BROKERS MANUAL GENERAL INFORMATION. Coverages Available

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1 BROKERS MANUAL The California FAIR Plan Association (the FAIR Plan) is an association of all insurance companies authorized to transact basic property insurance in California. Established under State law, the FAIR Plan provides insurance coverage to responsible applicants who have been unable to secure insurance for their home or business in the normal market. Brokers are not agents or representatives of the FAIR Plan in any respect and may not bind coverage on behalf of the FAIR Plan. They are not authorized to transact insurance coverage, or receive information from others on behalf of the FAIR Plan. Endorsements to FAIR Plan policies must be signed by an employee of the FAIR Plan authorized to do so, and no endorsement may be validly issued or signed by any other person on behalf of the FAIR Plan. All brokers must have and maintain a valid property casualty license or an approved certificate of convenience from the California Department of Insurance to actively transact and conduct business with the FAIR Plan in accordance with section 1631 of the Insurance Code. In transacting insurance with, but not on behalf of the FAIR Plan, all licensed insurance agents and brokers act as insurance brokers for applicants and policyholders, not as agents of the FAIR Plan. GENERAL INFORMATION Coverages Available Please refer to the Coverages link for descriptions of and links to the policy contracts and endorsements. Eligible Areas Please refer to the Eligible Areas link for information on those areas eligible for FAIR Plan coverage. Maximum Limit of Coverage Please refer to the FAIR Plan Coverage Limits link for information on the maximum limits available for each line of business (Dwelling, Commercial, and Businessowners). No Broker Fee Notice Insurance brokers should be aware that the California Department of Insurance adopted regulations governing the charging of Broker fees (Title 10 - California Code of Regulations, section et seq.) Section (b) of the regulations prohibits brokers from charging any fee, directly or indirectly, for services related to procuring

2 coverage from the FAIR Plan. The Department defines "services" to include any advice or assistance. Payment of Premium The FAIR Plan sends all new business quotations on broker generated business to the broker of record. An applicant's copy of the quotation form accompanies all such forms sent to the broker of record. This copy explains how payments may be made and the terms and conditions of the offer. The Plan will accept payment under the terms and conditions of the offer from the broker of record or directly from the applicant or insured. All payments must be accompanied by a copy of the FAIR Plan quotation or billing form. Endorsements and renewals are billed directly to the insured unless the FAIR Plan has been instructed to bill a different person/organization. All payments must be accompanied by a copy of the FAIR Plan quotation or billing form to insure proper credit of the remittance. It is not necessary to write a separate check for each item, unless payment is being made for a CEA earthquake policy. Although most brokers are very responsible when it comes to remitting premiums to the FAIR Plan on behalf of the broker s clients, some brokers have either failed to do so altogether after their clients have paid them, or have remitted with checks drawn on closed accounts or accounts with insufficient funds. Upon the failure of such a broker to provide cashier's checks, money orders, or other payment on good funds when requested to do so by the FAIR Plan, the FAIR Plan reserves the right to discontinue considering future applications for insurance submitted by that broker on behalf of his or her clients. The FAIR Plan may discontinue considering applications from brokers for other reasons, as well. All premiums must be paid in the gross amount. Automated Payments Online We now accept electronic checking or savings account payments from brokers, policyholders or third parties on new business quotations, mid-term endorsements, and renewal offers for FAIR Plan residential, commercial, and businessowner (BOP) policies via the payment button on the home page of our website. Refer to the Broker Bulletin section on our website for detailed features of this system. We are utilizing an Automated Clearing House (ACH) as an intermediary before posted payments reach our bank. Although payments will be deemed as received once the transaction is submitted, insurance brokers can not bind coverage or commit the FAIR Plan in any way. Verifying Payments via Automated Phone System Brokers and insureds can verify if policy payment has been received and posted through our Automated Phone System. This information can be accessed in either English or Spanish 24 hours a day/7 days a week at (213) Waiver of Premiums Owed The FAIR Plan will waive additional premiums owed if the amount is $3.00 or less. Deemer Provision

