ALLEGANY CO-OP INSURANCE COMPANY BUSINESSOWNERS POLICY UNDERWRITING GUIDELINES

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1 ALLEGANY CO-OP INSURANCE COMPANY BUSINESSOWNERS POLICY UNDERWRITING GUIDELINES Binding Authority of Agents Businesses that have been reviewed by agents of Allegany Coop and that do not fall under the list of either Unacceptable Exposures or that fall under the list of Exposures Requiring Prior Underwriting Approval may have coverage bound for the following maximum limits. Any limits exceeding these maximums must be submitted to the company on a Prior Company Approval basis. Replacement Cost Coverage (*) Building - Up to $500,000. Business Property Rate Group 1-3 Up to $350,000. Rate Group 4 Up to $175,000. General Liability Up to $1,000,000. Medical Payments Up to $5,000./$25,000. Actual Cash Value Coverage Building Up to $300,000. Business Property Up to $100,000. Liability / Medical Payments Same as for Replacement Cost *Note: Total Property Values including Business Income not to exceed $750,000. Businesses Requiring Prior Company Approval Before Binding Coverage- the following situations require underwriting review before binding coverage so that disputes with regard to pricing or coverage acceptability can be avoided. Without prior company approval the following may not be bound. 1. Businesses or prospective insured having been cancelled or nonrenewed by another company or by Allegany Coop during the past 5 years. 2. Businesses where there has been a lapse in coverage for any period of time. 3. Businesses that are or will be unoccupied for extended periods exceeding 3 months. 4. Businesses that are currently for sale and are actively listed by the insured or by real estate agents. 5. Businesses where the insured is known to have poor financial management- prior history of bankruptcy or poor premium payment history. 6. Businesses where the insured has less than 3 years experience Eligible Classes See attached manual pages. For multiple occupancy buildings All occupancies must fall within the eligible classes for Businessowners Policies. ED. 11/01/2004 1

2 Unacceptable Exposures Vacant / Unoccupied or partially vacant or unoccupied buildings. ACORD Policy Applications Allegany Coop exclusively uses the ACORD application format for all business owner submissions. The use of the Acord format is an industry standard that will prepare the way for the day when we will be able to accept application transactions on line. We require a fully completed ACORD application that is signed both by the prospective insured and by the licensed agent. A clear photograph of all structures to be insured should be included. We will be unable to process or bind coverage where the application is unsigned or the information is not complete. Incomplete applications received without full information will be returned as unbound coverage. The eligibility rules and the classification section permit a wide range of exposures to be rated under Allegany Co-op s Businessowners program. It is important to remember, however, that risk selection is critical for success under this easy rate commercial program. The following underwriting guidelines are to be used to gauge the quality of each insured operation or property when the initial eligibility qualifications have been met. PHYSICAL RISK FACTORS Under the Businesssowners Program there is property to insure whether it is buildings, contents of buildings or both. In addition to rating the policy using construction, occupancy hazards, and public and private protection present, the company is interested in insuring property located in or which is average or better than average structures. The following checklist is a good place to begin when selecting clients for the Businessowners program. Buildings-Structural Integrity-Here in Upstate New York there are many buildings that are over 50 years of age. For these older structures, or for that matter, even newer structures it is necessary to determine the structural integrity. Clues such as loose bricks, blocks or siding, deteriorated roof coverings or sagging roof structures, deteriorated foundations, missing or boarded up doors and windows, and evidence of prior fire or water damage should be carefully noted. For buildings having obvious structural problems it is best not to submit them since Allegany Co-op continues to inspect all commercial building property. If you are in doubt about a particular building or structural defect please do not hesitate to call the underwriter to discuss the matter before binding coverage. Buildings-Condition of Mechanical Service- The condition and proper maintenance of the mechanical services is the next area to consider. As the building is considered the age of the plumbing, heating and electrical systems should be noted. Consideration also should be given to the ongoing service and maintenance of these systems. The basement or the utility area where these services are located will yield considerable information about the condition of ED. 11/01/2004 2

