There are some important topics of discussion that were not included in this comparison that are beyond choosing the right coverages:

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1 Minnesota Petroleum Marketer s Members: Herein is the 2012 Insurance Coverage Comparison. The three companies that took part in the comparison included EMC, Federated and Nationwide. The report includes property, business income loss, general liability, umbrella liability, automobile liability and physical damage, employee benefits liability, liquor liability, workers compensation, inland marine, cargo insurance, crime, employment practices liability and data privacy-security coverage comparisons. The report was developed with the approach of comparing these coverages through the eyes of a business owner/manager. Tim Gross from Curtis Oil Company out of Hermantown, Minnesota prepared this comparison. He is a trained certified managerial accountant who has spent his 16 year career as Curtis Oil s CFO dealing with insurance matters for his company. As you review this report, you will find no one insurance company has a better overall program. All three programs had strengths and shortcomings, but no single carrier stood out from the rest. This is what you would expect from carriers who have a long history of insuring companies in our petroleum industry with all three offering industry specific packages designed to meet the needs of petroleum marketers. There are some important topics of discussion that were not included in this comparison that are beyond choosing the right coverages: 1) When selecting an insurance carrier and its corresponding coverages, the most important part of the selection is choosing the right insurance agent. It is not possible we as managers can know everything about insurance (or would we want to). Choosing the right agent, who has experience working with the petroleum industry, with its unique demands, is critical. 2) Part of choosing an insurance company is discovering what other services they provide. Understand their risk management services and support, training programs, round-table peer discussions, operational materials, claims handling, adjuster involvement, safety consulting services and agent involvement after the sale. This is where the insurance company s true value is realized and where one company can rise above the rest. 3) After choosing coverages, the decision of deductible levels and self retention must be made. This is more of a discussion of deductible/retention levels vs. premium savings or increases. The correct choice is driven by the characteristics of each individual s business and their claim history. The expected premium savings must be weighed against the potential deductible/retention dollars spent with each claim. Please use this comparison as tool when choosing insurance coverages and insurance companies. Tim Gross would be happy to answer any questions about this comparison. He can be contacted at (218) ext. 122.

2 Property Protection against physical damage to buildings, contents, inventory and other personal property. Property covered or items excluded are materially the same within the three insurance companies. EMC breaks its property coverage between use types: 1) Office and bulk plants and 2) Convenience stores and car washes with unique coverages for each use. This is done to best match industry requirements along with relating the cost of insurance to type of coverage needed for that industry. Ultimately, all three have comparable coverages. Note: All three handle blanket limits, replacement, agreed amount and coinsurance differently. Key Issues: Single Location Blanket Limit Coverage: This type of blanket coverage combines buildings, contents, and inventory into one total loss limit. All three insurance companies offer single location blanket coverage. For example, you have a c store location that has a value of $600,000 in buildings (real property), fixtures, equipment, and supplies of $225,000 (contents) and fuel and merchandise (inventory) of $175,000. The total blanketed loss limits would be $1,000,000 for this location, no matter what the individual component levels were at the time of loss. This helps protect underinsuring one area of coverage. For example, fluctuations in inventory values and levels at the time of loss are not a concern if you have location blanket coverage of $1,000,000 versus the nonblanketed $175,000 inventory standalone limit. Note: Nationwide separates inventory (stock) from building and contents blanket limits. Combined Location Blanket Coverage: EMC and Federated offer blanket coverage combining all locations into one total loss limit. For example, four c store locations have a total value of $6 million. This $6 million becomes the blanket limit for any one loss. This type of blanket coverage offers the best protection for the insured. Valuation of the Insured Property and Coinsurance: Without electing an option, value of an insured property is the current replacement value of a property at the time of the loss less depreciated value which is called Actual Cash Value. This amount is usually set by the insured and reviewed by the insurance company. In this situation, many times, the insured understates the value of a property to minimize the premium dollars. When a loss occurs, the difference between the insured value and the current replacement value may be large. This lack of insured value or underinsurance leads to an action by the insurance company called coinsurance. Basically, this is an adjustment or penalty for failure to insure a property to its true value. Each insurance company sets a rate of coinsurance which may run between 80 to 100%. The higher the coinsurance rate, the higher the possible penalty. Coinsurance most affects the insured in partial property losses (see the example below.) The penalty can be quite surprising to the insured if they are not aware of the potential adjustment to the paid claim. To avoid the coinsurance penalty, Federated offers blanket coverage and agreed amount value with all properties. There is never a coinsurance penalty with Federated. Nationwide waives coinsurance if the

