PRODUCER GUIDE. Effective: July 1, Carrier: Praetorian Insurance Company Rated A-, X. Claims Administration: LWP Claims Solutions, Inc.

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1 PRODUCER GUIDE Designed to Address the Needs of the Horticultural, Agriculture, Food Service, Healthcare, Service & Artisan Contractors and Transportation Industries. Effective: July 1, 2007 Offered and Underwritten Through: Arrowhead General Insurance Agency, Inc Northside Drive, Suite 450, San Diego, CA Tel: Fax: Carrier: Praetorian Insurance Company Rated A-, X Claims Administration: LWP Claims Solutions, Inc. Workers Compensation Claims Reporting Number:

2 General Information Arrowhead General Insurance Agency, Inc. (AGIA) has designed this program to meet the insurance needs for the Horticultural, Agricultural, Food Service, Healthcare, Service & Artisan Contractors and Transportation industries. This manual is designed to give basic information to the producer to determine risk eligibility in this program. This is not a rating or a quoting tool, but as a reference to attract the better than average risk. All completed submissions must be sent to AGIA for evaluation and pricing. Eligibility Risks must be in business with Work Comp history for a minimum of one year and must have current insurance coverage in force. New ventures will not be written. All risks over $500,000 EAP will be pre-inspected by loss control for acceptability. Applications must in our office no later than 1 month prior to the expiration date. Any risk pre-inspected and not approved by loss control will not be written. Risks over $100,000 will have post-binding inspections performed by loss control. Telephone inspections may be performed at underwriter discretion or randomly by AGIA management on any size risk. Risks over $350,000 EAP and/or risks with an average loss ratio of 55% or higher, or an experience modification in excess of 1.50 or less than.60 will have extraordinary underwriting analysis done. Audited financials or a Company generated financial statement must be included in the submissions for risks generating $350,000 EAP or greater. Risks must provide written description of any individual loss greater than $50,000, including nature of the injury, cause and current status. All loss data provided should be valued within the last ninety (90) days. Risk Management must be: 1) Stable for the past three years with no material change in operations. 2) Experienced in operation s industry. 3) Safety-conscious and compliant with any and all loss control recommendations. Exclusions The following risks do not qualify and are not to be submitted for consideration as a part of the program: USL&H, Jones Act Applicants who have filed for bankruptcy or have a poor financial history Classifications The Classification that most accurately describes the Insured s operations is to be used. In the case of multiple operations, the classification for each operation will be used. Only those governing classes listed in the Eligible Classifications section below qualify. A governing class is determined by the largest payroll amount assigned. Risks with incidental exposures from classifications not on the eligible list may be considered. Base Rates Class Code Class Code Description Effective 7/1/ Nurseries - Propagation & Cultivation

3 0016 Orchards - Fruit Poultry, Sheep Raising & Egg Production Flower Growers Dairy Farms Stock Farms Vineyards Potato Crops Cotton Farms Orchards - Nut Crops Farm Machinery Operation Strawberry & Bush Berry Crops Field Crops Market or Truck Farms Irrigation Works Operation Cotton Merchants Cotton Gin Operation Macaroni Mfg Bakeries Grain or Rice Milling Sugar Mfg. or Refining Creameries & Dairy Products Mfg Butchering Meat Products Mfg Fruit or Vegetable Evaporation or Dehydrating Olive Handling Fresh Fruit Packing Citrus Fruit Packing Dried Fruit Packing Canneries Fish Canneries Fruit Juice or Concentrate Mfg Vegetable or Fruit Processors frozen Breweries or Malt Houses Wineries Ice Mfg. or Ice Dealers Bottling Beverages Carpet, Rug or Upholstery Cleaning Welding or Cutting Millwright Work Boiler Installation Glass Merchants Ceiling Installation Suspended Acoustical Grid Masonry under $22.00 hr Masonry over $22.00 hr

4 5102 Iron, Steel, Brass, Bronze or Aluminum Erection Door or Pre-Glazed Window Installation Overhead Door Installation Instrument Professional or Scientific Repair Electrical Wiring over $26.00 hr Cabinet or Fixtures Installation Elevator Erection or Repair Plumbing under $23.00 hr Steam Pipe or Boiler Insulation Automatic Sprinkler Installation under $25.00 hr Automatic Sprinkler Installation over $25.00 hr Plumbing over $23.00 hr Electrical Wiring under $26.00 hr Office Machine Installation Vending or Coin Operated Machines Communications Cabling Concrete Work under $22.00 hr Concrete Work over $22.00 hr Concrete Pumping Concrete Construction Concrete Work Pre-cast walls Reinforcing Steel Installation Tile Installation Carpentry under $24.00 hr Carpentry over $24.00 hr Hardwood Floor Laying Lathing Wallboard Application under $24.00 hr Wallboard Application over $24.00 hr Glaziers under $24.00 hr Glaziers over $24.00 hr Painting under $22.00 hr Insulation Work Painting over $22.00 hr Plastering or Stucco Work under $23.00 hr Plastering or Stucco Work over $23.00 hr Street / Road Paving Street / Road Grading HVAC under $23.00 hr HVAC over $23.00 hr Roofing under $21.00 hr Roofing over $21.00 hr Executive Supervisors Steel Framing Residential under $24.00 hr

5 5631 Steel Framing Residential over $24.00 hr Steel Framing Commercial under $24.00 hr Steel Framing Commercial under $24.00 hr Carpentry under $24.00 hr Termite Control Work Carpentry over $24.00 hr Dam Construction Drilling Excavation under $25.00 hr Excavation over $25.00 hr Sewer Construction under $24.00 hr Sewer Construction over $24.00 hr Water Mains under $24.00 hr Water Mains over $24.00 hr Conduit Construction Irrigation Pipe Installation - Agriculture Fence Construction Confections or Food Sundries Mfg Parcel Delivery Companies Trucking Water Truck Service Companies Ambulance Services Freight Handlers Taxicab Operations Bus or Limousine Operations Beer or Ale Dealers Burglar and Security Alarm Systems Installation Cable Television Companies Stores Florists Stores Garden Supplies Stores Wholesale Fresh Vegetable Packing Hay, Grain or Feed Dealers Construction Permanent Yards Livestock Dealers Warehouses General Merchandise Warehouse Cold Storage Furniture Warehouses Alcoholic and Drug Recovery Homes Sheltered Workshops Residential Care Facilities Children Homemaker Services Nursing Homes Veterinary Hospitals

6 8834 Physicians Dentists Congregate Living Facilities for the Elderly Home Infusion Therapists Apartment Operation Seniors Janitorial Services Commercial Building Operation Mobile home Park Operation Apartment Operation Building Operation Pest Control Hospitals Child Day Care Centers Residential Care Facilities Elderly Restaurants Residential Care Facilities Developmentally Disabled Residential Cleaning Services Swimming Pool Cleaning Sewer or Tank Cleaning Garbage, Ashes or Refuse Collecting Household Appliance Installation House Furnishings Upholstering Scaffolds, Shoring, Cement Distributing Towers Advertising Companies Sign Erection or Repair Forms Policy and endorsement forms are carrier filed and approved by the California Dept. of Insurance in compliance with all insurance codes and the WCIRB. Eligible States California. Please contact your underwriter on accounts with incidental exposures in states other than California. Policy Term All policies are issued as guaranteed cost for a 12-month term. Short-term policies may be available to coincide with a Normal Anniversary Date or as an accommodation to replace business midterm. Retrospective or Deductible programs are not currently available. 5

7 New Business & Renewal Submission Requirements Complete Acord application (Include Agent and Insured signature on application) 4 years minimum of legible loss runs valued within the past 120 days Thorough description of operations Completed supplemental application (Include premium and payroll history) Experience mod worksheet (If Applicable) Narrative on any large loss exceeding $50,000 Bureau inspection report (If available) Binding of Coverage AGIA will retain full binding authority. Producers authorized to market this program do not have binding authority. The producer may request to bind coverage upon receiving a written certified quotation. No verbal representations by any employee of AGIA are valid. No backdating is permitted. The producer is responsible for collection of the down payment amount as stipulated on the quotation for new business and renewals. A copy of the deposit check or confirmation of check by fax/ must accompany the binding request. The down payment must be received within 5 business days after the date the request to bind was made or prior to the inception date of coverage if there is enough lead-time. If the down payment is not received within this timeframe, a Rescinding Bind Notice will be issued and the risk will not be re-bound without the underwriter approval. Please note that upon binding coverage all down payment checks must be made payable to Praetorian Insurance Company. NOTE: If rescinded, no contract of insurance will be recognized, as the insured is deemed unable to perform and consummate the contract. Certificates of Insurance Certificates may be issued by the producer on ACORD certificate forms only with a copy to be forwarded to AGIA for approval. Please do not strike any wording from the approved ACORD certificate form as it will be rejected. Dept. of Motor Vehicle filings will be generated by AGIA. Waiver of Subrogation Subrogation entitles an insurance company to recover the amount due an insured from a third party who caused the loss. When these rights are waived the Company gives up this opportunity. Because the right of subrogation is important, we want to protect that right, however, we recognize that there are instances where contracts require the Insured to waive their subrogation rights as a condition of the contract award. Certificates Of Insurance that include request for waiver of subrogation will need to include the following information: Length of Job, start to finish, if applicable Detailed description of work being performed Detailed description of Job Name/Job Number/Contract Number, Job Location, etc. Name and address of party requesting the Waiver Of Subrogation Class codes applicable to the job, class descriptions and applicable payroll. Be sure that payroll is consistent with the description of job, insured s operation and size of risk respectively. 6

