Thank you for choosing PEMCO. We ll work hard to keep your trust and serve you for years to come. You can count on us to be there when you need us.

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2 PEMCO CONTACT INFORMATION GO-PEMCO ( ) pemco.com You may report claims 24 hours a day. Thank you for choosing PEMCO. We ll work hard to keep your trust and serve you for years to come. You can count on us to be there when you need us. We like to say PEMCO is a lot like you a little different. That s a reflection of the unique and sometimes quirky nature of people who live in the Northwest, our wonderful little corner of the country. We re proud of our Northwest roots, and proud to be your local insurance company. You re why we re here, and we want to make sure you receive world-class service every time you do business with us. We d rather be listed in a customer s personal phone book than in The Wall Street Journal. At the end of the day, it s all about delivering on our promise and doing it in a way that s fair and meets your needs. So, thanks again for choosing PEMCO. Feel free to follow us on Facebook and Twitter, and visit pemco.com to tell us how we re doing. Stan McNaughton President and CEO

3 YOUR CONTRACT STARTS HERE HOW TO READ YOUR POLICY This policy is a legal contract that must be read and applied as a whole. One portion can t be separated from another. Start with the portions before Part I. Read the statements of coverage first, then the portions after each statement. They further modify and explain the coverage. Read Conditions Parts I and II last. Key words in the Definitions appear in this contract in dark type. AGREEMENT The insurance described in this policy is issued by (PEMCO) to the insured(s) named on the Declarations as policyholder(s). We, our, and us refer to PEMCO. We ll provide you with the insurance described in this policy. In return, you ll pay for the insurance and do all the things required of you by the policy conditions. The coverages and limits you chose are shown on the Declarations of this policy. This contract, the Declarations, and any attached endorsements contain all the agreements between you and PEMCO. DEFINITIONS You and your mean the person named as an insured on the Declarations and that person s resident spouse or registered domestic partner. Accident or watercraft accident means an unexpected and unintended occurrence resulting from ownership, maintenance, or use of a Watercraft We Insure. Bodily injury means injury to the human body including sickness, disease, or death arising from the injury. Disability means a physical condition that prevents the injured covered person from performing the essential duties of his or her occupation. Dinghy means a vessel used exclusively as a tender or lifeboat to a Watercraft We Insure. Covered person means you, a family member, and any person or organization who has your permission to use your insured watercraft. Family member means any resident of your household related to you by blood, marriage, or adoption. It includes your resident foster children. Income means salary, wages, commissions, professional fees, and profits from an individually owned business or farm. Loss means accidental loss of or damage to the insured property, including theft. Motor means an outboard motor including its remote controls, electric harness, battery, and fuel tanks. Newly acquired watercraft means a watercraft, motor, or watercraft trailer that you acquire ownership of during the current policy period. Nonowned watercraft means any private-pleasure vessel, including its motors, of 40 feet in length or less that you use with the owner s permission, and is not owned by or furnished for the regular use of you or a family member Page 1 of 13

4 Personal effects means clothing, sports equipment, fishing equipment, and other personal belongings that are not part of any watercraft. Personal effects does not include animals, currency, securities, valuable papers, documents, tickets, stamps, or passports. Property damage means physical damage to or destruction of tangible property, including its loss of use. Replacement cost means the cost, at the time of loss, of a new article identical to the one damaged, destroyed, or stolen. When the identical article is no longer manufactured or is not available, replacement cost means the cost of a new article similar to the one damaged, destroyed, or stolen, and which is of comparable quality and usefulness, without deduction for depreciation. Watercraft means a private-pleasure vessel 40 feet in length or less, including its hull, superstructure, spars, sails, fittings, machinery, furnishings, dinghy, furniture, protective covers, and any other equipment normally required aboard for the operation and maintenance of the vessel. Watercraft does not include: aircraft, including parasails or hang gliders; personal effects, boat trailers, or fuel; motors; radios, telephones, and other electronic devices not permanently attached except citizen-band radios, ship-to-shore radios, radar units, and depthfinders. Watercraft package means a watercraft, its motor(s), and its trailer, as described on the Declarations. WATERCRAFT WE INSURE We insure the watercraft packages described on the Declarations. We insure newly acquired watercraft, but only if: you notify us within 30 days of acquiring the watercraft, motor(s), or trailer; and you pay any premium due; and we insure all other watercraft, motors, and watercraft trailers you own. We insure nonowned watercraft while under the control of you or a family member. PART I PHYSICAL DAMAGE PROTECTION COVERAGE A DAMAGE TO WATERCRAFT WE INSURE If you ve selected this coverage as shown by a charge on the Declarations, we ll pay for direct physical loss to Watercraft We Insure resulting from an accident or theft. We ll also pay up to $500 for direct physical loss to personal effects owned by a covered person resulting from an accident or theft, but only while the articles are aboard a Watercraft We Insure. Coverage for personal effects is subject to a separate $50 deductible. PART I EXCLUSIONS Coverage A does not apply to loss caused by or consisting of: wear and tear, marring, scratching, gradual deterioration, inherent vice, rust, corrosion, mold, wet or dry rot. a latent defect. structural failure, electrical or mechanical breakdown, or overheating. Any ensuing loss is covered unless specifically excluded Page 2 of 13