3 insured selects individual blanket coverage. In this case, the agreed amount is the location s blanket limit. The only danger would be the location s blanket limit not being a sufficient amount to cover the loss. EMC offers an agreed amount, but that amount is still subject to a 90 to 100% coinsurance rate. To help the insured avoid the coinsurance penalty, EMC performs an estimate of value of all newly insured properties. If the estimate of value points to the possibility of underinsurance, EMC will encourage increasing the insured value of the property. Actual Cash Value and Replacement Cost: An insured has a choice of insuring a property under Cash Value recovery or Replacement Cost coverage. As stated earlier, Actual Cash Value is the current replacement value at the time of the loss less depreciated value. For example, you have a claim that requires a new roof on a 10 year old building. The current replacement value of the roof is $40,000 and the useful life of the old roof is 20 years. In this case, the insured would get a check for $20,000 less any deductible to be used for the new roof. Current and depreciated values can be very challenging to determine between the insurance company and the insured, especially in a large loss claim. To avoid disagreements in values, replacement cost is available with all three insurance companies. Current Replacement Cost is best defined as current construction cost. It is easy to get this confused with market value. Market value is the current selling price which may differ greatly from the cost of construction. Replacement cost does not include any reduction for depreciated value. This type of coverage is best chosen by an insured when rebuilding after a loss is probable or dealing with newer construction. Replacement coverage is still governed by the overall limits set for the property. Note: replacement cost coverage does not include betterments to the property s condition at the time of the claim. For example, you have a claim involving a dispenser at one of your locations which requires replacement. The replaced dispenser is not CRINDS (pay at pump) equipped. The new dispenser has pay at pump with all the latest technologies including television advertising monitors. The upgrades to the dispenser would not be covered by the claim. With replacement coverage, coinsurance is even more probable due to the lack of forecasting the current replacement cost. An insured s best practice, when reviewing replacement limits, is to consult a construction manager, an engineer or an architect to discover current replacement costs. The best protection for a property is to have a multiple location blanket limit with no coinsurance and covered with replacement cost, although this may come with the highest premium price tag. The goal of most insured parties is to balance the correct limits, at the most realistic insured values, with the appropriate recovery method all at premium that fits with the business budget. Pollution Clean up Coverage: Under the category of property, on premises pollution clean up is covered if the cause of the claim is sudden or accidental. For example, a tornado causes a fuel release from your bulk plant. The amount of coverage offered ranges from $25,000 to $100,000 depending on the insurance carrier and the insured s needs. Coverage for pollution loading and unloading claims can be added property insurance. It is best to note here that pollution clean up coverage is excluded by all three carriers. To get coverage as mentioned above, the policy must have these additions added, or in other words, bought back into the policy.

4 It is worth to note outside of property coverage, Federated offers off premises pollution liability coverage for tanks leased or loaned to another party. This offsite coverage can have limits up to $500,000 with a $1,000,000 aggregate limit. This coverage includes clean up, defense costs and thirdparty liability claims. A retro date for coverage may apply. To recap the key points with Property Coverage: Blanket Coverage By Individual Location Yes Yes * Yes and content *Stock separate from buildings By Combined Locations Available Available Not Available Replacement Cost Available Available Available Agreed Amount Yes No Yes Blank Limit Coinsurance Rate None % Waived Blanket Limit Coinsurance adjustment calculation: Property Value: $400,000 Coinsurance Rate: 90% Insured Value: $200,000 Deductible: $2,500 Amount of Loss: $100,000 Step One: Step Two: 400,000 x 90% = $360,000 (The minimum amount of insurance needed) $200,000/360,000 =.555 (Under insured rate) Step Three: $100,000 x.555 = $55,500 Step Four: $$55,500 $2,500 = $53,000