8 All Waiver of Subrogation endorsements are subject to the following charges: Specific Waiver: 5% of the specific job premium, subject to a minimum premium of $100. If the estimated payroll for the job is provided, then 5% is applied or $100 whichever is greater. If no estimated payroll for the job is provided, the $100 minimum is charged. This is done for each waiver issued. Blanket Waiver: 2% of the standard total premium, subject to a $500 minimum per policy whichever is greater at the time the waiver is issued. Blanket Waivers requested at binding will be billed separate from the policy deposit due within 10 days. Backdating is not allowed. If back dating is to be considered then we must first obtain a No Loss Letter signed and dated by the named insured warranting that there have been no known or reported losses or occurrences that may give rise to a claim covering the period of time between the start date of the job and the date that waiver request is submitted. When a Waiver of Subrogation Endorsement is requested, the insured will be billed at the time the endorsement is processed and they will be given 10 days to pay the additional premium Rates Rates quoted and issued will be in accordance with the issuing company s rate filing. Other modifiers may apply that will deviate the company s base rate. Base rates are effective 7/1/07. Contact your underwriter for further details. Cancellations Pro Rata Cancellation: The policy is cancelled pro rata and the return or additional premium is rounded to the next higher whole dollar when cancelled for any of the following: Non-Payment of Premium Non-report of payroll, failure to permit the Insurer to audit payroll Material misrepresentation Failure to cooperate with the investigation of a claim Non-Compliance with loss control recommendations Material change in ownership and/or operations Short Rate Cancellation: The policy is cancelled short rate when cancellation is at the Insured s request. Premium Accounting All payments will be applied in the following order: 1. Past due premium on inactive policies 2. Past due fees, surcharges, taxes on inactive policies 3. Past due premium on active policies 4. Current charges *Please note that alternative payment instructions included with the check will not be honored. Experience Modifications and Normal Anniversary Rating 7

9 If the risk has an established experience modification factor, it will be applied. If the effective date of a policy is different than their normal anniversary date, Company and/or Bureau rules will apply concerning rates and the experience mod. Customer Service AGIA has dedicated Customer Service Representatives, staffed from 8:00 a.m. to 5:00 p.m. Monday through Friday. They are available to answer questions for producers and customers on a wide range of operational units including Premium Accounting, Claims, Audit and Operations, etc. To utilize this customer service option, please call our toll free number at (866)

10 FINAL AUDITS Overview Every insurance policy that cancels mid-term or expires must have a final audit conducted, reconciling actual payrolls/exposure to the estimated amounts used on the policy when incepted. The results will determine if the premium paid by the Insured over the policy period is in excess or additional pay is needed. Procedure The following guidelines determine what type of audit is to be conducted pursuant to the premium size of the account: Estimated Annual Premium (EAP) between $0 and $9,999 are subject to a mail-in voluntary audit to be completed by the Insured. EAP of $10,000 and greater will be subject to a physical audit. Final Audits for expiring policies will be requested no less than 15 days prior to expiration. Final audits for policies cancelled by request of the insured or by request of the carrier will be ordered upon the effective date of cancellation. Final audits for policies cancelled for non-payment will be ordered 30 plus 5 days after the effective date of cancellation. Final Audit Billing Final audits with additional premiums will be due in 20 days. If the final audit additional premium is not paid within 25 days, a second notice will be sent with a due date of 10 days. If the premium is not paid after the second request, a third and final notice will be sent with a due date of 10 days. Uncollectible accounts may be sent to Collections if the premium is not received by the 61 st day from the original premium due date. Final Audit Disputes When an audit is disputed by an Insured, the Premium Audit department is notified immediately. Premium Auditing will review and determine what part of the audit is being disputed, why it is being disputed, and the insured s recommendations for resolving the dispute. If the audit is being partially disputed, the undisputed portion of the audit must be paid by the insured based on the above final audit billing time frames. If the audit is disputed over the accuracy of the figures, then copies of the records should accompany the dispute notification with clear explanation. Disputes regarding classifications will need to be quantified by the insured. Disputes should include a detailed narrative outlining why they feel the classification is erroneous. Owners/Officers of Company o o All owners/officers of the insured will be considered included for coverage unless specifically excluded by the application. All owner/officer information contained on the application will be considered factual. It will be the Producer s and/or the Insured s responsibility should an error or omission regarding owners/officers be found at final audit. Inspections Loss Control inspections are the key to determining improvement and success for a risk as well as identifying hazards that may exist which may eventually lead to the declination of a risk with Cypress Point Arrowhead General Insurance Agency, Inc.. As previously mentioned in the eligibility section, the following is a guideline for submitted risks: All accounts over $350,000 in premium will have a pre-inspection conducted 9

11 Any account over $100,000 will have a post binding inspection performed Telephone inspections may be conducted at any time on any account at the discretion of AGIA. Payment Plans Policy Premium Range Installment Plan Options $0 - $2,500 Annual/Prepay $0 - $4,999 30% & 3 Installments $5,001 and Over Annual/Prepay 30% Down & 3 Quarterly Payments 15% Down & 9 Monthly Payments 15% Down & Monthly Payroll Audits 10% Down & Monthly Payroll Audits Monthly reporting is available. Contact your underwriter for a complete review of all billing plans. Sub-Contractors When the Named Insured sub-contracts work, a certificate of insurance naming the named insured as the certificate holder must be provided or payroll for the sub-contractor will be charged as an employee at final audit. Minimum Premium $350 10