5 weathering, insects, vermin, and marine life. freezing. infidelity of any covered person s employees. infidelity of any person to whom the property is entrusted or rented. intentional or criminal acts of any covered person, if the loss that occurs: may be reasonably expected to result from such acts; or is the intended result of such acts. confiscation or seizure by a government authority. conversion or embezzlement by any person who possesses your watercraft under a bailment agreement, lease, conditional sale, purchase agreement, or other encumbrance. nuclear hazard, meaning any nuclear reaction, discharge, radiation, or radioactive contamination, whether controlled or uncontrolled or however caused, or any consequence of any of these. war or warlike acts, including insurrection, rebellion, or revolution. Coverage A does not apply to loss to property while any Watercraft We Insure is being used: in any illegal activity. by others under a lease, rental, or charter agreement. for the transportation of people or property for a fee. in a business. in any race or speed contest. The exclusion for race or speed contest does not apply when your watercraft is a sailboat or is in a predicted-log race. Necessary Repairs After a Loss PART I ADDITIONAL COVERAGES We ll pay the reasonable expenses for temporary, necessary repairs to protect covered property from immediate further loss following a loss we cover. This protection doesn t increase the amount of insurance that applies to the property being insured. COVERAGE E EMERGENCY SERVICE If you ve selected this coverage as shown by a charge on the Declarations, we ll pay for reasonable expense any covered person incurs resulting from the following emergency service to a disabled Watercraft We Insure : mechanical labor at the place of its breakdown. towing to the nearest garage, marina, service station, or other point where necessary repairs can be made. towing if it is stranded or aground. cost to deliver fuel, oil, or battery. We ll pay up to the Emergency Service coverage limit shown on the Declarations. No deductible applies to this coverage. Recovery If a Watercraft We Insure sinks or is stranded due to a covered loss, we ll pay the reasonable recovery expense you incur, up to an additional 20% of the amount we agree to pay under Loss Settlement Options for the lost or damaged property in need of recovery Page 3 of 13

6 PART I CONDITIONS Deductible We ll pay for the loss of covered property less the deductible shown on the Declarations or shown elsewhere in this policy for that coverage. A separate $100 deductible applies to a watercraft s dinghy. A separate $50 deductible applies to the watercraft s trailer. If more than one deductible under this policy applies to the same loss, only the highest applicable deductible will be applied. We won t subtract any deductible if: the accident involves direct contact with another vessel we insure. the damage to a Watercraft We Insure is a total loss. When there is a covered loss under both this policy and another policy issued to you by PEMCO, only one deductible will apply. The deductible will be the highest of all applicable deductibles. Insurable Interest and Limit of Liability We won t pay more for covered losses than the insurable interest of a covered person in the property covered. What to Do in Case of an Accident or Loss In case of a loss to covered property, you must: notify us promptly. notify the police in case of loss by theft. protect the property from further damage. make reasonable and necessary temporary repairs to protect the property from immediate further damage. keep an accurate and detailed record of repair expenses. Loss Settlement Options In the event of a covered loss, our liability will not exceed the lesser of the following: the actual cash value of the lost or damaged property; or the amount needed to repair or replace the lost or damaged property with like kind and quality. Personal effects losses are settled at replacement cost. We ll consider the lost or damaged property a total loss if the cost to repair or replace the lost or damaged property (less any salvage value) exceeds its actual cash value. We retain all rights to salvage after paying a total loss. If you ve selected Agreed Value for a particular watercraft package as shown by an Agreed Value amount listed on the Declarations, then we will pay that amount for a covered total loss to that watercraft package. We retain all salvage rights for the watercraft package after paying the Agreed Value amount. Partial losses to the watercraft package will be settled at the lesser of the repair cost, replacement cost, or Agreed Value amount. Agreed Value does not apply to newly acquired watercraft or non-owned watercraft. Recovered Property If you recover any property that we ve already paid for under this policy, you ll let us know. If we recover such property, we ll let you know Page 4 of 13