5 Of the $100,000 claim, the Insured would have expected claim coverage of $97,500, but only $53,000 is paid by the insurance company due to the coinsurance adjustment. Business Income Loss Replacement of business gross profit along with expenses directly related to those incomes Blanket Coverage By Location/Single Policy limit Actual Loss Optional Single Policy Lim No Limit by Occurrence Limits Calculation Past Performance Agreed Amount Agreed Amount Coinsurance Requirement No Waived No w/agreed amount Waiting Period 72 hours 72 hours Waiting period varies and is negotiable Covered Period 12 Months Agreed Amount $ 12 months No time limit Monthly Limit Actual Loss Agreed Amount $ 1/3 of occurrenc No Limit No time limit Ordinary Payroll Coverage Yes Yes Yes Computer Interruption Yes Yes Yes If EDP coverage Extended Business Period 90 days 30 days 30 days Operating but not yet back to normal Key Issues: To have a business income loss, there first must be a covered property loss. If the cause of the loss is

6 not covered under property coverage, business income loss is not available. For example, a fire is a property loss which would qualify for business income loss. But if your property coverage does not cover flood damage and a flood occurs, business income loss would not be available. Another example deals with a carwash where the city turns off city water for repairs for a long period of time. This is not a property claim so business income loss would not be available. In determining the amount of a loss, there are three main components to define: 1) net income, 2) normal operating expenses which includes ordinary payroll, (ordinary payroll includes all nonupper management/officers' payroll, employee benefits, FICA payments, and workers' compensation premiums) and 3) extra expenses not normal to the daily operations. Extra expenses would be, for example, renting temporary storage space or increased freight expense hauling from a more distant bulk plant location. Limits determination differs between insurance companies. Federated offers actual loss calculation with no limits. This is the most liberal form of coverage offered by the three insurance carriers. The loss reimbursement is based on past profit and loss statements. EMC offers an optional agreed blanket amount; thus, waving the coinsurance requirement. If this option is not taken, limits are placed upon each location. This could place the insured in a situation of coinsurance requirements. The blanketed agreed amount is the best choice to avoid this issue. Nationwide offers a single blanket limit which is an agreed amount by the parties. But, this amount of coverage is limited by occurrence. If the occurrence happens to be a fire and damages are experienced in only one property, the blanket limit would cover the loss. On the other hand, a tornado damages an insured's three convenience stores. In this situation, multiple damaged properties are still only one occurrence, that being the tornado. In this case, the blanket limit many not be adequate to cover the total General Liability and Umbrella Liability General Liability Protection from claims created from negligent acts Occurrence Based Yes Yes Yes (The liability claim, no matter when the event is reported, is covered as long as the claim originated

7 within the policy period for that carrier.) Auditable Yes No Yes Mid Year Only W/C at year end Year End Umbrella Liability Additional liability protection above underlying coverage from claims created from negligent acts Retained Limits None 10,000 None (like a deductible if no primary policy coverage and no umbrella exclusion) Underlying/Primary General Liability General Liability General Liability Auto Liability Auto Liability Auto Liability Work Comp Work Comp Work Comp Liquor Liability Garage Liability Employee Benefit liability Packaged Liquor Garage Liability Employee Benefit Key Issues: All coverages are similar between the three carriers. The coverage with the least exclusions is the best. That being said, all three have similar exclusions. Also, all three carriers are willing to write umbrella liability coverage even if they do not provide the underlying general liability coverage. Although, some qualifications may be required.

