I am pleased to confirm that we have renewed/ placed the following insurance policies for your association effective 12/31/ /31/2013.

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1 January 15, 2013 Chinquapin HOA PO Box 6001 Tahoe City, CA Re: Annual Insurance Disclosure Dear President, Board of Directors and Members, It has been our pleasure to serve Chinquapin HOA over these past years. We want you to know that we value your business and appreciate your continued confidence in. I am pleased to confirm that we have renewed/ placed the following insurance policies for your association effective 12/31/ /31/2013. Package - Policy #: N12NA00030 & SLO Umbrella - Policy #: Directors & Officers - Policy #: Crime - Policy #: Workers Compensation - Policy #: EIG Earthquake - Policy #: Not with our Agency Pursuant to the Davis-Sterling Common Interest Development Act, which went into effect on January 1, 1986 as California Civil Code , there are specific requirements relative to notifying property owners within the association about the Association s insurance policies and coverage. As a benefit to the association, we have prepared the following documents to assist you with the process of complying with the Code. Please be sure to distribute these documents to the unit owners. The relevant Code is copied on page two of this letter for your review. Sincerely, David B. Gordon dgordon@gordoninsurance.com Cc: Jody Nelson

2 California Civil Code Section (e)(1) A summary of the association's property, general liability, earthquake and flood insurance policies plus the fidelity bond, which shall be distributed within 60 days preceding the beginning of the association's fiscal year, includes all of the following information about each policy: A. The name of the insurer A. The type of insurance B. The policy limits of the insurance C. The amount of deductibles, if any (2) The association shall, as soon as reasonably practicable, notify its members by first-class mail if any of the policies described in paragraph (1) have lapsed, been canceled, are not immediately renewed, restored, or replaced, or if there is a significant change, such as a reduction in coverage or limits or an increase in the deductible, as to any of those policies. If the association receives any notice of nonrenewal of a policy described in paragraph (1), the association shall immediately notify its members if replacement coverage will not be in effect by the date the existing coverage will lapse. (3) To the extent that any of the information required to be disclosed pursuant to paragraph (1) is specified in the insurance policy declaration page(s), the association may meet its obligation to disclose that information by making copies of those pages and distributing it to all of its members. (4) The summary distributed pursuant to paragraph (1) shall contain, in at least 10-point boldface type, the following statement: "This summary of the association's policies of insurance provides only certain information, as required by subdivision (e) of Section 1365 of the Civil Code, and should not be considered a substitute for the complete policy terms and conditions contained in the actual policies of insurance. Any association member may, upon request and provision of reasonable notice, review the association's insurance policies and, upon request and payment of reasonable duplication charges, obtain copies of those policies. Although the association maintains the policies of insurance specified in this summary, the association's policies of insurance may not cover your property, including personal property or, real property improvements to or around your dwelling, or personal injuries or other losses that occur within or around your dwelling. Even if a loss is covered, you may nevertheless be responsible for paying all or a portion of any deductible that applies. Association members should consult with their individual insurance broker or agent for appropriate additional coverage." Important Information: Davis-Stirling rewrite Effective January 1, 2014 The Davis-Stirling Act applies to all common interest developments in California, including those in existence prior to the Act. In 2012, the Davis-Stirling Act was rewritten so as to simplify, reorganize and renumber the Act into Civil Code Bus: Toll Free:

3 February 25, 2013 To The Property Owners of Chinquapin HOA The information below is being delivered pursuant to California Civil Code, Section If you have any questions or need additional information, please contact your Board of Directors. A. PROPERTY INSURANCE 1. Name of Insurer: Lloyds of London (A 15) 2. Effective Dates: 12/31/ /31/ Property Coverage Limits: $500,000, Deductible: $50,000 for water damage, $10,000 for other perils B. GENERAL LIABILITY INSURANCE 1. Name of Insurer: Mt Hawley Insurance Co. 2. Effective Date: 12/31/ /31/ Limits of Liability: $1,000,000 OCC/ $2,000,000 AGG 4. General Liability Deductible: NA C. DIRECTORS & OFFICERS LIBILITY INSURANCE 1. Name of Insurer: Continental Casualty 2. Effective Dates: 01/01/ /01/ Limits of Liability: $ 1,000, Retention $1,000 D. FIDELITY ( Crime ) INSURANCE (Employee Dishonesty; may also include forgery, alteration and other parts) 1. Name of Insurer: Continental Casualty 2. Effective Dates: 01/01/ /01/ Limits of Coverage: a. Employee Dishonesty $350,000 Deductible: $10,000 b. Robbery/safe burglary- $350,000 Deductible: $10,000 money & sec Bus: Toll Free:

4 D. UMBRELLA LIABILITY INSURANCE (Applies to general liability, directors & officers & owned Autos if disclosed below in Auto section) 1. Name of Insurer: Lexington Insurance Co. 2. Effective Dates: 12/31/ /31/ Limits of Liability: $25,000, Retention $10,000 E. Workers Comp 1. Name of Insurer: Employers Insurance Group 2. Effective Dates: 03/15/ /15/ Employers Liability Limit: $1,000,000 F. AUTO INSURANCE 1. Name of Insurer: Mt Hawley Insurance Co. 1. Effective Dates: 12/31/ /31/ Limits of Coverage: Combined Single Limit ( if noted) a. Hired Auto 1,000,000 a. Non Owned Included w Hired H. EARTHQUAKE INSURANCE 1. Name of Primary Insurer: Not with our Agency. 1. Effective Dates: NA 2. Policy Limit: $NA 3. Policy Deductible: $NA 4. Name of Excess Insurer: Not with our Agency. 5. Effective Dates: NA 6. Policy Limit: $NA 7. Policy Deductible: $NA H. FLOOD INSURANCE 1. Name of Insurer: Lloyds of London 1. Effective Dates: 12/31/ /31/ Policy Limit: $5,000,000 (excluded in NFIP zone A&V) 3. Policy Deductible: $100,000 Bus: Toll Free:

5 INSURANCE DISCLOSURE REQUIREMENTS REQUIRED WORDING The California Civil Code requires that the following language be distributed to each property owner in the Association. CALIFORNIA CIVIL CODE, Section 1365 This summary of the Associations policies of insurance provides only certain information, as required by subdivision (e) of Section 1365 of the Civil Code and should not be considered a substitute for the complete policy terms and conditions contained in the actual policies of insurance. Any Association member may, upon request and provision of reasonable notice, review the Associations insurance policies and, upon request and payment of reasonable duplication charges, obtain copies of those policies. Although the Association maintains the policies of insurance specified in this summary, the Associations policies of insurance may not cover your property, including personal property or, real property improvements to or around your dwelling, or personal injuries or other losses that occur within or around your dwelling. Even if the loss is covered, you may nevertheless be responsible for paying all or a portion of any deductible that applies. Association members should consult with their individual insurance broker or agent for appropriate additional coverage. Bus: Toll Free:

6 Insurance Responsibility according to the CC&R s Homeowner associations (HOA) are a unique group. There are two entities that make up an HOA, the Homeowners Association as a legal entity and the individual unit owners/members of the association. Early on, the association must determine its insurance responsibility and needs. An association typically chooses one of four levels of responsibility and makes that choice clear in the CC&R s. The levels of the HOA s responsibility are: Common Area Only: This is typical of associations comprised of single family homes. The HOA accepts responsibility for areas not owned by an individual owner. Common areas may include recreation facilities, parking lots, landscaping, fences, laundry rooms and all other jointly used amenities. Owners in these associations must insure their entire structure as well as their contents on a standard homeowners form 3 or form 5. Bare walls: This is where, the association has accepted the responsibility of rebuilding the structure to the bare walls. This does NOT include replacement of fixtures such as tubs, toilets, counters, cabinets, floor and window finishes, etc. As many people don t understand this and/or comply, we urge against setting your CCR s up in this way. If the HOA has this form, it is critical that each owner purchase a sufficient limit of Building Coverage A on their HO6 policy to cover ALL of the interior fixtures and finishes. Original Construction: this is where, in the event of a loss, the association has accepted the responsibility of rebuilding the structure to it s original construction. Owners in these associations should carry an HO6 with a Building Coverage A limit sufficient to replace anything that has been upgraded beyond original construction such as marble/granite, high end floor or wall coverings, upgraded window coverings, cabinets, appliances, etc. Betterments & Improvements or All Inclusive : This is where, the association has accepted the responsibility of rebuilding the structure as it stood at the time of loss, to include all betterments & improvements, whether made by the association or an individual unit owner. After a careful review of Chinquapin HOA CC&R s, we have interpreted them to be:betterments & Improvements. The Association shall obtain and maintain a master or blanket policy written on an all risk, replacement cost basis, covering all Residence Lots, Common Areas and Common Facilities. In the event of a loss your carriers interpetation, if different from ours, will supersede our interpetation. Coverage is subject to the terms, conditions, limitations and exclusions of the actual policies. Bus: Toll Free:

7 Recommendation to Owners Regarding the Need to Carry an HO6 Condo Unit-owners Package Policy and Earthquake Loss Assessments Coverage As is standard on all homeowner s association master policies, the association s master policy does not cover the personal property, loss of use (or rental income) and personal liability of unit owners and their tenants. In addition, depending on your association s CC&R s, you may need to also cover your cabinets, fixtures, wall and floor coverings either entirely or if you have done upgrades. Whether you live in the unit or rent it out, each owner should carry what is commonly known as an HO6 policy to cover these and other exposures including: A. Building This is for building items such as wall to wall carpets, draperies, wall coverings, cabinets and fixtures (and upgrades to these items) which may not be covered by the master policy due to wording in the CC&R s which limit the association s responsibility. This can also cover the master policy s deductible for such losses, depending again on the CC&R s. Unit owners should review the CC&R s and/or discuss with the Board of Directors or property manager the specifics to determine how much coverage is appropriate to carry. It is quite inexpensive to increase the limit. A. Personal property such as furniture, clothes, etc. This is NOT intended for the personal property of a tenant if you rent out your unit. They must carry a renter s policy known as an HO4. B. Loss of use of your unit should a covered loss occur. This could pay for things such as hotels or rent in a temporary apartment or home after a covered property loss. If you rent your unit to others, this coverage could pay for the loss of rental income to you during the repairs. C. Loss Assessments (other than earthquake) This could pay the unit owners share of an assessment to cover certain losses to association property that result in an assessment being made by the association due to inadequate insurance. An example might be repair from a fire where the insurance proceeds were not enough to cover the loss and a general assessment was made to pick up the difference. D. Personal liability such as a guest getting hurt in your unit or hitting someone or their property with a golf ball. If you rent your unit to others, this could be extended to cover the liability you have to a tenant who may be hurt while occupying your unit. Bus: Toll Free:

8 Earthquake and Earthquake Loss Assessments Coverage Most standard homeowners, mobilehome, condominium, and renters insurance policies do not cover earthquake damage. Similar to flood insurance, earthquake insurance usually must be purchased separately. Residential property insurers (insurance companies that sell homeowners policies and policies for qualifying condominiums and apartments) are required under California Insurance Code (CIC) Section to offer earthquake coverage for the peril of earthquake. If you have purchased an HO6 you should have also been offered earthquake coverage. You should have ben given 30 days from the date of mailing from the insurance company to accept the offer of earthquake coverage, if your homeowners insurance company does not receive a response from you, then they can consider the offer rejected. If you didn t accept your property insurers eerthquake coverage, you may want to contact a broker-agent to assist you with securing a monoline "stand-alone" policy. Stand-alone policies are offered by a few specialty insurance companies who do not require you to purchase your homeowners insurance from them in order to offer you earthquake coverage. They offer a stand-alone policy, which is referred to as a monoline policy (one line of insurance) by the insurance industry. In California there is another option, the Californai Earthquake Athourity also know as the CEA. The CEA has more than 800,000 policies in force, representing about 70 percent of all residential earthquake insurance policies sold in California. CEA earthquake insurance policies are are sold and serviced exclusively through CEA s participating insurance companies California law requires you to have a residential insurance policy in-force with a CEA participating insurance company in order to have a CEA earthquake policy. Participating insurance companies process all CEA policy applications, policy renewals, invoices, and payments and handle all CEA claims. Whether purchasing through a standard earthquake carrier or the CEA, every offer of earthquake insurance must provide coverage for your dwelling, your personal property, and for any additional living expense (ALE). You may waive ALE coverage if you or your family do not occupy the dwelling you wish to insure. In addition we recommend that you purchase earthquake loss assessment coverage. Bus: Toll Free:

9 What is Earthquake Loss Assessment? In condominium communities, the exterior of buildings, certain building components, and common areas are typically owned by all the condominium owners as a group. In the event of earthquake damage to such property, the association may, in accordance with its bylaws, impose an assessment against all members of the association to pay for exterior or structural repairs. This coverage is unique to condominium owners, in that if damage from an earthquake occurs and the losses are not fully covered by the association s master insurance policy, Loss-Assessment coverage may help you pay for your share of certain assessments the association may impose on all property owners in your condominium development. A partial list of assessments not covered are those made to pay for the repair of non-residential structures, awnings, patio coverings, pools, spas, club houses, artistic features, or separate parking structures. What does Loss-Assessment coverage cover? If your condominium owners association imposes an assessment to repair damage caused by an earthquake, Loss-Assessment coverage may help pay your share of certain assessments. Bus: Toll Free:

10 You re Partner For Success ADDRESSING THE INSURANCE NEEDS OF INDIVIDUALS AND BUSINESSES FOR A SECURE FUTURE. Gordon Associates Insurance Services, Inc. is a group of commercial and personal lines insurance specialists in the San Francisco Bay Area who are dedicated to finding Insurance products that meet your specific needs. As the insurance broker for Chinquapin HOA, we would like to extend our services to the members of the association. As a full service agency, we can quote and write your HO6 policy to help coordinate coverage between the association s master policy and unit owner coverage responsibilities. Rent your unit? No problem we can quote the HO6 (condominium owners policy) for you and an HO4 (renters policy) for your tenant. Already have an agent, that s ok, we are always here to assist you and them in coordinating coverage. Want all your eggs in the same basket? We also offer Auto Motorcycle Recreation Vehicles Watercraft/boats Life Personal Umbrella Earthquake Flood and more Questions about the HOA Master Policy? Feel free to call our HOA Specialist Jody Jones, Lic # 0F76195, x6966 jjones@gordoninsurance.com For a free quote, please contact one of our personal lines specialists at Insurance: An ingenious modern game of chance in which the player is permitted to enjoy the comfortable conviction that he is beating the man who keeps the table. Bus: Toll Free:

11 Request for Evidence of Insurance Effective immediately, you will be able to obtain your certificates of insurance immediately by visiting Gordon Associates Insurance Services, with our continued focus on providing superior service to our customers, is proud to announce our adoption of a state-of-the-art insurance certificate delivery system. EOI Direct provides round-the-clock, online access to insurance information for lenders, mortgage brokers, closing agents, realtors, and homeowners in need of a certificate of insurance of a master policy for community associations insured through our agency. To request a certificate of insurance, or to view the policy coverage listed on a particular certificate, please visit If you are a first-time user, follow the links to register so you can log into your account as an existing user. There is a delivery charge for Certificate Holder changes, but there is no cost to register for this service. Once you have logged into your account, click on Evidence of Insurance to search and access the association policy information you are seeking. Customer service is available toll-free from 7:00 a.m. to 6:00 p.m. (Mountain Time), Monday through Friday to provide additional assistance. Those without internet access may also contact the help desk at one+ (877) to order their certificate over the phone with a representative. EOI Direct is an online internet utility developed to simplify and automate the process of delivering property insurance certificates within minutes days, nights, weekends and holidays. Jody Nelson, HOA Marketing/Client Relations Specialist Lic # 0F76195, x6966 jjones@gordoninsurance.com Bus: Toll Free: