LEXINGTON INSURANCE COMPANY HO3 & DP3 UNDERWRITING GUIDELINES

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Christina Perkins
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1 LEXINGTON INSURANCE COMPANY HO3 & DP3 UNDERWRITING GUIDELINES July 2014

2 RISK CRITERIA HO3 & DP3 Minimum Limit with Wind (less than 10 miles from coastal/bay waters) - $500,000 in all Coastal Counties including Harris County. Minimum Limit with Wind (10 miles or greater from coastal/bay waters) - $300,000 in all Coastal Counties including Harris County. Minimum Limit X-Wind (regardless to distance) - $250,000 in all Coastal Counties including Harris County Minimum Limit - $250,000 in all other counties. Maximum Limit None, subject to binding authority of $5,000,000 TIV for the risk COASTAL COUNTIES Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, *Harris, Jackson, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio, Victoria, Willacy Occupancy: HO3- Primary, secondary, tenant occupied and short-term rentals acceptable. DP3- Vacant Construction Information: Frame Construction Exterior wall of wood or other combustible construction, including wood-iron clad, stucco on wood, or plaster on combustible supports. Aluminum or plastic siding over frame. Hardi-plank construction should be rated as frame. Masonry Construction Exterior walls constructed of masonry materials such as adobe, brick, concrete, gypsum block, hollow concrete block, stone, tile, or other similar materials, with floors and roof of combustible construction. Homes that are a combination of both frame and masonry construction shall be classified as frame when the exterior walls of frame construction (including gables) exceed 33 1/3% of the total wall area, otherwise class as masonry.

3 Masonry Veneer Exterior walls of combustible construction veneered with brick or stone. Log Home Kit built, milled or hand hewn log homes should be rated as log home. (EIFS) Exterior Insulation and Finish System A rigid or semi-rigid insulation board made of expanded polystyrene or other material; including the adhesive and/or mechanical fasteners used to attach the insulation board to the substrate; any reinforcing mesh that is embedded in a base coat applied to the insulation board, and any finish coat providing surface texture and color. Eligibility: HO3 policy may be issued for an owner occupied or owner rented dwelling which is used exclusively for private residential purposes and contains 1-2 families. HO3 policy may be issued for an owner occupied or owner rented dwelling which is used exclusively for private residential purposes 3 or 4 families. 3 or 4 family rentals may be written provided the following conditions are met: Owner occupancy required. Minimum AOP is $2,500 Animal liability exclusion $500,000 max liability No special coverage C Unit rented to others endorsement DP3 policy is used for Vacant homes only. Residential dwellings with incidental business on premises may be written provided the business operations are limited to the residence premises with no employees and no business related foot traffic to the home. HO3 & DP3 risks must be insured to 100% Replacement Cost calculation. Dwellings may not have prior wind damage that is unrepaired. Risks may have up to two mortgages. Mobile homes are not eligible for the Lexington Homeowners Program. Specialty homes, such as underground homes, Berm or Geodesic homes are not eligible for the Lexington Homeowners Program. Losses: Prior 3-year history required. No authority exists for any prior liability claim (including Personal Injury.) Loss authority exists up to 4 total property losses. HO 3: No loss may be greater than the lesser of $100,000 or 25% of Coverage A.

4 Liability: No authority exists for any prior liability claim (including Personal Injury.) No authority exists to bind liability coverage for Target Risks (including but not limited to: actors, professional athletes, political figures or related figures) requesting Section II coverage. Unfenced swimming pools require the attachment of Lexington s Swimming Pool Liability Exclusion. Risks with trampolines require the attachment of the Lexington s Trampoline Exclusion. All risks in Texas exclude Animal Liability. Liability may be extended to a maximum of 3 golf carts. Home day care exposures are not eligible. Liability may be extended to 2 residential locations subject to a maximum liability limit of $500,000. Property: Home day care exposures are not eligible. Homes used or titled for farming or ranch purposes with commercial exposure may be written for homes with personal liability provided that a corresponding CGL policy is in force. A copy of the current CGL policy must be kept in the underwriting file. Age of Dwelling: Requirements: Roof: Asphalt or Shingle- COMPLETE replacement required within 15 years. Slate- UPDATE within 30 years. Electrical: Heating: Plumbing: Fully upgraded within the last 35 years. Circuit breakers required. No knob and tube wiring. Fully updated within the last 35 years. Fully updated within the last 35 years. No lead. Roof Guidelines Due to the unique weather patterns found in Texas, roof coverings must be carefully underwritten. The following must be updated as indicated: Asphalt, Shingle, or other Composite type roofs - COMPLETE replacement is required over the last 15 years unless the policy is endorsed with the roof exclusion. Overlaid roofs - Overlays do not qualify as complete replacement. This type of roof will only be covered on an Actual Cash Value (ACV) basis. If the overlay is