7 You can choose to keep the property or return it to us. If you keep it, you must reimburse us for the value of the recovered property. You can t abandon property to us. Right to Appraisal If we and the owner of the property don t agree on the amount of a loss within 60 days after Proof of Loss has been filed, either party may demand in writing that the loss amount be determined by an appraisal. We and the owner of the property each choose a competent appraiser. These appraisers choose a competent and impartial umpire. The appraisers separately determine the property s actual cash value and the amount of loss. If they disagree, they ll submit their differences to the umpire. An award in writing by two of the three determines the loss amount. The owner of the property pays his or her appraiser, and we pay ours. The umpire cost and all other appraisal expenses are shared equally between the owner of the property and us. No Benefit to Bailee This insurance won t benefit any person or organization who cares for or handles your property for a fee. Loss Payable Clause We ll adjust all losses with you. We ll pay you unless some other party is named in the policy or is legally entitled to payment. Legal Action No legal action may be brought against us until you or a covered person has complied with all policy conditions and provisions. The action must be started no later than one year after the date of the accident causing the loss or damage. PART II LIABILITY AND INJURY PROTECTION COVERAGE L BODILY INJURY AND PROPERTY DAMAGE TO OTHERS If you ve selected this coverage as shown by a charge on the Declarations, we ll pay the damages for bodily injury and property damage to others if you or a family member are legally liable because of an accident involving a Watercraft We Insure. Additional Benefits These benefits are in addition to our limit of liability for damages. We ll pay for the cost to investigate an accident involving a Watercraft We Insure. We ll also defend a covered person, hire a lawyer, and pay all defense costs if the covered person is sued by someone for damages because of an accident even if the accusations aren t true. Our duty to settle or defend ends when our limit of payment for this coverage has been exhausted by payment of judgments or settlements. We ll pay up to $300 for the cost of appeal bonds, bonds to release attachments (for an amount not exceeding the applicable limit of liability shown in this policy), and bail bonds required of a covered person because of an accident covered under this policy. We are not obligated to apply for or furnish such bonds. We ll pay any interest accruing after judgment is entered in any suit we defend. Our duty to pay interest ends when we offer to pay that part of the judgment that does not exceed our limit of liability for this coverage Page 5 of 13

