A. - C. Course of Construction... 6 II. Coverage... 8 IV.1. Additional Living Expense... 8 IV.1.3. Contents... 8 IV.1.2. Dwelling... 8 IV.1.1.

Limited Earthquake Index Page Section No. A. - C. Course of Construction... 6 II. Coverage... 8 IV.1. Additional Living Expense... 8 IV.1.3. Contents... 8 IV.1.2. Dwelling... 8 IV.1.1. D. Deductible... 9 IV.1.B. E. - F. Earthquake Rating Assignment Table... 13 IV.3. G. - H. Glossary... 7 III. I. - K. Information... 3 I. L. Limited Earthquake Rating Method... 11 IV.2. Loss Assessment Coverage... 9 IV.1.D. M. - O. Minimum Premium... 11 IV.1.3. P. - Z. Premium for Base Deductible... 10 IV.1.E. Revised - January, 2011 Montana Page 1

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I. Earthquake Information Faults and Earthquakes The United States is undermined by several major fault systems, each of which have the potential of causing catastrophic earthquakes. New faults are discovered regularly. It s believed that the 1994 Northridge Earthquake produced the highest set of ground motions ever recorded in a major urban area. Peak accelerations reached or exceeded twice the force of gravity. This earthquake made seismographers aware of the existence of` more fault lines in the metropolitan Los Angeles area than previously known. Proximity of a quake s epicenter to populated areas is one key to the amount of insured loss. However, depending on soil composition and other geologic factors, it is possible that the effects of a tremor may be felt even more intensely miles away from the epicenter. State Exposure to Quake Predicting Quakes Measuring Intensity According to the Federal Emergency Management Association (FEMA), 39 states are exposed to earthquake activity. While every state in the union has suffered some degree of earthquake damage, most of this century s seismic activity has occurred in the west. The Pacific Northwest and California experience considerable activity, with California reporting tremors nearly every day in some part of the state. Seismologists continue to study earthquakes and develop theories that provide a better understanding of why they occur and what the high risk areas are. Unfortunately, these theories cannot predict when the ground will shake, leaving accurate prediction of the next one a mystery. There are two widely used methods for describing an earthquake s intensity. The Richter Magnitudes Scale gauges the amount of seismic energy released by an earthquake. A Richter measurement of 3.5 is equivalent to the amount of energy released by detonating 1,000 pounds of TNT. Following is a summary of the scale and the likely result of such an earthquake: Richter Magnitudes Earthquake Characteristics Less than 3.5 Can be measured, but usually not felt by humans 3.5 to 5.4 Some minor damage, frequently felt by humans 5.5 to 6.0 Minor damage to buildings 6.1 to 6.9 Significant damage possible 7.0 to 7.9 Serious damage possible; major earthquake 8 or more Complete destruction of communities possible Source: University of Nevada-Reno, Seismology Lab MMI Scale The Modified Mercalli Intensity Scale (MMI Scale) is used to assess the effects of an earthquake at different locations. The MMI Scale ranges from I (earth movement is not felt by humans) to XII (total destruction). Higher intensities usually occur closer to the epicenter, although not necessarily. In the 1989 Loma Prieta earthquake, also known as the World Series quake, the intensity was stronger in San Francisco Bay (up to IX) than in the area immediately surrounding its epicenter in the Santa Cruz Mountains (primarily VIII). New - January, 2007 Montana Page 3

I. Earthquake Information (Cont d) Is there any coverage under the Standard Dwelling Fire policy? What are Unigard s Guidelines for Earthquake Coverage? The basic dwelling fire contracts exclude earthquake coverage on the dwelling structure. Some companies provide earthquake coverage on contents when written under an all-risk form. Because of the potential exposure for loss, Unigard chose to totally segregate earthquake from all other perils, although there is limited coverage in our Silver and Gold programs for Personal Property away from the residence premises. To obtain earthquake coverage, a separate earthquake endorsement must be added and the appropriate premium charged. We believe that privately provided earthquake insurance should be available for all policyholders except those with a significantly greater than normal exposure. The following represent severe earthquake hazards that are not contemplated by the rates. As such, dwellings fitting these criteria are not acceptable for coverage in Unigard: Solid brick, stone, or concrete dwellings. Frame residences are relatively flexible and therefore give way during earth movement, often sustaining relatively minor damage. Masonry construction is rigid and subject to structural failure during earthquake. Brick or stone veneer and tile roofs often sustain earthquake damage. Frame homes with masonry veneer are eligible, however, the masonry veneer is excluded from earthquake coverage. Dwellings on a slope of more than 20 degrees Most of the damage in the 1964 Alaska earthquake was caused by soil failure, including landslide. The greater the degree of slope, the more prone it is to landslide, especially if the slope is steepened by erosion or excavation. With accelerations exceeding the force of gravity, homes built on slopes become increasingly vulnerable to earthquake damage. Water heaters that have not been strapped and/or braced A water heater that is not strapped or anchored to the wall can topple during an earthquake. If gas or electrical lines are broken in the process, fire and/or water damage can occur. Revised January, 2011 Montana Page 4