8 Another measure when choosing Umbrella liability coverage is discovering which carrier offer the most underlying policy types. In other words, the more the Umbrella follows other coverages the better. For example, an auto liability claim exhausts the limits found in the auto coverage. If the auto liability is listed as underlying the Umbrella liability, coverage is triggered with the extended limits available. In this example, the umbrella liability follows the auto liability. Verification of sales, properties, and payroll are handled differently by each insurance provider. Federated completes a midyear annual audit of sales ($ and gallons), vehicle and property lists, and payroll expense. Nationwide audits the same data at renewal time. EMC only performs a work comp audit at year end. Federated and Nationwide's annual audit adds to administration time and costs relating to the effort born by the insured's staff to produce the data required for the audit. The audit results address changes to sales and payroll which immediately affect premium dollars. This can be positive if sales and payroll are down. But more likely, sales and payroll increase. These increases directly produce a billable premium lag and a larger future premium immediately. Related to the audit discussion, when dealing with additions during a policy year including new business, property and vehicles, the carriers differ somewhat. All carriers require new additions to be declared in a timely manner when acquired, but the carriers differ when premiums are adjusted. Nationwide requires any business or property with a value of $500,000 or more be declared using an ISO form with premium adjustments occurring from the date of acquisition. Any additions of less than $500,000 are covered under the current policy with no premium adjustments. For example, if an insured purchases a new tank wagon truck for $150,000, the vehicle is covered with no effect on premium. The increase would occur at renewal time. EMC requires new additions to be declared with a grace period of days with some dollar limits. Federated also requires all additions to be declared within 30 days to insure coverage with immediate premium increases.

9 Within the general liability coverage, premises medical payments is an optional coverage which is not made available by all carriers. Medical payments apply in the case of a person being injured on your property. For example, customer slip and falls at one of your locations resulting in a injury claim. EMC includes optional premises medical payment coverage. This means medical only payments are made to a person who claims injury without regard to fault or negligence up to policy limits of $5,000. This type of coverage makes immediate payment to a "good customer" with no hassle. Also, it may reduce the possibility of a small claim turning into a much larger one due to the quick payment. Little is required from the insured other than reporting the claim. Federated and Nationwide do not offer premises medical payments. Negligence must be proven before payment is made. Company adjusters are involved in every claim and negligence is measured. If frequency of injury claims is not an issue, premises medical coverage is probably beneficial. But, if your company has a frequency problem, Federated and Nationwide's case by case investigation may be the better approach. Also, it is worth noting all three carriers offer additional packages to their general liability to cater to our petroleum industry. These packages of coverage certainly add value because of their design to meet our specific, special insurance needs of our businesses. Federated names their package Petro Shield, Nationwide's is called Petro Guard and EMC is the MPMA program. All packages are similar with no material differences. One of the important additions is the option of "Scheduled Delivery" extended liability coverage. This extended coverage is used in the event that a keep fill customer is not filled timely and damages occur. Another extended coverage included in all three packages is "Misdelivery" coverage. This coverage is beneficial in the event wrong product is delivered contaminating all the product in the tank. If the misdelivery occurs off premises (at a customer's location), this coverage is part of General Liability. If the misdelivery occurs at the insured's site (on premises), the new product contaminated is covered under your Property coverage and the current inventory contaminated is covered under

10 General Liability. Finally, a customer's vehicle damaged in an operator's car wash is not covered under auto liability. This coverage is found under General Liability under all three insurance companies. loss experienced unless the limit is set higher at renewal to anticipate such a large loss. Automobile Liability & Physical Damage Protection from claims dealing with automobile accidents resulting from the ownership or use of covered vehicles. Auto Limits Per Occurrence Per Occurrence Per Occurrence No Aggregate No Aggregate No Aggregate Garage liability Available Available Available Repair Operations Garagekeepers Coverage Available Available Available Protection from claims related to damage to non owned vehicles and equipment and personal belongings related to the loss. Legal Liability or Primary Both Both Both Relating to garagekeeper coverage Hired & Non owned Liability Yes Yes Yes Employees as Insured's Yes Yes (G/L) Yes Broadened Auto Pollution Yes Yes Yes (Includes misdelivery) Fellow Employee Yes Yes Yes Key Issues: It is important to understand that auto liability limits are different from limits found in general liability coverage. Auto liability has one limit each time there is a claim. The limit is by occurrence and is inot limited by an aggregate total. If your policy is written with a $500,000 auto liability limit, you

11 can have six different auto claims each totaling $500,000 for a grand total of $3,000,000 and still be covered. All three insurance carriers offer "Garage Liability" for service stations operators along with "Garage Keepers" coverage which covers physical damage to customer cars while in the care and control of the repair shop. Also, as part of garagekeepers coverage, all three carriers offer Legal Liability or Primary coverage. Legal Liability places the coverage in second position to the vehicle owners insurance coverage. Primary coverage means the repair shop's coverage is in first position. Primary is the most popular. You can imagine the difficulty asking a customer to file a damage claim on their insurance first due to the fact their vehicle was damaged while at your shop under your care. "Hired and Non owned Liability" along with "Employees as Insured" are important components to Auto Liability. If sub contractors or hired drivers drive your vehicles or theirs for your business, "Hired Liability" coverages protect you if are brought into a liability claim caused by your contractor and their auto liability coverage is insufficient. Also, if employees drive their own vehicle for business, it is important to have "Employees as Insured" in case the employee has little or no personal coverage and the claim is brought upon the company. Most insured's choose not to cover physical damage on employee's vehicles believing this is the employee's responsibility through their own auto coverage. Note: All carriers uses a system of symbols designating certain coverages. These symbols are attached to each vehicle listed under the policy. It is important to understand these symbols and make sure the correct symbols match the coverage intended for each vehicle. "Broadened Auto Pollution" coverage is offered by all three insurance companies as extended coverage. "Broadened Auto Pollution" involves vehicle liability claims relating to spills, overturns and the resulting pollution clean up occurring off premises or non owned property. This coverage also includes pollution clean up resulting from loading and unloading claims occurring off premises. (Some insurance companies require this loading/unloading as additional coverage beyond Broadened Pollution.) It is worth to note, pollution clean up is excluded by all three insurance companies. The coverage described above must be added to the policy to be in place. In addition, all three insurance companies offer extended "Fellow Employee" coverage. "Fellow Employee" coverage is designed to protect an employee from another employee's liability claim after an auto accident involving multiple employees. An insured company will find this benenficial by reducing the possibility of a suit between employees. Note: Fellow Employee coverage may also be available under General Liability coverage. Federated and Nationwide offer pre and post employment DMV checks on employees. EMC offers only post employment checks. Standards for insurability range by the age of the employee and the number of violations within a time period. All three insurance providers have similar standards for insurability. During renewal, employee drivers are spot checked for continued good driving habits. It is good practice to have an internal HR driving policy that mirrors the driving qualifications of the insurance companies. A driver not insurable by the insurance company should also not be qualified to drive per your company's driver's policy.

12 Employee Benefits Liability Protects against claims brought from errors occurring in the area of employee benefits programs Claims Made Base Yes Yes Yes Occurrence Base Available Available Available Retro Date Option Optional Optional Optional If conditions met If conditions met If conditions met Prior and Pending Optional Optional Optional Continuation Date If conditions met If conditions met If conditions met Extended Reporting Available Available Available (Tail coverage) to 100% of premium to 100% of premium to 100% of premium Key Issues: The best way to describe this coverage is protection from a clerical error causing a loss by an employee in the area of company sponsored benefits programs. For example, you forget to issue a COBRA notice to a terminated employee or you don't offer medical benefits to a newly eligible employee. This coverage for most insurance carriers is usually found under General Liability. When a business changes insurance carriers, the timing of a claim event vs. the reported claim date is an important issue in this area of liability coverage. "Claim Based" coverage means the event and the report date must fall within the policy period for the carrier. In this situation, you would buy Extended Reporting Period" coverage so your past insurance carrier would cover the claim that occurred during their policy period but reported after policy termination. This is sometimes called Tail Coverage. Choosing the "Occurrence Based" coverage offers a broader period for reporting a claim compared to Claim Based. Under Occurrence Based, the claim is covered by the old carrier even if the date the event is reported happened after the policy ended. Also, the new carrier may agree to cover any claims reported during their policy period but occurred before the policy start date if "retro date or "prior and pending continuation date" option is chosen. For this to be made available as an option, it must be proven that Employee Benefit Liability coverage was in place with no breaks in coverage in the past. Additional coverage can be purchased that goes beyond clerical errors. This coverage includes the area of fiduciary liability of benefit programs. This coverage protects management/owners from personal responsibility when managing these benefits. These claims arises when an employee makes errors or omissions in administrating benefit plans or breaches duties in managements of ERISA