8 We ll pay your expense for first aid to others at the scene of an accident involving a Watercraft We Insure. We ll pay up to $100 a day for loss of wages, but not other income, a covered person might have for attending hearings or a trial at our request because of a lawsuit against that covered person. Protection for Others We ll pay the damages for bodily injury and property damage to others if any other person or organization is legally liable because of an accident while using, with your permission, a Watercraft We Insure. We ll pay the damages for bodily injury and property damage to others if any other person or organization is legally liable. But we ll only pay if the bodily injury and property damage to others is caused by acts or omissions arising from an accident that involves (and occurs while) you or a covered person with your permission are using a Watercraft We Insure. The other person or organization is not protected if the accident involves a nonowned watercraft owned by, leased, chartered, or hired to that person or organization. Limit of Liability Our total liability under Coverage L Bodily Injury and Property Damage to Others for any one accident will not exceed the limit of liability shown on the Declarations. This limit is the most we ll pay for any one accident regardless of the number of covered persons, claims made, or watercraft or premiums shown on the policy, or premiums paid, or watercraft involved in an accident. COVERAGE M MEDICAL PAYMENTS If you ve selected this coverage as shown by a charge on the Declarations, we ll pay the necessary and reasonable medical expenses for a covered person s bodily injury suffered in a watercraft accident. We ll pay these expenses if the bodily injury or death is suffered while in, on, or getting onto or off of a Watercraft We Insure. But we ll only pay medical and funeral expenses incurred within three years from the date of the accident. Medical expenses are those needed and reasonable for medical, dental, hospital, professional nursing, X-ray, and ambulance services, pharmaceuticals, prescription eyeglasses, and prosthetic devices. We ll pay the above expenses if you or a family member are struck by any vessel and sustain bodily injury. If a covered person dies as a result of the accident, we ll pay a maximum of $3,000 for funeral expenses. This is not an additional amount of insurance. Limit of Liability The limit of liability for Coverage M -- Medical Payments coverage shown on the Declarations for each person is the most we ll pay in Coverage M -- Medical Payments benefits and funeral expenses for each person for any one accident, regardless of the number of covered persons, claims made, or watercraft or premiums shown on the policy, or premiums paid, or watercraft involved in an accident. COVERAGE N LOSS OF INCOME If you ve selected Coverage M -- Medical Payments as shown by a charge on the Declarations, we ll also pay for income lost by any person covered for a particular watercraft accident if that person suffers disability as the direct result of bodily injury caused by that accident. The lost income period is that period beginning on the 15th day after the accident and ending 54 weeks after the accident or when the injured person no longer is disabled or dies, whichever occurs first Page 6 of 13

9 The benefit amount payable under this policy for loss of income by any one person for any one accident won t exceed 85 percent of the lost income or $200 for each week of the disability, whichever is less. The amount payable will be reduced by any amount payable or required to be provided under workers compensation or other similar disability benefits law. These benefits are the most we ll pay for any one accident regardless of the number of covered persons, claims made, or watercraft or premiums shown on the policy, or premiums paid, or watercraft involved in an accident. Income Records If we require any records relating to a claim for Loss of Income, the injured person must give us permission to obtain those records. COVERAGE U UNDERINSURED BOATER BODILY INJURY If you ve selected this coverage as shown by a charge on the Declarations, we ll pay for bodily injury damages you or a family member sustain when those damages are caused by a watercraft accident involving the operation, maintenance, or use of an underinsured watercraft as defined below. The damages must be those that you or a family member are legally entitled to recover from the owner or operator of the underinsured watercraft. This coverage also applies to any other person occupying or being towed behind a Watercraft We Insure with your permission. This coverage does not apply to punitive damages. Definition of Underinsured Watercraft Some boat owners or operators carry no insurance, while others have limits inadequate to pay damages if an accident occurs. The nature of this coverage makes a detailed definition of underinsured watercraft necessary: Underinsured watercraft is a watercraft of any type: to which no bodily injury liability insurance policy or bond applies at the time of the accident. to which a bodily injury liability policy or bond applies at the time of the accident, but the limit of the liability policy or bond is inadequate to pay the full amount a covered person is legally entitled to recover as damages. to which a bodily injury liability policy or bond applies at the time of the accident, but the insurance or bonding company is or becomes insolvent or denies coverage to its insured for that accident. a hit-and-run watercraft whose operator or owner can t be identified, and that watercraft causes an accident resulting in bodily injury to a covered person. An underinsured watercraft is not: one owned by or regularly furnished for use by you or a family member while you or any family member is using it. a watercraft or trailer to which the liability coverage of this policy applies. one located for use as a residence or premises. one being towed by or carried by a land motor vehicle. one owned or operated by a self-insurer, except a self-insurer which is or becomes insolvent. one owned by any governmental entity, including its subdivisions or agencies; or operated by an employee or agent of any governmental entity, including its subdivisions or agencies, while in the course of employment Page 7 of 13

10 Those Not Protected We don t protect anyone occupying a Watercraft We Insure while it s being used to transport persons or deliver property for compensation of any kind. We don t protect anyone occupying a watercraft you or a family member own which is not a Watercraft We Insure. We don t protect anyone occupying a watercraft furnished or available for regular use by you or a family member and operated by you or that family member which is not a Watercraft We Insure. We don t protect anyone whose claim is based on, derived from, or the result of the bodily injury or death of a person who is not a covered person for underinsured watercraft insurance benefits under this policy. We don t protect anyone eligible to receive benefits under: any workers compensation law; any disability benefits law; the Jones Act; or the federal Longshore and Harbor Workers Compensation Act. Payment of Damages Under these coverages, we may pay the covered person, his or her legal representative, or anyone else authorized by law to receive payment. The amount we owe for damages caused by the owner or operator of an underinsured watercraft will be reduced by the amount of any applicable liability policy or bond. The amount of damages also will be reduced by any other amount actually paid by or on behalf of anyone responsible for bodily injury to a covered person. When we pay damages under these coverages, the covered person must repay us out of any amounts recovered from anyone liable for his or her bodily injury. The covered person must protect our right to recover our money. But we won t exercise this right to the extent that it would reduce the covered person s full recovery of damages. At our request, the covered person must cooperate with us, and representatives of our choice, to recover the payments we ve made under these coverages. Our expenses to recover payments also must be paid to us out of any money recovered. Other Insurance If this policy and any other policy providing underinsured boater coverage applies to the same loss, the maximum limit of liability under all policies will be the highest limit of liability that applies under any one policy. If other underinsured boater coverage applies, we ll pay only our fair share of the loss. That share is our proportion of the total underinsured boater insurance that applies to the loss. But any insurance we provide when you or a covered person use a watercraft you don t own will be excess over any other collectible insurance. The phrase any other policy providing underinsured boater coverage used above includes other PEMCO policies, whether or not purchased by you, and policies issued by any other insurer. Limitation Period No person will be entitled to underinsured boater benefits under this coverage unless, within three years of the date of the accident or the covered person s 18th birthday (whichever is later), we receive notice in writing from the covered person or their representative that the covered person intends to make an underinsured boater claim against this policy Page 8 of 13

11 Limits of Coverage Our total liability under Coverage U -- Underinsured Boater Bodily Injury for any one accident will not exceed the limit of liability shown on the Declarations. This limit is the most we ll pay for any one accident regardless of the number of covered persons, claims made, or watercraft or premiums shown on the policy, or premiums paid, or watercraft involved in an accident. PART II EXCLUSIONS Coverages L, M, N and U do not apply to bodily injury or property damage: caused intentionally by or at the direction of any covered person. occurring while any Watercraft We Insure is: used in any illegal transportation or trade; used by any others under lease, rental, or charter agreement; used to transport people or property for a fee; being carried in or on a land vehicle; on a trailer attached to, or being towed by, a land vehicle; being loaded or unloaded from a land vehicle. occurring while any Watercraft We Insure is in any race or speed contest, or while used to pull skiers in any sanctioned competition, exhibition, or jumping contest. This exclusion does not apply when your watercraft is a sailboat or in a predicted-log race. arising out of a covered person s past or present business pursuits. arising out of the rendering of or failure to render professional services. caused by war or warlike acts, including insurrection, rebellion, or revolution. arising out of the use of a parasail or hang glider, or any other device designed for flight. to any person eligible to receive benefits under: any workers compensation, nonoccupational disability, or occupational disease law; or the federal Longshore and Harbor Workers Compensation Act. to property owned by a covered person. arising out of any liability a covered person assumes under any written contract or agreement. to property rented to, occupied by, used by, or in the care of a covered person. This exclusion doesn t apply to any launching ramp, dock, or watercraft storage house rented exclusively to you. What to Do in Case of an Accident PART II CONDITIONS In the event of bodily injury or property damage, a covered person or anyone making a claim under this policy must: Promptly notify us in writing stating: the covered person s name; the date, place, and circumstances of the loss; the name and address of anyone who might have a claim against a covered person; the names and addresses of any witnesses. Promptly send us any legal papers relating to the accident Page 9 of 13

12 At our request: cooperate with us and assist us in any matter concerning a claim or suit; help us enforce any right of recovery against any person or organization who may be liable to a covered person; submit to a sworn statement; attend any hearing or trial. A covered person will not voluntarily pay any money, assume any obligations, or incur any expense, other than for first aid to others at the time of the accident, as provided by this policy. Bankruptcy We aren t relieved of any obligation under this policy because of the bankruptcy or insolvency of a covered person. Legal Action No legal action may be brought against us until you or a covered person has complied with all policy conditions and provisions. UNDER COVERAGES M, N, and U What an Injured Covered Person Must Do If a covered person is injured, that person, or someone acting for that person, must: promptly give us written notice of loss. give us written authorization to obtain copies of all medical records and reports. permit doctors we select to examine the injured person as often as we may reasonably require. submit to questions under oath and sign and swear to your responses. Our Payment of Benefits Watercraft Medical Payments We may pay the injured person or the provider of the medical services. Payment under this coverage is not an admission of liability by us or a covered person. Duties After Loss or Accident What a covered person must do: PARTS I AND II CONDITIONS Prepare an inventory of lost or damaged property showing quantity, description, actual cash value, and amount of loss. Attach all bills, receipts, and related documents that support the figures in the inventory. As often as we reasonably require: show us the damaged property; provide us with records and documents we request and permit us to make copies; and submit to questions under oath and sign and swear to your responses. Send to us, within 60 days of our request, your signed, sworn Proof of Loss that sets forth, to the best of your knowledge and belief: the time and cause of loss; your interest, and all other interests, in the property involved and all liens on the property; other insurance that may apply to the loss; Page 10 of 13

13 changes in title of the property during the term of the policy; specifications of detailed repair estimates; and an inventory of lost or damaged property. Policy Period This policy is issued for the time period shown on the Declarations. It applies only to accidents, occurrences, and losses during this time period. Navigational Limits This policy applies only to accidents, occurrences, and losses within: the continental United States (excluding Alaska) and Canada and all inland lakes, rivers, and navigable waterways therein. 75 miles off the Pacific coast of either the continental United States (excluding Alaska) or Canada (including the Queen Charlotte Islands, but not more than 12 miles off their western shore). Seaworthiness Warranty You warrant that your watercraft will be kept in a safe, seaworthy, and navigable condition. Seaworthy means fit to withstand the foreseeable and expected conditions of weather, wind, waves, and the rigors of normal and foreseeable use in whatever type of waters a watercraft will be located. For a watercraft to be considered seaworthy, you must (without limitation): exercise due diligence to properly manage the watercraft; comply with all federal safety standards and provisions; and follow all customary and manufacturer-recommended maintenance guidelines. Other Insurance Primary and Excess Insurance The insurance we provide for any watercraft, motor, or watercraft trailer described on the Declarations or for any newly acquired watercraft we insure under this policy is primary. Any insurance provided by this policy for a nonowned watercraft is excess. That is, it protects you after the limit of primary insurance provided by another policy or loss-protection plan is exhausted or if there s no primary insurance or loss protection for that nonowned watercraft. Sometimes, other primary insurance is available for a Watercraft We Insure when our insurance also is primary. Or, other excess insurance is available for a Watercraft We Insure when our insurance is excess. In either case, we ll pay only our fair share of the loss. That share is our proportion of the total liability limit that applies to the loss. This definition of our fair share applies to all parts of this policy except Coverage M -- Medical Payments. Our Right to Recover Payment After we ve made any payment under this policy, we have the right to recover the payment from anyone else who might be held responsible. You and any covered person we protect must sign any papers and do whatever is necessary to enable us to exercise this right. You and any covered person we protect must not do anything that would adversely affect this right. Concealment or Fraud We don t provide coverage for anyone who, with the intent to deceive, has: intentionally concealed or misrepresented any material fact or circumstance before or after the loss or accident; or made false statements or engaged in fraudulent conduct relating to this insurance policy Page 11 of 13

14 Changes in Your Policy You automatically get the benefit of any improved policy coverage if the change doesn t require an additional premium. The only other way this policy can be changed is by our policy endorsement or amendment. Waiver or Change of Policy Provisions To be valid, a waiver of or change in a provision of this policy must be made in writing to us. Changes in Cost of Insurance If there is a newly acquired watercraft, we ll adjust the premium as of the date you acquire it. Any premium adjustment will be according to our rules and rates when the change occurs. If we learn after policy issue that a change in circumstances materially affects our risk, we ll adjust the premium for the rest of the policy period according to our rules and rates. Cancellation You may cancel this policy at any time by returning it to us or by letting us know the date the cancellation is to take effect. We may cancel this policy only for the reasons stated below by letting you know in writing of the date cancellation takes effect. This cancellation notice, together with our reason for cancellation, will be mailed to you and, if applicable, your agent or broker at the last addresses known to us or shown by our records. Proof of mailing will be sufficient proof of notice. When you have not paid the premium, we may cancel at any time by letting you know at least 10 days before the date cancellation takes effect. When this policy has been in effect for less than 60 days and is not a renewal with us, we may cancel for any reason by letting you know at least 45 days before the date cancellation takes effect. When this policy has been in effect for 60 days or more, or at any time if it is a renewal with us, we may cancel: if there has been a material misrepresentation of fact which if known to us, would have caused us not to issue the policy; or if the risk has changed substantially since the policy was issued. When this policy is written for a period of more than one year, we may cancel for any reason at anniversary by letting you know at least 45 days before the date cancellation takes effect. When this policy is canceled, the premium for the period from the date of cancellation to the expiration date will be refunded pro rata. If the return premium is not refunded with the notice of cancellation or when this policy is returned to us, we will refund it as soon as possible, but not later than: 30 days after we send a notice of cancellation to you; or 30 days after we receive the policy or a notice of cancellation from you. We will retain any refund less than $2. Except as noted below, if the policy is canceled by us, we will give the same advance notice of cancellation in writing to any mortgagee or other person shown by the policy to have an interest in a covered loss as we give to you. The cancellation notice may be delivered or mailed; if mailed, proof of mailing will be sufficient proof of notice Page 12 of 13

15 Nonrenewal We may elect not to renew this policy. We may do so by mailing written notice, including our reason for refusing to renew, to you and, if applicable, your agent or broker at the last addresses known to us or shown by our records. We ll send it at least 45 days before the policy expires. Proof of mailing will be sufficient proof of notice. If we have offered in writing, either directly or through our agent, at least 20 days before the expiration date of this policy, to renew this policy, and have included a statement of the renewal premium due, we may terminate this policy on its expiration date if you fail to pay the required premium due. For the purpose of determining the date when nonrenewal can be affected: A policy with a term of six months or less is considered as if written for a policy period of six months. A policy written for a term longer than one year or a policy with no fixed expiration date is considered as if written for a period of one year. Waiver of Small Premiums and Refunds Additional charges or a refund of less than $2 resulting from policy changes will be waived. Transfer of This Policy You can t transfer this policy to any person or organization without our written consent. But if you die, the policy will continue in force for the rest of the policy period for family members, legal representatives acting within their capacity, and anyone having proper temporary custody of your insured watercraft, motors, and watercraft trailer. Our Right to Settle We may settle any claim or suit if we believe it s proper. Your Cooperation You and any covered person agree to cooperate by giving us information that relates to your policy and any claim made against the policy, and by answering all reasonable requests for that information. We may also require you or a covered person to be examined under oath Page 13 of 13

16 MUTUAL POLICY CONDITIONS This policy is issued by a mutual insurance company, and you are a member of PEMCO Mutual Insurance Company ( PEMCO ) while this policy is in force. PEMCO s annual meeting is held at its headquarters in Seattle, Washington, on the third day in January each year at 4 p.m. If January 3 falls on a Saturday or Sunday, the meeting will take place on the next business day. The purpose of the meeting is to transact the general business of PEMCO and elect a board of directors. Members participate in earnings of PEMCO in a manner and to an extent as determined by the board of directors. This policy is nonassessable, meaning that, beyond payment of the premium for this insurance, you have no responsibility for our debts or obligations. This is not a complete and valid contract without an accompanying policy Declarations page. ENDORSEMENTS ARE AN IMPORTANT PART OF YOUR POLICY. PLEASE ATTACH THEM TO YOUR POLICY.

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