat Revised: 10/01/16

159 Inboard/outboard - A boat in which the engine is inside the hull at the back of the boat. With an inboard/outboard engine the propeller is at the rear the boat. Sailboat - A small boat propelled partially or wholly by sail Revised: 10/01/16

160 Raft - A flat structure, typically made of planks, logs, barrels, or inflatable craft that floats or drifts on water. Canoe - A light, open, slender boat that has pointed ends and is propelled by paddles Revised: 10/01/16

161 Kayak - A light, slender boat that has pointed ends with a single or double opening in the center and is propelled by a double-bladed paddle. Rowboat - A small boat propelled by oars Hull Type The hull types are as follows: Tri-Hull or Cathedral Hull: Two or more hulls attached closely together. V Bottom or Vee Hull: Designed to operate at high speeds and to cut through rough water. Flat Bottom: Typically small open boat. Catamaran or Tunnel Hull: Essentially two deep V hulls joined by a platform. Pontoon Hall: Flat bottomed boat with floats used to support the structure on water Revised: 10/01/16

162 A hull is the body of a boat. It is a central concept in floating vessels as it provides the buoyancy that keeps the vessel from sinking. Tri-Hull or Cathedral hull - Cathedral or multi-hulls, are two or more hulls attached closely together. This combination of hulls allows for much more stability than what is found in other hull forms. The air pocket that is formed between the hulls may also provide lift, helping the boat get on plane more easily and increasing efficiency. V-Bottom or Vee Hull - "V-hulls" are designed to operate at high speeds and to "cut" through rough water, which provides a smoother ride than flat-bottomed or round hull boats. V-hulls are not as efficient as flat or round bottomed boats, and need larger engines to move at similar speeds. The vast majority of the boats sold today have a variety of the v-hull. Flat Bottom - Flat bottom boats are typically small open boats such as john-boats. Flat bottomed boats can easily get "on plane" or ride on top of the water at high speeds. Flat bottom boats are typically intended for use on calm waters such as ponds, small lakes, and slow rivers because they do not handle well in choppy or rough water, especially at planing speeds. Flat bottomed boats are not very stable, caution should be used when moving about Revised: 10/01/16

163 Catamaran or Tunnel Hulls - When you see a catamaran, you are looking at a tunnel hull. Hulls are essentially two deep v-hulls joined by a platform/cockpit area. Tunnel hulls are gaining in popularity, as they offer many of the benefits of other hull designs, such as stability, speed, and roominess with few of the drawbacks. Can operate in virtually any seas, and tends to ride better than mono-hull boats. Pontoon Hull - Flat-bottomed boat or the floats used to support a structure on water. It may be simply constructed from closed cylinders such as pipes or barrels or fabricated as boxes from metal or concrete. These may be used to support a simple platform, creating a raft. A raft supporting a house-like structure is one form of houseboat. The basic design is usually implemented as a simple catamaran or, with three rows of floats, a trimaran Boat Age Age of boat shall be determined by using the model year as year "one". Boat age is automatically advanced 1 year at renewal of the Homeowners policy. For example, if a 3-year-old boat is added to a policy mid-term, the age will become 4 at renewal Boat Class - Outboard Motorboats Only From the classification chart classify the boat and motor according to the length of the boat and horsepower of the motor. To determine the classification for boats without a motor, boats using two motors, or insuring a motor only, use the following process below: When a boat is insured without a motor, assume a motor of 22 horsepower. When a motor is insured without a boat, assume a boat length of 13 feet. When two motors are used (at the same time) on one boat, compute the horsepower by taking 100% of the horsepower of the largest motor and 50% of the horsepower of the second motor. When two or more boats used interchangeably with one motor, the highest rated combination shall be used for rating all items insured Revised: 10/01/16