I. Earthquake Information (Cont d) Homes that are not bolted to the foundation Bolting the foundation sill plate to the concrete foundation and bracing the cripple walls between the foundation and first floor help prevent the dwelling from being shaken off its foundation. During a sizable quake like the 1994 6.7 Northridge tremor, a home could actually slide off the foundation and experience partial collapse. It's a frightening prospect, and it happens too often for anyone to be complacent. During the 1989 7.1 Loma Prieta earthquake in Northern California, over 23,000 homes were damaged or completely destroyed. After an extensive study, the State Legislature found and declared that "lack of anchorage and cripple-wall failure were the avoidable causes." In other words, not one bolted home suffered from sliding or collapse. Dwellings built on posts, piers or stilts Previous earthquakes have demonstrated that posts, piers and stilts are generally unable to outlast the violent shaking of a quake. Collapse is common. Homes built on land fill or unstable soils, including alluvial soils and those subject to liquefaction Deep, loose soils tend to amplify and prolong the shaking. Soil subject to liquefaction may temporarily lose its ability to sustain the weight of the house. Dwellings with previous earthquake damage and/or homes with severe cracks in the foundation, dwelling or chimney Earthquake damage is cumulative. A structure which appears to have survived an earthquake may have been weakened by internal damage to the walls. One with known earthquake damage is especially susceptible due to the uncertainty that all damage was actually recognized and corrected. To Obtain Earthquake Coverage on a qualified risk: What are Unigard s Earthquake Guidelines AFTER the ground shakes? Prior to offering earthquake coverage, a questionnaire signed by the insured and two photos showing front and rear angles of the home must be reviewed by underwriting. Agents do not have binding authority on earthquake risks. The easiest time in the world to sell earthquake coverage is right after the ground shakes. Unfortunately, with many earthquakes, once isn t enough. A single earthquake is often followed by multiple aftershocks, many of which are earthquakes in their own right. To allow time for the ground to settle, there is a 30 day waiting period during which no coverage may be added to a dwelling within a 100 mile radius of the epicenter if a quake measures 5.0 or more on the Richter Scale. No coverage will be added for 72 hours within a 100 mile radius of the epicenter after an earthquake measuring less than 5.0 on the Richter Scale. In the event of a 30 day moratorium, a Producer Link Letter Bulletin, usually including a map, will be provided to all agents in the affected areas. New - January, 2007 Montana Page 5

II. Questions & Answers Can earthquake be written on the following? Course of Construction: We do not offer coverage for dwellings under Course of Construction. Revised January, 2011 Montana Page 6