5 more than 15 years old, the roof coverage must be excluded using the Roof Exclusion. Slate or Tile roofs - These require replacement within the last 30 years unless the policy is endorsed with the Roof Exclusion. Temporary Suspension of Binding: No coverage may be bound on any risk, nor may coverage be increased on any risk insured by any existing policy, when the following conditions exist in the underwriting territory: Hurricane Watch/Warning If there is an announcement by the U.S. Weather Bureau to the public of a Hurricane Watch or Warning, a moratorium will immediately go into effect. Endorsements: HO3 Only Special Limits Coverage C Increased Special Limits of Liability Option 1: (all categories as listed below) All States: Standard: Increase: California: Standard: Increase: Money $200 $1,000 Money: $200 $1,000 Securities: $1,500 $5,000 Securities: $1,500 $5,000 Watercraft: $1,500 $2,000 Watercraft: $1,500 $2,000 Trailers, not used with watercraft: $1,500 $3,000 Trailers, not used with watercraft: $1,500 $3,000 Jewelry, Watches, Furs, Stones: $1,500 $5,000 Jewelry, Watches, Furs, Stones: $1,500 $10,000 Firearms: $2,500 $5,000 Firearms: $2,500 $5,000 Silverware/Goldware/Pewterware: $2,500 $5,000 Silverware/Goldware/Pewterware: $2,500 $5,000 Fire Department Service Charge: N/A N/A Fire Department Service Charge: $500 $1,000 Credit Cards: N/A N/A Credit Cards: $500 $2,500 Tree Removal: N/A N/A Tree Removal: $1,000 $2,500 Option 2: (Increased Jewelry, Watches, Furs and Stones only) Standard Limit $1,500 Total Limit $5,000 Golf Cart Coverage Physical Damage Coverage: Subject to a $250 deductible. Personal Liability (same limit as Homeowners). Increased Limits on Business Property Standard Limit of $5,000 (on residence premises). Increased Total Limit

6 $10,000 $25,000 Loss Assessment Coverage HO3 $1,000 Included. Maximum limit $100,000 Personal Injury Coverage Personal Property Replacement Cost Coverage Special Computer Coverage Standard Coverage: Named Peril. Endorsement Coverage: All Risk. Coverage is included if All Risk Coverage C is purchased. Special Personal Property Coverage (All Risk Coverage C) Available for primary and secondary occupancy. Water Back up and Sump Overflow Increased Total Amount $5,000 $10,000 $25,000 Watercraft Liability Motorboat rates determined by horsepower: Horsepower Less Than 150 Greater Than 150- Refer to Underwriting Sailboat rates determined by length: Length 26 to 40 Feet Greater than 40 Feet- - Refer to Underwriting Extended Replacement Cost Provides extended Coverage A replacement of 125% or 150% Ordinance Or Law Coverage 5% additional = 15% Total Limit 15% additional = 25% Total Limit Mechanical Breakdown Coverage

7 Automatically Included Wind/Hail Deductibles are as follows: HO3 and DP3 Less than 5 miles to coast 5% 5 to 10 miles to coast 3% miles to coast 2% 25+ miles to coast 1% AOP Deductibles are as follows: 1% or $2,500 whichever is greater. Application: The application and all other required documents must be signed, obtained and uploaded at time of submission. Property Inspection Reports: Property Inspections will be ordered within hours of binding. Discrepancies In Value: Lexington requires that homes must be insured 100% to Replacement Cost POLICY PERIOD/MINIMUM PREMIUM Policy Term: 12 month policies will be issued. HO3 Minimum Premium: $1,100 - Non Coastal $1,100 - Coastal DP3 Minimum Premium: $1,000 Non Coastal $1,000 Coastal Minimum Earned Premium (MEP) HO3: MEP is 25%. DP3: 3mth- 100%, 6mth- 50% and 12mth- 25% Cancellations: Agent Commission: 12% No flat cancellations.

LEXINGTON INSURANCE COMPANY HO3 & DP3 UNDERWRITING GUIDELINES

LEXINGTON INSURANCE COMPANY HO3 & DP3 UNDERWRITING GUIDELINES June 2012 RISK CRITERIA HO3 & DP3 Minimum Limit - $500,000 in all Coastal Counties and Portion of Harris County. Minimum Limit - $150,000 in