3 If through no fault of the applicant, acceptance or rejection of an application is not made by the FAIR Plan within twenty (20) days after the date the completed application is received in the FAIR Plan office, the coverage requested in the application is deemed to be effective on the twenty-first day after such receipt, provided that a provisional deposit premium of twenty-five dollars is received in the FAIR Plan office within forty-five days from the date the application is received in the FAIR Plan office. If the deposit premium is not received in the FAIR Plan office within such forty-five (45) day period, no coverage shall be deemed ever to have become effective and a new application must be submitted. Send no money with the application. The FAIR Plan will notify you by letter and include the date of the application's receipt, if the FAIR Plan is unable to quote by the twentieth (20th) day. Effective Dates of Coverage Please refer to the Effective Dates of Coverage link for information on effective dates for new business and endorsements. New Business: All quotations are provisional, and have been quoted prior to inspection. An additional premium may be due after inspection, and any additional premium due must be received in the FAIR Plan office by the date shown on the billing. To avoid possible lapse of coverage, new business applications must be received in the FAIR Plan office 20 days prior to the effective date desired. On new business, the FAIR Plan is permitted 20 days to accept or decline the risk. The application is the basis for policy issuance and the acceptance or rejection of coverage. It is the responsibility of the broker and the applicant to see to it that information submitted is in all respects accurate. Inspections, where made, are for the purpose of determining the physical condition of the property or for the presence of a brush/wildfire exposure (Commercial policies). They are not for the purpose of correcting omissions or inaccuracies in the information submitted in the applications for insurance, or renewal of insurance. Inspectors hired by the FAIR Plan do not make any determination of the value of the property, the adequacy of the insurance requested by the applicant, or the safety of any property. The effective date of coverage will be: 1. One(1) day after the date the premium is received in the California FAIR Plan's office, or; 2. A later date may be specified if desired, provided it is not more than 60 days from the quotation expiration date shown on the quotation. If the premium is not received in California FAIR Plan's office within 60 days of the date of the FAIR Plan's premium quotation, the offer of coverage expires and a new application must be submitted.

4 Endorsements: Endorsements Adding or Increasing Coverage: Unless a later date is specifically requested on the Endorsement Application, the effective date of an endorsement increasing the dollar amount of coverage will be the fifth (5th) day after the Endorsement Application requesting such increase is received in the FAIR Plan office, but only if the FAIR Plan has not rejected such request by the end of such fifth (5th) day. Endorsements Deleting or Decreasing Coverage: The effective date of an endorsement decreasing coverage shall be the date the Endorsement Application is received in the FAIR Plan office, unless a later date is specifically requested. If there is reason to use an earlier date, this reason should be shown on the Endorsement Application. Endorsements Not Impacting Coverage: The effective date of a non-money endorsement, such as a change of loss payee, will be the date the requested change is received in the FAIR Plan office. Endorsement Quotations: The FAIR Plan will generate an endorsement quotation to the insured and broker of record indicating the amount of the total additional premium. If the insured desires the coverage being quoted, payment must be received by the FAIR Plan for coverage to be effective. The insured is responsible for making sure that any additional premium is paid by the due date, even if the insurance premium is paid through a mortgage impound account. The effective date of coverage is determined by the date the endorsement premium is received in the FAIR Plan Office as follows: a) If the endorsement premium is received within 15 days of the date of this quotation, the effective date is the endorsement effective date shown on the endorsement quotation; b) If the endorsement premium is received within 16 to 60 days from the date of this quotation, the effective date is the date the endorsement premium is received. Premium will be adjusted based on the actual number of days of coverage. c) If the endorsement premium is received after 60 days from the date of this quotation, the effective date is 5 days after the date the endorsement premium is received. Premium to be charged will be adjusted based on the actual number of days of coverage. Renewals Policies are renewed by Renewal Declaration. The Declaration Pages are normally mailed to the insured with electronic notification to the broker approximately 60 days prior to the expiration date of the policy. The Renewal Premium Due Notice is sent approximately 30 days prior to the expiration date of the policy. This notice includes wording advising that if the renewal premium is not received by the expiration date of the current policy term, the policy will be cancelled as of that date. If the premium is not received by that date, a cancellation confirmation notice is sent to the insured and any loss payees listed on the policy and an electronic notification is sent to the broker, if any. This notice advises that the policy is cancelled, but may be reinstated if the premium payment is received prior to the final due date (15 days after the renewal date). If payment is received prior to the final due date, a notice of reinstatement will be sent to the same persons and entities

5 Requests for Evidence of Insurance for Escrow Closings Please refer to the Requests for Evidence of Insurance for Escrow Closings link for information on these requests. Brokers are not authorized by the FAIR Plan to issue on its behalf any documents, including an evidence of insurance or binder of coverage showing the existence of a FAIR Plan policy. New Business The web application should be submitted as early as possible to ensure that there is a valid quotation before the escrow is ready to close. Once a quotation has been issued, the quickest and most efficient way to secure evidence of insurance (proof of coverage), is to submit a web payment. The escrow closing instructions from the escrow company must be electronically attached when the payment is submitted. The escrow instructions should include the closing date, the lender s name and address, loan number, and the vested interest of the buyers (named insured(s) on the policy). If the web payment and escrow closing document are received by 3:45 P.M. on a business day, a policy will be issued to serve as evidence of insurance and will be faxed to the escrow company s fax number listed on the document that same business day. Any web payments and escrow closing documents received after 3:45 P.M. on a business day will be processed the next business day. The earliest effective date of coverage for a new business policy is one (1) day after the date the payment is received by the FAIR Plan. Therefore, any web payment with escrow closing documents must be received at least one (1) day before the escrow closing date for that date to be honored as the effective date. Escrow Closing / Refinance for Existing Policies The quickest and most efficient method of requesting an Evidence of Insurance for a refinance depends on the circumstances as noted below: 1. Mortgagee Change Only o Brokers should submit a non money web endorsement via our online system. This will result in an ed endorsement declaration with the requested change, typically within a matter of minutes. o Adding any comments or attaching any files WILL cause a delay in the processing of the endorsement request. 2. Mortgagee Change, Vesting Change, Address Modification, Coverage Change, etc. o All requests should be faxed to (213) or (213) and include the following: A request for an Evidence of Insurance. Escrow closing document including the lender s name, address and phone number, loan number, vesting for the named insured (assignment of

6 policies not permissible), address modification, requested effective date, etc. Any change in coverage must include a signed request from the insured or broker with the specific changes being requested. o The request will be screened for completion and accuracy. If acceptable, an endorsement declaration with the requested change(s) along with the most current renewal declaration will be faxed to the escrow company s fax number listed on the closing documents, normally within two business days. If there is a requested coverage change, an endorsement quotation will be included with the faxed documents. An endorsement declaration will be issued upon receipt of premium. Inspections Property is inspected at the discretion of the FAIR Plan after the policy is issued to determine the physical condition of the property or to establish the basis for a brush/wildfire charge for Commercial policies. These inspections are not for the purpose of determining property valuation or correcting inaccuracies in the information submitted in the application for insurance or renewal of insurance. In the event the inspection report shows the risk does not meet the FAIR Plan underwriting standards but can be improved to meet such standards, the FAIR Plan will advise the insured and the broker what changes noted in the inspection report must be made to the property for it to remain eligible for insurance. Upon completion of the changes by the insured, the FAIR Plan must receive photos and/or receipts as proof that the changes have been made. If the inspection report shows that the property is uninsurable according to the FAIR Plan underwriting standards, the policy will be cancelled, non renewed, or rescinded and the insured, broker, and mortgagee will be notified of the reason for the cancellation, non renewal or rescission. Properties submitted to the FAIR Plan for coverage consideration must be in insurable condition, and meet the FAIR Plan s underwriting guidelines. If the risk submitted for coverage has any existing property damage, the FAIR Plan will decline to issue a quotation UNLESS a copy of a contract signed by a licensed contractor and the applicant is submitted with the new business application. The contract should indicate in detail the scope of the work to be done, the start date and projected completion date. If an insured with a brush/wildfire charge on their Commercial policy secures additional clearance and desires a brush/wildfire re-inspection, a written request should be submitted directly to the FAIR Plan. A re-inspection will be ordered and the results of that inspection will be communicated directly to the insured with a copy to any broker acting for the insured. Right of Appeal Any applicant or insured shall have the right of appeal to the FAIR Plan within 60 days of written notification of an adverse underwriting finding or decision of the FAIR Plan. Each notification of a potentially adverse action shall be accompanied by a statement that the applicant has the right to appeal and will also set forth the procedures to be followed for such appeal.