13 functions. For example, management hires a third party to administer the company's 401(k) plan and the third party fails and large losses are experienced by the plan. Due to poor third party selection or monitoring, management may be found liable. Liquor Liability Protection against liquor liability claims related to the retail package liquor sales Liability Available Available Available Packaged liquor Secondary carrier sales under G/L Sales Auditable No No No Adjusted at Renewal Adjusted at Renewal Adjusted at Renewal Key Issues: Nationwide does not write separate Liquor Liability coverage for the C Store industry. This coverage is listed under General Liability. If other liquor sales occur, other than package liquor sales, there would be no coverage. Coverage for more broadened liquor sales would have to be written under liquor store industry requirements not included in this study. EMC and Federated offer separate liquor liability coverage with its own limits. EMC's coverage is provided by a secondary carrier. Workers' Compensation (WC) Protection from claims dealing with an employee's work related injuries Employer's Liability Minimum Limits $500,000 $500,000 $500,000 (Bodily injury by accident, Bodily injury by disease limit, and Bodily injury by disease each employee) Within all the areas of business insurance, workers' compensation can have the widest premium variances between bidding insurance companies. At times, it is easy to feel that as business owners and managers, we have no control over WC premiums when it comes to the bid process. There are a few key issues to be aware of.

14 Key Issues: 1) Class Code, Classification of Operations and Base Rates It is important to understand how your employee's job duties and positions fall into the WC classifications and class codes. Getting a good understanding of this will insure proper placement of your employees and their wages into the correct class codes. Class codes are assigned a base rate which are governed by state statue. Some class codes come with high billable rates like 8353 LP Gas Dealer & Drivers with a rate of $6.44 per $100 in wages. Compare that to class code 8810 Clerical Office Employees with a rate of $.25 per $100. Place an office person in the code for LP drivers, and you will pay more in WC premiums. For example, a $30,000 per year office person would create $75 in WC premium, but if the wage was treated as an LP driver, the WC premium would be $1,932. Note: Employee placement, like most WC policies, are governed by state statue. Base rates can differ between the same class codes due to the insurance company's ability to adjust rates by their class code's historical loss ratios. These rates are subject to change. Below are some current rate examples by insurance company: ($100 wages) Class Code 8353 LP Dealer Driver C Store Retail Office Clerical Also, you can reduce your wage dollars by the amount of overtime you paid. That is, the 1/2 time additional rate paid for overtime hours can be removed from wages. By reducing overall reported wages, WC premiums are reduced. 2) Experience Modification (MOD rate) Another large factor affecting WC premiums is your Experience Modification (or MOD rate). This adjustment to the WC premium is determined by a quasi governmental entity that looks at several factors in determining your MOD rate. First, what is a MOD rate? A MOD rate is a report card showing how your company compares to like companies. A rating of 1.00 means you are average with no adjustment to your premiums. A rating of 1.2 means your WC claim experience is 20% higher than other companies like your own. Conversely, a rating of.80 means you are 20 % better than other similar companies. This rate is multiplied to your WC premium to give an adjusted premium. For example, a premium before MOD adjustment was $40,000. With a MOD rate of 1.2, the adjusted WC premium would be $48,000 ($40,000 x 1.2). Your Experience Modification is determined by several factors: 1) A three year claim history is used, not including the current year. If you have a bad claim year, after the third year it will fall off. But that means one bad year will affect MOD rates for three years. 2) Claims are treated differently. Your WC experience rating is affected by claim frequency; a lot of zero loss claims will affect your MOD rate. Claims with medical losses will affect your rating. Medical

15 losses are limited to a maximum loss of $5,000 per claim. The claim most affecting rating is the claim that includes medical losses along with lost wages. The best way to avoid or reduce the effect of this type of claim is to get an injured employee back to work as quickly as possible and accommodate work restrictions. To recap: claim frequency, medical losses, and wage losses all affect your Experience Modification. A way to improve an Experience Modification rating is to close all claims that can be closed before year end and before MOD rates are established. Open claims will have an estimated loss applied to them (reserve) which maybe higher than actual costs when closure is complete. It pays to get your claims closed in a timely manner. 3) WC Credits Review and understand WC credits available from the insurance company. These credits directly reduce the worker compensation premium. WC credits is an area where insurance companies may differ greatly due to their credit schedules and subjective attributes determined by the underwriter. Here are possible credits found within a WC proposal: Credits Available: Deductible Credit Managed Care Credit Return to Work Credit Drug Free Policy Credit Scheduled Credit Premium Discount Part of the credit differences are due to premium discount schedules and the individual rates applied to each credit definition. Other credit differences are created by attributing factors like: safety programs, safety committees, flexibility to return to work, distance to major hospitals, EMT on staff, hiring practices, job descriptions with physical requirements, claim history, etc. An insurance company cannot credit more than 40% of the premium. This being the case, expect a credit of 0% to 40% depending on the insurance company's view of attributing factors and credit schedules. Note: In most cases deductible options are not a useful tool for reducing WC premiums. The credited amount does not usually exceed the actual deductible expense that occurs during the plan year. Also, the deductible amount is not credited to the company when the mod rate is calculated. Inland Marine Protection against claims involving portable tools and equipment and a catch all for physical loss to property you own or lease while on premises or off not covered under Property coverage

16 Mobile Equipment Tools and equipment not covered under schedule property coverage. For example: hand tools bobcats, loaders, trenchers, and pressure washers that can be moved off premises. Limits Owned and Covered with max Owned and Employee Owned total $ limit Employee leased Itemized list of equipment 80% co insurance Itemized list of and tools over $1,500 applies value Valuation Agreed Value Replacement or Agreed Value No co insurance Actual Cost Max $ limit No co insurance Accounts Receivable Coverage from claims related to loss or destruction of accounts receivable records Limits Agreed Amount $25,000 $25,000 Largest limits available Larger limits available Larger limits available in market Computers Electronic Data Processing Coverage Limits Found in Petro Shield Replacement or Found in Petro Actual Cost Max $ Guard package package limits limit limits Key Issues: Inland marine acts like a catch all for property not covered under property coverage but requires insured protection. Inland marine is also useful for property that is not adequately covered under property and needs additional levels of coverage. An example of this would be an electronic sign with a value of $25,000. Under normal property coverage the maximum limit for signs may only be $10,000. In this example, the sign would have to be listed on Inland Marine to insure the total value of the asset. Federated and Nationwide require mobile equipment and tools over a certain value to be itemized and listed with an agreed value placed upon them. EMC values mobile equipment or computers either with replacement cost or actual cost with a maximum limit per policy period. Note: Some policies list Computer EDP coverage as stand alone coverage, not under Inland Marine.

17 Cargo Insurance Protection of property (inventory) transported by motor vehicle. Property Covered Own property Own property Own property Property you are Others property Others property liable for as acting as common as acting as common carrier carrier Property you are liable for Property you are liable for Consigned property Valuation Amount of invoice Amount of invoice Amount of invoice Actual Cash Value Market Value at time of delivery Key Issues: This coverage is designed to cover the inventory (property) on a truck when transporting. A claim arises when the product is lost due to for example an vehicle accident. All three coverages are similar with limits ranging from $25,000 to $50,000. Limits can be increased by extended coverage if needed. Issues may arise due to ownership of the product at the time of the claim. A problem could arise if it is proven you were not the owner of the product while acting as a common carrier. To avoid such problems, make sure your policy includes coverage while performing as a common carrier, if your business does such service. Crime Loss of property or funds due to dishonest or fraudulent acts of your employees or theft, forgery or alteration by a third party. Theft of Money and Inside and Inside and Inside and Securities Outside premises Outside premises Outside premises Standard Limits $20,000 / occurrence $10,000 / occurrence $20,000 / occurrence Limits Adjustable Limits Adjustable Limits Adjustable

18 Computer Fraud Available Available Available Higher Limits Higher Limits Higher Limits Fund Transfer Fraud Available Available Available Higher Limits Higher Limits Higher Limits Employee Theft Available Available Available Higher Limits $25,000 Standard Higher Limits Higher Limits Key Issues: Usually coverage of theft and money are limited by blanket limits by location. Most carriers include some form of crime coverage in their petro industry packages. But employee theft, computer fraud and electronic funds transfer fraud is add on coverage with separate larger limits. Note: If you administer your own ATMs, remember to add their risk into your limit requirements. Some ATMs may include cash reserves of $15,000 and higher depending on usage demands. Employment Practices Liability Protection against claims arising from employer's employment policies and practices. Examples include employment discrimination, wrongful discharge, and sexual harassment. Coverage Available Third party product Third party product Claims Made Base Yes Yes Yes Retro Date Option Optional Optional Optional If conditions met If conditions met If conditions met Prior and Pending Optional Optional Optional Continuation Date If conditions met If conditions met If conditions met Extended Reporting Available Available Available (Tail coverage) to 100% of premium to 200% of premium to 100% of premium Third Party Coverage No Yes Yes

19 Key Issues: Third party coverage option is important in the case where a third party brings a suit against the employer similar as if an employee brought the suit. The third party liability coverage would be covered as if an employee initiated the claim. For example, an employee racially discriminates against a customer. That customer could bring suit against the employer due to the actions of the employee. Third party coverage would provide protection for such a claim. When a business changes insurance carriers, the timing of a claim event vs. the reported claim date is an important issue in this area of liability coverage. "Claim Based" coverage means the event and the report date must fall within the policy period for the carrier. In this situation, you would buy Extended Reporting Period" coverage so your past insurance carrier would cover the claim that occurred during their policy period but reported after policy termination. This is sometimes called Tail Coverage. Also, the new carrier may agree to cover any claims reported during their policy period but occurred before the policy start date if "retro date or "prior and pending continuation date" option is chosen. For this to be made available as an option, it must be proven that Employee Practices Liability coverage was in place with no breaks in coverage in the past. Data Privacy & Security Claims related to identity recovery and data compromise including response expenses, defense expense, and liability coverage. (PCI compliance) Identity Recovery Expense Expense Available only Reimbursements Reimbursements through the open market Data Compromise Employees and Employees and Customers Coverage Customers Coverage Limits $15,000 50,000 $50, ,000 Key Issues: Fairly new coverage brought about by the demands of PCI compliance requirements and the risk of claims involving the security of customer's data (i.e., credit card data). Nationwide does not offer this coverage. EMC designed their coverage through a third party. Data compromise includes response expenses as well as defense and liability costs. Coverage limits range from Federated's $50,000 aggregate limit to a $250,000 limit offered by EMC. If a true claim arises, the

20 limits can easily be reached, so recommendations would demand the highest limits available. Note: If your company does business on line, for example accepting credit card payments through your company's web site, "Cyber Liability" policies are available in the market. Cyber liability adds additional levels of data compromise coverage not found above.