III. Glossary of Common Earthquake Terms Alluvial Soil: Anchor Bolts: Cripple Walls: Earthquake Retrofitting: Epicenter: Fault: Liquefaction: Shearwall: Subduction Earthquake: Subduction : Thrust Earthquake: Clay, silt, sand, gravel or similar material deposited by running water. Made of loose particles, alluvial soils tend to compact during earthquakes, making them unstable. Steel bolts embedded in a concrete foundation that hold the framing of the building and the foundation together. A short stud wall that extends from the top of the perimeter foundation upward to carry the floor joists. The danger comes from the fact these components are in the seismic load path and are often inadequately braced. They can collapse like dominos in a large earthquake. Plywood reinforcement on the inside face of the cripple-wall studs can save a house from destruction in a future quake. Strengthening existing structures to resist damage from a future earthquake. The point on the earth s surface directly above the focus of an earthquake. A weak point or fracture in the earth s crust along which displacement of the two opposing rock layers occurs. The joint is usually not exactly vertical but inclined, so that one plane of the fault overhangs the other. A condition resulting from quake vibrations that makes soil lose its cohesion and behave temporarily as a liquid. On slopes as slight as 3, loss from liquefaction can occur as large masses of soil flow down the slope. Soil may also lose its bearing strength, causing houses to sink and lighter buried structures (such as oil tanks) to rise to the surface. Structural element made up of plywood, a specific nailing schedule, metal connectors and wood framing which resists the sideways force of the earthquake. A thrust type earthquake caused by slippage between converging plates in a subduction zone (see below). Such earthquakes usually occur on the shallow part of the boundary and can exceed magnitude 8. The region between converging plates, one of which dives beneath the other. The Cascadia Subduction in the Pacific Northwest is an example. (Also called a subduction quake.) An earthquake resulting from the sudden movement of the leading edge of one plate descending (subducting) beneath another plate. The 1994 Northridge quake is an example. Thrust quakes are far more damaging than strike-slip quakes. New - January, 2007 Montana Page 7

IV. Limited Earthquake Coverages Dwelling Fire Rule 1. Limited Earthquake Coverage A. Coverages 1. Dwelling The dwelling coverage limit will always be the same as the Coverage A limit for the dwelling. Dwelling coverage does not include: 2. Contents outbuildings appurtenant structures swimming pools masonry fences and walls not necessary for the structural integrity of the dwelling walkways and patios not necessary for regular ingress or egress from the dwelling awnings or other patio covers decorative or artistic features including plaster if other covering would be more cost-effective landscaping masonry chimneys. The policy does cover replacement of a damaged masonry chimney with a nonmasonry, earthquake resistant chimney. The contents limit will always be the same as the Coverage C limit for Personal Property. Contents coverage does not include coverage for glassware, china, porcelain, or ceramic items, artwork or other decorative items. 3. Additional Living Expense The limit is $5,000 to cover expenses while the dwelling remains uninhabitable because of physical loss or damage by earthquake. Attach Limited Coverage for Earthquake - Dwelling Fire All Forms 154441 4. Earthquake coverage is available on Forms DP 00 02 or DP 00 03, for frame and masonry veneer dwellings. Masonry veneer is excluded from coverage. Solid brick, stone or concrete dwellings are not eligible for earthquake coverage. Revised January, 2011 Montana Page 8

Rule 1. Limited Earthquake Coverage (Cont'd) B. Deductible - All Programs The base deductible is 10% of the limit for each coverage and is subject to a $500 minimum. This deductible may be increased for a premium credit. Coverage A and Coverage C The deductible applies separately to loss under Coverage A - Dwelling and Coverage C - Personal Property. Additional Living Expenses No deductible applies to Additional Living Expense. C. Premium for Higher The premium for higher deductibles is determined by applying the Deductibles applicable credit to the Base Deductible premium. Dwelling Fire Deductible Credit Credits Deductible Percentage Frame and Superior Masonry 15% 11% 5% 20% 22% 11% 25% 33% 16% D. Loss Assessment - Coverage for loss assessment resulting from loss by earthquake is not Earthquake available. (Property Coverage Only) Revised January, 2011 Montana Page 9

Rule 1. Limited Earthquake Coverage (Cont'd) E. Premium for Base The premiums are for each $1,000 of insurance. Deductible - All Programs 1. Dwelling Fire Table A - Coverage A - Dwellings, and Unit Owners Building Items Frame* Masonry* Superior 2 $1.18 $8.85 $2.31 3 0.75 5.22 1.42 4 0.35 1.99 0.63 5 0.21 0.69 0.32 * If exterior Masonry Veneer is covered, rate as Masonry; if not covered, rate as Frame. Table B - Coverage C - Personal Property Frame* Masonry* Superior 2 $1.18 $5.14 $1.18 3 0.75 3.15 0.75 4 0.35 1.38 0.35 5 0.21 0.69 0.21 * If exterior Masonry Veneer is covered, rate as Masonry; if not covered, rate as Frame. Table C - Coverage E - Additional Living Expense The premiums are for $5,000 limit of coverage. This coverage can only be written in conjunction with Coverage A. Frame* Masonry* Superior 2 $15 $25 $15 3 20 30 18 4 25 35 20 5 30 40 25 * If exterior Masonry Veneer is covered, rate as Masonry; if not covered, rate as Frame. New January, 2007 Montana Page 10

Rule 1. Limited Earthquake Coverage (Cont'd) 2. Minimum Premium Rule - Dwelling Fire a. If Coverage A is purchased, the minimum premium will be $60. b. If the policy does not have Coverage A, the minimum premium will be $40. Rule 2. Limited Earthquake Rating Method The premium for Limited Earthquake Coverage will be developed as follows: Dwelling Fire - All Forms a. Find the earthquake rating zone based on the for the location of the condominium. b. Determine if Dwelling Fire Earthquake Rate Tables A, and/or B applies, find the rate based on the earthquake rating zone, and the construction of the dwelling. This is rate per $1,000 of Coverage A and/or Coverage C. c. Multiply the appropriate rate by the amounts of insurance for: (1) Coverage A or Improvements, Alterations and Additions - Increased Limits. (2) Coverage C. d. Determine the flat charge by zone from Dwelling Fire Earthquake Rate Table C for Coverage E - Additional Living Expense. This is the flat charge for $5,000 limit for Coverage E. e. If a deductible greater than the Earthquake base deductible is written, apply the applicable credit to the Base Deductible premium. Revised January, 2011 Montana Page 11

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Rule 3. Earthquake Rating Assignment Tables The State of Montana is divided into six earthquake rating zones, based on the ZIP Code of the property insured. Please refer to the following pages for the corresponding Earthquake Rating. As ZIP Code boundaries are changed by the United States Postal Service (USPS), a new ZIP Code may be created. This new ZIP Code may not yet be listed. If this is the case, use the rating territory that corresponds to the ZIP Code that formerly applied to the risk. Definitions: P.O. Box: A mail box located in a United States Post Office. R.P.O.: A Residential Post Office box located in a building and used by the residents or businesses of that building. New January, 2007 Montana Page 13

Rule 3. Earthquake Rating Assignment Tables 59001... 5 59002... 2 59003... 5 59004... 5 59006... 2 59007... 5 59008... 5 59010... 5 59011... 5 59012... 5 59013... 5 59014... 5 59015... 2 59016... 2 59018... 2 59019... 5 59020... 2 59022... 2 59024... 2 59025... 2 59026... 5 59027... 2 59028... 5 59029... 5 59030... 2 59031... 2 59032... 5 59033... 5 59034... 2 59035... 2 59036... 5 59037... 2 59038... 5 59039... 5 59041... 5 59043... 5 59044... 2 59046... 5 59047... 2 59050... 2 59052... 5 59053... 2 59054... 5 59055... 5 59057... 5 59058... 5 59059... 5 59061... 5 59062... 5 59063... 5 59064... 2 59065... 2 59066... 2 59067... 5 59068... 5 59069... 5 59070... 5 59071... 5 59072... 5 59073... 5 59074... 5 59075... 2 59076... 5 59077... 5 59078... 5 59079... 2 59081... 2 59082... 2 59083... 5 59084... 5 59085... 5 59086... 2 59087... 5 59088... 2 59089... 2 59101... 2 59102... 2 59103... 2 59104... 2 59105... 2 59106... 2 59107... 2 59108... 2 59201... 5 59211... 5 59212... 5 59213... 5 59214... 5 59215... 5 59217... 5 59218... 5 59219... 5 59221... 5 59222... 5 59223... 5 59225... 5 59226... 5 59230... 5 59231... 5 59240... 5 59241... 5 59242... 5 59243... 5 59244... 5 59245... 5 59247... 5 59248... 5 59250... 5 59252... 5 59253... 5 59254... 5 59255... 5 59256... 5 59257... 5 59258... 5 59259... 5 59260... 5 59261... 5 59262... 5 59263... 5 Note: Refer to an atlas or map for places not listed. New January, 2007 Montana Page 14

Rule 3. Earthquake Rating Assignment Tables (Cont d) 59270... 5 59273... 5 59274... 5 59275... 5 59276... 5 59301... 5 59311... 5 59312... 5 59313... 5 59314... 5 59315... 5 59316... 5 59317... 5 59318... 5 59319... 5 59322... 5 59323... 5 59324... 5 59326... 5 59327... 5 59330... 5 59332... 5 59333... 5 59336... 5 59337... 5 59338... 5 59339... 5 59341... 5 59343... 5 59344... 5 59345... 5 59347... 5 59349... 5 59351... 5 59353... 5 59354... 5 59401... 4 59402... 4 59403... 4 59404... 4 59405... 4 59406... 4 59410... 2 59411... 4 59412... 4 59414... 4 59416... 4 59417... 4 59418... 5 59419... 5 59420... 5 59421... 4 59422... 5 59424... 5 59425... 4 59427... 4 59430... 5 59432... 4 59433... 5 59434... 4 59435... 5 59436... 5 59440... 5 59441... 5 59442... 5 59443... 4 59444... 5 59445... 5 59446... 5 59447... 5 59448... 4 59450... 5 59451... 5 59452... 5 59453... 5 59454... 5 59456... 4 59457... 5 59460... 5 59461... 5 59462... 5 59463... 4 59464... 5 59465... 4 59466... 5 59467... 5 59468... 5 59469... 5 59471... 5 59472... 4 59473... 4 59474... 5 59477... 4 59479... 5 59480... 4 59482... 5 59483... 4 59484... 5 59485... 4 59486... 4 59487... 4 59489... 5 59501... 5 59520... 5 59521... 5 59522... 5 59523... 5 59524... 5 59525... 5 59526... 5 59527... 5 59528... 5 59529... 5 59530... 5 59531... 5 59532... 5 59535... 5 59537... 5 59538... 5 59540... 5 Note: Refer to an atlas or map for places not listed. New January, 2007 Montana Page 15

Rule 3. Earthquake Rating Assignment Tables (Cont'd) 59542... 5 59544... 5 59545... 5 59546... 5 59547... 5 59601... 2 59602... 2 59604... 2 59620... 2 59624... 2 59625... 2 59626... 2 59631... 2 59632... 2 59633... 2 59634... 2 59635... 2 59636... 2 59638... 2 59639... 2 59640... 2 59641... 2 59642... 2 59643... 2 59644... 2 59645... 2 59647... 2 59648... 2 59701... 2 59702... 2 59703... 2 59710... 2 59711... 2 59713... 2 59714... 2 59715... 2 59716... 2 59717... 2 59718... 2 59719... 2 59720... 2 59721... 2 59722... 2 59724... 2 59725... 2 59727... 2 59728... 2 59729... 2 59730... 2 59731... 2 59732... 2 59733... 2 59735... 2 59736... 2 59739... 2 59740... 2 59741... 2 59743... 2 59745... 2 59746... 2 59747... 2 59748... 2 59749... 2 59750... 2 59751... 2 59752... 2 59754... 2 59755... 2 59756... 2 59758... 2 59759... 2 59760... 2 59761... 2 59762... 2 59771... 2 59772... 2 59773... 2 59801... 4 59802... 4 59803... 4 59804... 4 59806... 4 59807... 4 59808... 4 59812... 4 59820... 5 59821... 3 59823... 4 59824... 3 59825... 4 59826... 4 59827... 3 59828... 3 59829... 3 59830... 5 59831... 4 59832... 3 59833... 3 59834... 4 59835... 3 59836... 3 59837... 3 59840... 3 59841... 3 59842... 5 59843... 2 59844... 4 59845... 4 59846... 4 59847... 4 59848... 4 59851... 4 59853... 4 59854... 2 59855... 3 59856... 4 59858... 3 59859... 4 59860... 3 59863... 3 Note: Refer to an atlas or map for places not listed. New January, 2007 Montana Page 16

Rule 3. Earthquake Rating Assignment Tables (Cont'd) 59864... 3 59865... 3 59866... 5 59867... 5 59868... 4 59936... 2 59937... 2 59870... 3 59871... 3 59872... 5 59873... 4 59874... 4 59875... 3 59901... 2 59902... 2 59903... 2 59904... 2 59910... 3 59911... 2 59912... 2 59913... 2 59914... 3 59915... 3 59916... 2 59917... 4 59918... 4 59919... 2 59920... 2 59921... 2 59922... 2 59923... 4 59925... 2 59926... 2 59927... 2 59928... 2 59929... 3 59930... 4 59931... 3 59932... 2 59933... 4 59934... 4 59935... 4 Note: Refer to an atlas or map for places not listed. New January, 2007 Montana Page 17

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