7 An appeal does not extend coverage to a new applicant, extend the term of a policy if a policy is in effect, nor change the effective date of a cancellation. Cancellations All premium refunds resulting from policy cancellations are computed on a pro rata basis. The FAIR Plan will cancel a policy effective the date the FAIR Plan receives the request for cancellation via the Brokers System on the FAIR Plan web site or in writing from the insured or broker unless the date of cancellation requested is a later date. If the request for flat cancellation of a new business policy is received within 30 days of the inception date, the policy will be cancelled flat. If the policy has been in force for more than 30 days, and the requested date of cancellation is earlier than the date the request is received in the FAIR Plan office, a reason for cancellation must be given (e.g. property being sold, coverage placed with another carrier). If the property was sold, the FAIR Plan should be notified of the desired cancellation date. If the date of cancellation is more than 30 days prior to the date the request is received, a copy of the escrow Closing Statement will be required by the FAIR Plan. If coverage has been replaced by another insurance company (or companies) the FAIR Plan policy will be cancelled effective the inception date of the replacement policy. If the date of cancellation is more than 30 days prior to the date the request is received, a copy of the replacement policy will be required by the FAIR Plan. If the request for cancellation is received more than 90 days from the date coverage is replaced, cancellation will be effective the date the request is received but credit will be allowed for duplicate insurance if a copy of the replacement policy is submitted (per California Insurance Code Sections ). Installment Plan/Financing Premiums The FAIR Plan has an optional installment plan applicable for either residential or commercial properties. If the annual premium is $ or more, premiums may be paid in three installments consisting of a 40% down payment, and two separate installments of 30% each, with the second installment due three months from the inception date of the policy. The final installment is due six months from the inception date of the policy. There is a $2.50 service charge applicable for each installment billing, for a $7.50 total transaction fee. The FAIR Plan will generate and mail a billing notice 45 days before the due date of the second installment, and the final installment. When a request to add or increase coverage is received, an endorsement Quotation is issued showing the additional premium resulting from this change. This additional premium must be paid in full (outside the installment billing) in order to endorse the requested coverage change to the policy. If an additional premium endorsement is generated by the FAIR Plan (e.g. occupancy,

8 construction type, protection class), additional premiums due will be spread over any remaining installment payments. California FAIR Plan will accept a commercial premium financing agency gross payment for the full amount of our billing. Claims It is the insured s duty under the policy to report any loss or damage to covered property directly to the FAIR Plan. Insurance agents and brokers are not agents or representatives of the FAIR Plan in any respect, and a report to them of loss or damage does not satisfy the insured s duty to notify the FAIR Plan. Losses may be reported 24 hours a day, seven days a week, online via the home page of the FAIR Plan s website at Losses may also be reported via phone at (213) The Claims Department will make every effort to acknowledge receipt of the notice of loss to the insured and broker within 24 hours, and the acknowledgement will include both the claim number and name and contact information of the adjusting company. Brokers and their staff should be familiar with the Claims Practices Regulations relative to submitting claims on behalf of their client(s) in a timely manner. Copies of the regulations can be obtained from the Department of Insurance. Commission Rate New business commission for policies in all lines of business is 10%. Renewal commission for policies in all lines of business is 8%. Commissions paid on mid-term change transactions will be based on the commission in place for the current term of the policy. Commissions paid are based on the broker of record on the date payment was received and posted. The FAIR Plan is the market of last resort and should only be considered if no alternatives are available in the voluntary market. Commission Statements Commissions are paid monthly by the tenth (10th) day of every month. All premiums must be paid in the gross amount. Brokers may not deduct commissions from any premiums due when making payment. Broker Changes and Mergers To be recognized by the FAIR Plan as effective, letters of record changing brokers must be signed by the insured, or the broker releasing the account, and the broker acquiring the account. Broker of record changes will not be accepted for new business quotations.