3 those services. Clues that indicate electrical problems are the evidence of blown and discarded fuses, open breaker boxes, open junction boxes and temporary wiring. Plumbing problems also may be evident if there are leaking pipes, poor quality solder joints and evidence of unprofessional repairs, water staining around plumbing fixtures, or simply old rusted plumbing pipes which are liable to break from age and rust. Heating systems will show evidence of maintenance by observing the housekeeping, currency of boiler certificates, or evidence that filters have and are changed on a regular basis. Housekeeping-Commercial Ventures generally need to maintain an appearance of prosperity and success. Where there is obvious lack of attention to the appearance of the premises one should exercise extreme caution. One area often overlooked is the utility rooms, storage areas and trash disposal areas. Many apparently successful ventures have insurance exposures due to the accumulation of trash and debris, lack of organization for stock storage, and build up of combustibles in basements and utility rooms. Checking these non-public areas is a good place to offer value to current prospective clients in assisting them in managing their risks. COMMERCIAL VENTURES-FINANCIAL CONDITION Businesses that are under financial distress are a problem for insurance companies. The potential for fraudulent claims not only dramatically increases when a business is experiencing financial difficulty, but other risk exposures also begin to develop due to delayed maintenance, taking shortcuts in safety in order to save expenses, or simple tiredness and lack of attentiveness as business problems increase. The following checklist is offered in order to assess the financial condition of any prospective insured business being considered for the Businessowners Program. 1. Is the business a new venture? Newly formed businesses that are undercapitalized have a high degree of failure. Newly formed businesses that are requiring insurance need to be investigated as to the experience of the owners in operating similar ventures and the extent of capitalization to ensure that they can survive the inevitable difficult first year. 2. Lack of good maintenance or housekeeping is not only an indication of problems with the physical risk, but they can be indications of financial difficulties that makes the maintenance and appearance of the business a low priority. 3. Previous cancellation or non-renewal of insurance for non-payment of premium is also an indicator of financial distress. When you are being offered an account that has a history of slow payment or non-payment of premium it is wise to investigate further into the financial stability of the business. ED. 11/01/2004 3

4 4. Businesses that are up for sale or which have a minimal amount of stock as compared to businesses of like operations can also be an indication of financial problems. LIABILITY CONCERNS Observing and assisting insured clients in managing their liability exposures can avoid some significant losses. Sidewalks and entry areas that are kept clear of snow and ice, that are maintained in smooth and safe condition are a must when seeking to prevent liability claims. If there is a parking area for which the insured client or prospect is responsible a thorough look around for potholes, loose gravel or stones or any areas where water collects and that can turn into an icy area need to be addressed. Inside the premises watch for torn carpeting, slippery floors, cluttered aisles and stock that is piled high above head level as potential liability problem areas. The public should be kept away from stock storage and work areas and from utility rooms or basement areas through the use of warning signs and self-closing doors. The attention agents and underwriters give to protecting clients from undue risk can set them apart by creating value beyond the price of product. SUMMARY All of these items that create superior risk selection can be addressed by observation of the business. Interview of the insured client or prospective client helps you to determine the client s attitude toward safety and risk management issues. Setting the stage for safety is the way in which value is created in the insurance buying process. Both client retention and sales success can be directly linked to a thorough handling of the risk factors present in commercial ventures. ED. 11/01/2004 4

5 BUSINESSOWNERS POLICY PROGRAM Rule No. 1. ELIGIBILITY: The Businessowners Policy Program contains rules, classifications, rates and premiums for writing property, liability and other coverage s to: A. OWNERS Building (s) and Business Property APARTMENT Building (s) 1) Not over 6 stories in height 2) Containing 5 to 60 units 3) Does not have mercantile occupancy exceeding 15% of total building area. OFFICE Building (s) 1) Primarily used for office purposes 2) Not over 3 stories in height 3) Does not exceed 10,000 square feet per floor 4) Does not have mercantile occupancy exceeding 15% of total building area SERVICE Building (s) 1) Primarily used for service businesses shown in the Classification list 2) Not over 3 stories in height 3) Does not exceed 10,000 square feet per floor MERCANTILE Building (s) 1) Principal occupancy is buying and selling of merchandise 2) Does not exceed 10,000 square feet per floor 3) Not over 3 stories in height CHURCHES- Building (s) 1) Principal occupancy is for religious purposes 2) Does not exceed 10,000 square feet per floor MOTELS Buildings 1) Principal occupancy is for temporary residence 2) Maximum 2 story building with no restaurant operations 3) No more than 50 units SELF STORAGE UNITS Building 1) Principal occupancy is for storage. 2) Does not exceed 10,000 square feet per floor ED. 11/01/2004 1

6 B. TENANTS OFFICES Does not occupy more than 10,000 square feet in any one building. SERVICE Does not occupy more than 10,000 square feet in any one building. MERCANTILE 1) Principal business is buying and selling of merchandise 2) Does not exceed 10,000 square feet in any one building 2. POLICY COVERAGE: Policy coverage is shown for both the Standard and Deluxe Policies. Standard Policy Deluxe Policy Building Named Peril All Risk Replacement Cost Replacement Cost or Actual Cash Value or Actual Cash Value Business Property Named Peril All Risk Replacement Cost Replacement Cost or Actual Cash Value or Actual Cash Value MANDATORY COVERAGES: Property Additional Expense $1,000. $1,000. Loss of Income Actual up to Actual up to 12 months 12 months LIABILITY Fire Legal $100,000. $100, ED. 11/01/2004 2

7 OPTIONAL COVERAGES Standard Policy Deluxe Policy STANDARD POLICY AND MANDATORY COVERAGES DELUXE POLICY Accounts Receivable $500. $1,500. Building Inflation Protection Included Included 3% per year 3% per year Employee Dishonesty $500. $1,500. Exterior Signs Optional $1,000. Standard Policy Deluxe Policy Money & Securities $500. $1,500. Personal Injury Optional Included Business General Liability Optional Included Seasonal Variation Optional 25% of Business Property Limit for 90 day period (must be shown on supplemental declaration) Sprinkler Leakage Optional 50% of Business Property limit Valuable Papers & Records $500. $1,500. While Away From Optional 15% of Business Property Insured Premise up to $5,000. ED. 11/01/2004 3

8 OPTIONAL COVERAGE Standard Policy Deluxe Policy Businessowners Burglary Optional Optional and Robbery Storekeepers Burglary Optional Optional and Robbery Tenants Improvements Optional Optional and Betterments Outside Grade Floor Optional Optional Building Glass Non Owned Automobile Optional Optional Druggist Liability Not Available Not Available Morticians Liability Optional Optional Barber & Beauty Shop Optional Optional Liability Clergyperson Protective Optional Optional Liability Business General Liability Optional Optional (Extra Coverage) Business Premises Limitation Optional Optional Products Automatic Automatic Coverage provided in rate can be deleted by rate credit MINIMUM LIMIT OF INSURANCE Property None None Liability $100,000 OL&T $300,000 CGL Medical Payments $500/$10,000. $1,000/$25,000. ED. 11/01/2004 4

9 4. GENERAL RULES: 4-a CANCELLATION If insurance is cancelled or reduced at the request of the company or the insured, the earned premium shall be computed on a pro-rata basis. 4-b CONTRIBUTING INSURANCE Coverage may be divided between two or more companies using the rates, rules, forms and endorsements of this manual. 4-c COINSURANCE- The rates in the rate pages contemplate an 80% Co-insurance percentage for Buildings and Business Property. Optional Coinsurance percentages of 50% and 0% are available for an additional premium charge. Prior Underwriting approval is required to use lower Co-insurance options. 4-d MAXIMUM & MINIMUM CHARGES No additional premium shall be charged and no return premium shall be allowed when such additional or return premium is less than $5.00. Standard Annual Minimum Premium $ Deluxe Annual Minimum Premium $ Minimum retained premium $ Minimum premium applies per location and includes mandatory coverages. 4-e RATE REVISION The revised rates shall apply to all policies, endorsements and binders having inception dates on and subsequent to the effective date of revisions, except that renewals of policies having inception dates within 45 days after the date of announcement, may be written at the rates prevailing immediately prior to announcement of revisions. 4-f RESTRICTION OF INDIVIDUAL POLICY If a policy would not be issued because of unusual exposures, the applicant may request a restriction of the policy at no reduction in the premium. The request, bearing the signature of the applicant, shall be referred to the company. ED. 11/01/2004 5

10 4-h WHOLE DOLLAR PREMIUM 5. RATING: The premium for each exposure shall be rounded to the nearest whole dollar, separately for each coverage provided by the policy. A premium involving 50 cents or over shall be rounded to the next higher whole dollar. All premiums in this manual are ANNUAL per $100 of insurance unless otherwise specified. 1. Determine the construction, protection and rate group of the risk to obtain composite rate. Multiply rate by amount of insurance of Building and Business Property to obtain composite premium. 2. Apply deductible credits. 3. Add or deduct to amount in (2) for optional property coverages. 4. Add premiums for optional liability coverages. 5. Apply Scheduled Rating Plan (if applicable) CONSTRUCTION Fire Construction Classifications shall be determined according to the following definitions: 5-a FRAME- Buildings where the exterior walls are wood or other combustible materials, including construction where combustible materials are combined with other materials (such as brick veneer, stone veneer, wood iron-clad, stucco on wood). One third or exterior walls are of frame or combustible material. 5-b MASONRY Buildings where the exterior walls are constructed of masonry materials such as adobe, brick, concrete, gypsum, block, hollow concrete block, stone, tile or similar materials, and where the floors and roof are combustible (disregarding floors resting directly on the ground). Less than one third of exterior walls are of frame or combustible construction. 5-c FIRE RESISTIVE Buildings where the exterior walls, floors, and roof are constructed of masonry or fire resistive materials having a fire resistance rating of not less than two hours. All exterior walls, ceilings and roofs are of noncombustible construction. Note: Metal buildings with metal or frame supports shall be classified as frame. OWNER-OCCUPIED means a building owned and occupied by the insured. The owner must occupy 25% or more of the building to use the owner occupied rates. ED. 11/01/2004 6

11 PROTECTION 5-d HIGHLY PROTECTED Building is located within 1000 feet of an approved fire hydrant and within 5 road miles of a responding fire department and is included in the Highly Protected Community Classification List. 5-e PROTECTED Building is located within 1000 feet of an approved fire hydrant and is within 5 road miles of a responding fire department. 5-f SEMI-PROTECTED Building is located within 5 road miles of a responding fire department. 5-g UNPROTECTED All other. 5- HIGHLY PROTECTED COMMUNITY CLASSIFICATION Highly protected rates shall be used for buildings that are located within 1000 feet of an approved fire hydrant, within 5 road miles of a responding fire department and located in one of the communities listed on the URB Classification List. See Company provided URB listing for a complete list of these communities. ED. 11/01/2004 7

12 BUSINESS CLASSIFICATION SECTION OPTIONAL CRIME RATE RATE BUSINESS PROPERTY CLASSIFICATION GROUP GROUP Apartments (5 units and up) SEE RATE PAGES Automobile Accessory Store, No automobile repair work, tire recapping or vulcanizing performed 2 2 Bagel Shop, with cooking 4 1 Bagel Shop, with NO cooking 2 1 Bakeries, with baking and selling on premises 2 1 Bakeries, selling only (no baking) on premises 1 1 Barber and Beauty Supplies 2 1 Barber Shop (LS-76 & 76A exclusions apply) 1 1 Beauty Shop (LS-76 & 76A exclusions apply) 1 1 Beverage Store, selling beer and wine 2 3 Beverage Store, selling no alcoholic beverages 1 1 Bicycle Shop 2 1 Book and Magazine Store 1 2 Camera and Photographic Supply Store 2 2 Candy, Nut and Confectionery Store, with cooking on premise 4 1 Candy, Nut and Confectionery Store, with NO cooking on premises1 1 Card and Stationery Store 1 1 Carpet Store, with less than 25% of total receipts derived from installation charges 2 2 Churches SEE RATE PAGES Clothing Store 4 3 Confectionery, Candy and Nut Store, with cooking on premises 4 1 Confectionery, Candy and Nut Store, with NO cooking on premises1 1 Convenient Store/Deli, no gas pumps owned by insured 2 2 Craft Store 1 1 Curtain & Draper Store, with less than 25% of the total receipts derived from installation charges 1 2 Department Store with more than $500,000 annual sales 4 3 Department Store with less than $500,000 annual sales 1 3 Drapery & Curtain Store with less than 25% of the total receipts derived from installation charges 1 2 Drug Store with cooking on premises 4 3 Drug Store with NO cooking on premises 2 2 Fabric Store 1 2 Fish, Meat & Poultry Store 1 2 Floor Covering Store incl. Carpet with less than 25% of total receipts derived from installation charges 2 2 Florist 1 1 Furniture Store 2 2 Game, Toy and Hobby Store 1 1 Garden and Lawn Store 2 1 General Store 2 2 Gift, Novelty and Souvenir Store 2 1 Glass, Paint and Wallpaper Store 1 1 Groceries, less than $500,000 annual sales 3 2 ED. 11/01/2004 8

13 Hardware Store 2 2 Health Food Store 1 2 Hobby, Toy and Game Store 1 1 Household Appliance Store, with less than 25% of total receipts derived from off-premises repair & service operations 2 2 Ice Cream Store, NO cooking on premises 1 1 Jewelry Store 2 2 Kitchen Accessories Store 2 2 Lawn and Garden Supply Store 2 1 Leather Goods Store 1 3 Libraries USE APT CLASS RATE Liquor Store 2 3 Lodges USE APT CLASS RATE Magazine and Book Store 1 2 Meat, Fish and Poultry Store 1 2 Monument Store 2 2 Motel, No restaurant, 2 story or less, maximum 50 unitsuse CLASS RATE Music, Tape and Record Store 4 2 Novelty, Gift and Souvenir Store 2 1 Nut, Candy and Confectionery Store with cooking on premises 4 1 Nut, Candy and Confectionery Store with NO cooking on premises 1 1 Office SEE RATE PAGES Office Machine Store 2 2 Optical Goods 1 1 Paint, Glass and Wallpaper Store 1 1 Pet Store 2 1 Photographic & Camera Supply Store 2 2 Pizzeria, at least 75% take out, seating 20 or less, no habitational2 2 exposure Post Office, Lessor Risk USE APT CLASS RATE Poultry, Meat and Fish Store 1 2 Radio & TV Store with less than 25% of total receipts derived from repair & service operation 4 1 Record, Tape & Music Store 4 2 Retail, NOC 2 2 Restaurant Equipment Store 2 2 Sewing Machine Store 1 2 Self Storage Units USE CHURCH RATES Shoe Repair Store 2 2 Shoe Store 2 2 Souvenir, Gift & Novelty Store 2 1 Sporting Goods Store 4 4 Stationery & Card Store 1 2 Supermarket, more than $500,000 annual sales 4 2 Tailor Shops (Men s and Women s) 1 1 Tape, Music and Record Store 4 2 TV & Radio Store with less than 25% of total receipts derived from repair and service operations 4 3 Tobacco Store 2 3 Toy, Hobby and Game Store 1 1 Upholstery Goods Store with less than 25% of total receipts derived from work performed 1 2 ED. 11/01/2004 9

14 Vacuum Cleaner Sales & Service Store 1 2 Variety Store 4 3 Video Store 2 2 Wallpaper, Paint & Glass Store 1 1 Wholesale, NOC 1 2 OCCUPANCY CLASSIFICATION LIST OPTIONAL CRIME RATE RATE SERVICE GROUP GROUP Appliance Repair 3 2 Automatic Car Wash 3 2 Clothing Alteration, pressing & repair 4 3 Clothing rental 3 3 Coin Operated laundries & Dry Cleaners, self-service, attended 3 3 Dental Labs 2 1 Diaper Service 2 1 Drying Cleaning Plants, except rug cleaning 2 1 Electrotyping 1 2 Engraving 1 1 Funeral Directors 2 1 Industrial Launderers 2 1 Laundry & Dry Cleaning pick up stations, NO cleaning on premises3 1 Letter Service (mailing or addressing) 1 1 Linen Supply 2 1 Linotyping 1 1 Lithographing 1 1 Photocopying & Blueprinting 1 1 Photoengraving 1 1 Photo finishing Laboratories 2 2 Photographic Studios 4 2 Power Laundries (not auto) 2 1 Printing Commercial & Related Services 1 1 Radio & TV Repair 3 3 Shoe Repair 4 2 Stenographic & Duplicating, NOC 1 1 Tailors (Men s and Women s) 4 3 Tuxedo Rental 3 3 Valet Service 2 3 Watch, Clock & Jewelry Repair 3 3 ED. 11/01/

15 SPECIAL CONDITIONS % CREDIT **Smoke Detectors 2% **Fire Extinguishers 2% **Central Station Reporting Alarm (Certificate Required) 10% Fire Resistive (Masonry rates only) 20% *Sprinklered (Certificate Required) 20% Fire Resistive & Sprinklered 35% MAXIMUM AMOUNT OF CREDIT 50% NEW CONSTRUCTION CREDIT applicable only to the following requirements: 1 to 10 years 35% Credit 11 to 20 years 15% Credit 1. Buildings and/or Contents, must be insured to 90% replacement cost. 2. $1000. Deductible 3. Highly Protected or Protected property only. 4. Subject to $ Minimum premium. *Rate credit for sprinklered buildings is applied when entire building is protected by sprinkler system. Service contracts required. Baking includes operations with any of the following: bagel ovens, pizza ovens, no grill or deep fat fryers. Cooking means operations with grills and/or deep fat fryers, automatic extinguishing system required. No cooking means operations without ovens, grill or deep fat fryers. **Highest protective device credit available is 10%. ED. 11/01/

16 OPTIONAL COVERAGES DEDUCTIBLE Multiply factor by composite rate Deductible Factor $ PROPERTY ACCOUNTS RECEIVABLE $1.00 per 1,000 ADDITIONAL EXPENSE $3.00 per 1,000 of additional coverage BUILDING INFLATION PROTECTION 1% per quarter % of building premium 2% 1.5% per quarter % of building premium 3% 2.0% per quarter % of building premium 4% each additional.5% per quarter % of building premium 1.3% BOP EXTENDER Endorsement #1 (SF-513) $50.00 per location Endorsement #2 (SF-514) $90.00 per location Endorsement #3 (SF-515) $ per location BUSINESSOWNERS AGREED AMOUNT (SF-28A) Agreed amount from may be attached to the policy. Use the agreed Amount (s) in premium calculations. BUSINESSOWNERS BURGLARY & ROBBERY COVERAGE (SF-55) This form is limited to an amount not to exceed 25% of limit of liability of Coverage B Business Personal Property. Rates per $1,000 of Businessowners Burglary and Robbery Coverage. CRIME RATE GROUP (1) (2) (3) (4) Rate for 1 st $ Premium for 1 st Rate for next $10,000 Premium for $15,000 Rate for next $10,000 Premium for $25,000 Rate for all over ED. 05/01/

17 COINSURANCE OPTIONS- Co-insurance Percentage options of 50% and 0% are available where there is an obvious large discrepancy between market value and either replacement cost or actual cash value. Multiply the appropriate manual rate by a factor of 1.12 for 50% Co-insurance and by a factor of 1.20 for 0% Co-insurance. CUSTOMER GOODS (SF-132) EMPLOYEE DISHONESTY Rate customer goods using the business property composite rate $3.00 per $1000 per employee of additional coverage EXTERIOR SIGNS $2.00 per $100 LOSS OF INCOME 1% of composite building (or business property if there is no building) premium for each additional month. LOSS OF INCOME SPECIAL -2% of composite building and business LIMITATIONS (SF-312) property premium To increase limited Loss of Income amounts use form SF-312A For each Additional 10% add: Building ONLY +.5% of building composite premium. Business Property ONLY or Building and Business Property +.5% of Business Property composite premium. LOSS PAYABLE (SF-127) MONEY & SECURITIES Upstate No Charge $5.00 per $1,000 (all risk for any destruction of money security) OUTSIDE GRADE FLOOR BUILDING GLASS (SF-78) Upstate & Suburban $3.00 per linear foot (plates with burglary alarm foil, increase per linear foot rate by 20%) (Lettering or Ornamental work - $3.00 per 100) SEASONAL VARIATION To add coverage to standard charge 6% of Composite Business Property Premium and designate 90 day period. To increase number of months - (Standard Plan #1 & #2) (Deluxe Plan #2) To increase percentage of Seasonal Variation (Standard Plan #1 & #2) (Deluxe Plan #2) 1. Add coverage to Standard Plan 2. 2% of Composite Business Property Premium for each additional month 1. Add coverage to Standard Plan 2. 1% of Composite Business Property Premium for each 5% increase over ED. 11/01/

18 initial 25% SPRINKLER LEAKAGE 15% of Composite Business Property Premium. TENANTS IMPROVEMENTS AND BETTERMENTS (SF-135) The amount of insurance on Improvements & Betterments can be increased by charging the appropriate Building composite premium. VALUABLE PAPERS & RECORDS $1.00 PER $1,000 WHILE AWAY FROM INSURED PREMISES (SF-133A) 2% of composite business property premium for each additional 10% of the Coverage B limit of insurance. EARTHQUAKE (SF-398) Frame Buildings - $.40/1000 All Other Buildings - $.80/1000 COMPUTER COVERAGE (MR-61A) $12.00 per $1,000 ASSAULT & BATTERY EXCLUSION (LS-73) REFRIGERATED FOOD PRODUCTS FOOD SPOILAGE (SF-93) OFF PREMISE POWER FAILURE (SF-96) STOREKEEPERS BURGLARY & ROBBERY (SF-58A) Amount of Insurance CREDIT $10.00 per location $12.00 per $1,000 $12.00 per $1,000 Maximum Coverage, $5,000 per location See table below. Optional Crime Rate Groups 1 & 2 3 & 4 $500 $60 $71 $1,000 $93 $109 $1,500 $120 $142 $2,000 $145 $171 $3,000 $190 $223 $4,000 $230 $268 $5,000 $265 $308 MECHANICAL, ELECTRICAL, OR PRESSURE SYSTEM BREAKDOWN (SF-345) Coverage is available and is automatically added to each policy. Rates are based on Total Insured Property Values (TIV) per location. Rates are applied on a flat charge basis and are not subject to any policy discounts or surcharges. PER LOCATION TIV $ 0-100,000 $25 $ 100, ,000 $45 $ 250, ,000 $75 $ 400,001-and Up $125 RATE PER LOCATION ED. 11/01/

19 OPTIONAL LIABILITY COVERAGES ADDITIONAL INSURED - 2 ½ % of Total Premium - $10 Minimum Premium per additional Insured. BEAUTY OR BARBER SHOP LIABILITY (LS-44)- Also requires LS-76 & LS-76A Limits of Liability Beauty Parlor Barber Shop Manicurist Each Claim/Aggregate Full Time Part Time First Barber Each Add l 100,000/100, ,000/300, ,000/500, ,000,000/1,000, MINIMUM PREMIUM IS $25.00 PER YEAR BUSINESS PREMISES EXCLUSION OTHER THAN DESIGNATED PREMISES (LS-70) For use with forms LS-5 and LS-6 Credit $10 per policy CLERGYPERSON PROFESSIONAL LEGAL LIABILITY (LS-45) Limits of Liability Each Loss / Aggregate Rate per Clergyperson Minimum Premium Per Clergyperson 100,000/100, ,000/300, ,000/500, ,000,000/1,000, EMPLOYEES NON-OWNERSHIP AUTOMOBILE (LS-50) Limit of Liability Premium Each Accident 100, , , ,000, FIRE LEGAL Charge 20% of Standard Building Composite rate per $100 of coverage above $100,000. ED. 11/01/

20 MORTICIANS OR CEMETERY COVERAGE (LS-46) Limit of Liability Each Claim / Aggregate Rate per Body Minimum Premium First Over ,000/100, ,000/300, ,000/500, ,000,000/1,000, PERSONAL INJURY $15 per policy PRODUCTS (LS-42 OR LS-43) Automatic Coverage Products coverage is automatically included in the composite premium. Products coverage can be removed from policies with from LS-1 or LS-3 by applying a credit and NOT ATTACHING form LS-42 or LS-43. Products coverage can be removed from forms LS-5 or LS-6 by applying a credit and ATTACHING form LS-16B Credit to remove Products Coverage All other risk - Rate Groups 1,2,3, & 4 $15 OPTIONAL EXCLUSIONS- to be used at the Underwriters discretion. (e.d. 8/09) LS-118 (12/08) Silica Exclusion- $1.00 credit per policy This form excludes coverage for bodily injury, property damage or where applicable, personal injury or advertising injury, arising from the actual, alleged, or threatened exposure to or ingestion, inhalation, absorption or presence of silica in any form or to any harmful substance related to silica. This exclusion applies to any occurrence, notice, claim or suit arising out of or resulting from the deleterious health effects associated with silica. LS-120 (12/08) Exterior Insulation Exclusion- $1.00 credit per policy This form excludes coverage for bodily injury, property damage or where applicable, personal injury or advertising injury, arising from the design, manufacture, sale, service, construction, fabrication, preparation, installation, application, maintenance, or repair, including remodeling, correction, replacement or maintenance of exterior insulation or finish system or any similar system or part thereof, including any methodology to correct any problem with such an installed system by or for an insured. ED. 11/01/

21 BUSINESSOWNERS COMPOSITE RATES RATES PER $100 OF COVERAGE (TORT REFORM INCLUDED IN RATES) FRAME - UPSTATE & SUBURBAN REPLACEMENT COST-BUILDING & BUSINESS PROPERTY BUILDING STANDARD POLICY DELUXE POLICY HP P SP/U HP P SP/U **SERVICE OWNER OCCUPIED LESSOR-TENANT *MERCANTILE (RATING GROUP 1-3) OWNER OCCUPIED LESSOR-TENANT (RATING GROUP 4) OWNER OCCUPIED LESSOR-TENANT BUSINESS PROPERTY ***MERCANTILE ***SERVICE BUILDING & BUSINESS PROPERTY $250 DEDUCTIBLE APARTMENT OFFICE OWNER-OCC LESSOR-TEN CHURCH MOTEL SELF STORAGE * IF SOLE OCCUPANCY APPLY FACTOR OF.90 TO ABOVE RATE **IF MERCANTILE OCCUPANCY IS IN BUILDING ADD 10% TO ABOVE RATE *** IF BUILDING & BUSINESS PROPERTY ARE WRITTEN TOGETHER MULTIPLY BUSINESS PROPERTY RATE BY.85 ED. 11/01/2004

22 BUSINESSOWNERS COMPOSITE RATES RATES PER $100 OF COVERAGE (TORT REFORM INCLUDED IN RATES) FRAME - UPSTATE & SUBURBAN ACTUAL CASH VALUE-BUILDING & BUSINESS PROPERTY BUILDING STANDARD POLICY DELUXE POLICY HP P SP/U HP P SP/U **SERVICE OWNER OCCUPIED LESSOR-TENANT *MERCANTILE (RATING GROUP 1-3) OWNER OCCUPIED LESSOR-TENANT (RATING GROUP 4) OWNER OCCUPIED LESSOR-TENANT BUSINESS PROPERTY ***MERCANTILE ***SERVICE BUILDING & BUSINESS PROPERTY $250 DEDUCTIBLE APARTMENT OFFICE OWNER-OCC LESSOR-TEN CHURCH MOTEL SELF STORAGE * IF SOLE OCCUPANCY APPLY FACTOR OF.90 TO ABOVE RATE **IF MERCANTILE OCCUPANCY IS IN BUILDING ADD 10% TO ABOVE RATE *** IF BUILDING & BUSINESS PROPERTY ARE WRITTEN TOGETHER MULTIPLY BUSINESS PROPERTY RATE BY.85 ED. 11/01/2004

23 BUSINESSOWNERS COMPOSITE RATES RATES PER $100 OF COVERAGE (TORT REFORM INCLUDED IN RATES) MASONRY - UPSTATE & SUBURBAN $250 DEDUCTIBLE REPLACEMENT COST-BUILDING & BUSINESS PROPERTY BUILDING STANDARD POLICY DELUXE POLICY HP P SP/U HP P SP/U **SERVICE OWNER OCCUPIED LESSOR-TENANT *MERCANTILE (RATING GROUP 1-3) OWNER OCCUPIED LESSOR-TENANT (RATING GROUP 4) OWNER OCCUPIED LESSOR-TENANT BUSINESS PROPERTY ***MERCANTILE ***SERVICE BUILDING & BUSINESS PROPERTY APARTMENT OFFICE OWNER-OCC LESSOR-TEN CHURCH MOTEL SELF STORAGE * IF SOLE OCCUPANCY APPLY FACTOR OF.90 TO ABOVE RATE **IF MERCANTILE OCCUPANCY IS IN BUILDING ADD 10% TO ABOVE RATE *** IF BUILDING & BUSINESS PROPERTY ARE WRITTEN TOGETHER MULTIPLY BUSINESS PROPERTY RATE BY.85 ED. 11/01/2004

24 BUSINESSOWNERS COMPOSITE RATES RATES PER $100 OF COVERAGE (TORT REFORM INCLUDED IN RATES) MASONRY - UPSTATE & SUBURBAN $250 DEDUCTIBLE ACTUAL CASH VALUE-BUILDING & BUSINESS PROPERTY BUILDING STANDARD POLICY DELUXE POLICY HP P SP/U HP P SP/U **SERVICE OWNER OCCUPIED LESSOR-TENANT *MERCANTILE (RATING GROUP 1-3) OWNER OCCUPIED LESSOR-TENANT (RATING GROUP 4) OWNER OCCUPIED LESSOR-TENANT BUSINESS PROPERTY ***MERCANTILE ***SERVICE BUILDING & BUSINESS PROPERTY APARTMENT OFFICE OWNER-OCC LESSOR-TEN CHURCH MOTEL SELF STORAGE * IF SOLE OCCUPANCY APPLY FACTOR OF.90 TO ABOVE RATE **IF MERCANTILE OCCUPANCY IS IN BUILDING ADD 10% TO ABOVE RATE *** IF BUILDING & BUSINESS PROPERTY ARE WRITTEN TOGETHER MULTIPLY BUSINESS PROPERTY RATE BY.85 ED. 11/01/2004

25 LIABILITY COVERAGE (PREMIUMS INCLUDE TORT REFORM REDUCTION) LIABILITY STANDARD POLICY 100,000/200, ,000/600, ,000/1,000,000 1,000,000/2,000,000 DELUXE POLICY 300,000/600, ,000/1,000,000 1,000,000/2,000,000 PREMISES & OPERATIONS OLT BUSINESS GENERAL LIABILITY BUSINESS GENERAL LIABILITY EXTRA COV (LS-1) (LS-5) (LS-6) OLT CGL BGL-EC --- $56.00 $ $34.00 $89.00 $ $56.00 $ $ $ $ $ $ $29.00 $ $85.00 $ MEDICAL PAYMENTS PER PERSON/PER ACCIDENT 500/10, /25, /50,000 1,000/25,000 1,000/50,000 1,000/100,000 2,000/25,000 2,000/50,000 2,000/100,000 3,000/25,000 3,000/50,000 3,000/100,000 4,000/25,000 4,000/50,000 4,000/100,000 5,000/25,000 STANDARD POLICY DELUXE POLICY $ $ $ $14.00 $6.00 $18.00 $10.00 $22.00 $14.00 $26.00 $18.00 $30.00 $22.00 $34.00 $25.00 $38.00 $29.00 $46.00 $32.00 $50.00 $35.00 $54.00 $39.00 $58.00 $43.00 $62.00 $45.00 LS-59 LEAD EXCLUSION IS INCLUDED AS A MANDATORY FORM 21 ED. 11/01/2004

26 OPTIONAL COVERAGES COINSURANCE OPTIONS- 50 % Co-Insurance- Multiply applicable building or business personal property rate by a 1.12 factor. 0% Co-Insurance- Multiply applicable building or business personal property rate by a 1.20 factor. DEDUCTIBLE- Multiply factor times composite rate Deductible Factor $ $ $1, $2, $5, $10, PROPERTY ACCOUNTS RECEIVABLE $1.00 PER 1,000 ADDITIONAL EXPENSE $3.00 PER 1,000 Additional Coverage BUILDING INFLATION PROTECTION 1% per quarter 1.5% per quarter 2.0% per quarter % of building premium 2% % of building premium 3% % of building premium 4% each additional.5% per quarter % of building premium 1.3% BUSINESSOWNERS AGREED AMOUNT (SF-28A) Agreed amount form may be attached to the policy. Use the agreed amount(s) in premium calculatation BUSINESSOWNERS BURGLARY & ROBBERY COVERAGE (SF-55) This form is limited to an amount not to exceed 25% of limit of liability of Coverage B - Business Personal Property. Rates per $1,000 of Businessowners Burglary and Robbery Coverage. CRIME RATE GROUP Rate for 1st $5000 Premium for 1st 5000 Rate for next Premium for Rate for next Premium for Rate for all over ED. 05/01/