Service is our Hallmark.

Arizona New Business: 11/18/09 Renewal Business: 1/27/10 Business Auto Program Annual Terms Semi-Annual Terms Service is our Hallmark.

TARGET MARKET At Hallmark, our goal is to provide you with the best commission, the most competitive rates, the easiest website, and the lowest down payments in the light & local marketplace. Our target market includes risks such as: Painters & Landscapers Contractors & Couriers Caterers & Nurses Farmers & Funeral Homes Vehicles under 16,000lbs G.V.W. 1-10 Power Units No Credit Check Additional Insureds & Blanket Waivers of Subrogation Low Down Payments & Easy Payment Plans VEHICLE BODY TYPES All vehicles and trailers must be listed on the app and dec page; no premium is charged for trailers 2000lbs or less. CARS & VANS Private Passenger Automobiles Car, Van, Minivan, SUV, and Pickup Truck Hearse Step Van up to 10,000lbs G.V.W. Delivery Van up to 16,000lbs G.V.W. Catering Van TRUCKS & TRAILERS Flatbed & Stake Body Trucks up to 16,000lbs G.V.W. Box & Refrigerated Trucks up to 16,000lbs G.V.W. Tank Trucks up to 1,400 gallons Utility Trailers Small Box Trailers Horse and Livestock Trailers USE CLASSES Service (S): Any vehicle used to carry tools, supplies or supervisory personnel to or from a jobsite that remains parked at 2 or fewer jobsites for most of the workday. Also includes farm/ yard vehicles which are used for incidental trips. Commercial (C): Vehicles which are not otherwise classified. Delivery (D): Retail stores, courier services, and small package delivery vehicles (up to 16,000 GVW). Visiting Nurse (N): Vehicles used by home health care companies to visit patients; there is no livery in this use class. Farm & Livestock (F): Vehicles used strictly on a farm or ranch, except for incidental trips. Incidental trips include travel to other plots of land owned by the same farmer, trips to deliver farm products, and trips to town for gas and repair work. Funeral (Y): Vehicles owned and operated by funeral directors or funeral services; there is no livery in this use class. Manufacturing (M): Vehicles used in support of manufacturing products. Not Classified (Z): Vehicles and Services not otherwise classified. 2

COVERAGE SYMBOLS ISO Business Auto Policy: Symbol 7 Specifically Described Autos includes only those vehicles listed and described in the policy declarations for which a premium charge is shown. Hallmark does not offer Symbol 8 (Hired Autos) and Symbol 9 (Nonowned Autos) coverages SR-22 FILINGS Certificate prints at Point of Sale; agent is responsible for issuing and filing the SR-22 with the Arizona DOT. Hallmark issues SR-22 forms for 6 and 12 month policy terms. COVERAGES LIMITS Liability Bodily Injury & Property Damage...$15,000 / $30,000 / $15,000 $25,000 / $50,000 / $25,000 $50,000 / $100,000 / $25,000 $50,000 / $100,000 / $50,000 UM/UIM Bodily Injury... $15,000 / $30,000 / $15,000 $25,000 / $50,000 / $25,000 $50,000 / $100,000 / $25,000 $50,000 / $100,000 / $50,000 Medical Payments...$500 $1,000 $2,000 $5,000 Speial Causes of Loss...See Deductibles Below (Must be written in combination with BI/PD and Collision) Comprehensive...See Deductibles Below (Must be written in combination with BI/PD and Collision) Collision...See Deductibles Below (Must be written in combination with BI/PD and Comprehensive or Specified Causes of Loss) Rental Reimbursement... $20 per Day, $600 Maximum (Must have Physical Damage Coverage to qualify) Towing and Labor... $50 per Disablement (Must have Physical Damage Coverage to qualify) Safety Glass Coverage...This coverage eliminates the deductible (Must have Physical Damage Coverage to qualify) for glass claims. DEDUCTIBLES Optional Combinations Comp or SCL $250 $250 $500 $500 $1,000 $1,000 $2,500 $2,500 $5,000 Collision $250 $500 $500 $1,000 $1,000 $2,500 $2,500 $5,000 $5,000 3

REGULATORY FILINGS Hallmark does not issue Form E, DOT, ICC, MCS-90 or any other government regulated Motor Carrier filings. POLICY TERMS Hallmark offers 6 and 12 Month term policies. CERTIFICATE OF INSURANCE Hallmark s website will print a Certificate of Insurance at the Point of Sale. A policy cancellation notice will not be sent to certificate holders. WAIVER OF SUBROGATION Hallmark offers a Blanket Waiver of Subrogation upon request at anytime during the policy term. The applicant must declare each affected business entity that is requesting a waiver. ADDITIONAL INSURED Hallmark will add Additional Insured s upon request at anytime during the policy term. DISCOUNTS: TIER Hallmark s Tier is made up of the following components: Prior Insurance (at least 6 months of Business Auto Liability coverage, exception made for PPA if Business Use surcharge is included on Dec and Policy) Days Lapse Prior Liability Limits Proof should include the prior company s name, Liability limits, policy number, effective and expiration dates for the previous six (6) months and MUST be maintained in the insured s file for policies entered through the POS system or accompany the application for discount to apply. Acceptable proof includes a policy declarations page, experience letter, or Certificate of Insurance, or ID card (will assume minimum Liability limits) issued from previous carrier. Tier assignment does not impact the rate level for 1 Month term policies. GENERAL LIABILITY DISCOUNT A General Liability discount applies if the named insured provides a copy of their Business Owners Policy or their Commercial General Liability policy, which is to be kept in the agency files. ACCIDENT PREVENTION DISCOUNT An Accident Prevention discount applies to those insured persons for a three-year period after successfully completing a motor vehicle accident prevention course as approved by the insurance company of the policyholder. CLAIMS FREE RENEWAL DISCOUNT A Claims Free Renewal discount applies at renewal if the policy has been loss-free since inception. 4

CDL EXPERIENCE DISCOUNT A CDL Experience discount applies for CDL licensed drivers with 2 or more years of commercial driving experience and has remained loss-free during that time. INCORPORATED DISCOUNT An Incorporated discount applies if business has been incorporated for 12 months or more. PAID IN FULL DISCOUNT A Paid in Full discount is applied when the total policy premium plus fees is collected at the inception of the policy. SURCHARGES: UNVERIFIABLE MVR SURCHARGE Indicates no valid license, incorrect number provided to company / agent, or any other situation where we are unable to obtain a Motor Vehicle Report. FOREIGN DRIVER S LICENSE SURCHARGE Applies if the driver does not have a valid U.S. or Canadian License but does have a valid foreign license or international driver s license. INEXPERIENCED OPERATOR SURCHARGE Applies if the driver is over 19 years-old and has not been licensed at least 12 months to operate a vehicle listed on the policy. PERSONAL USE SURCHARGE Applies to any vehicle that has significant personal use. PAYMENT OPTIONS Term Down # of Payments 1st Pay Due Billing 6 16.70% 5 20 Days Every 30 Days 6 20.00% 5 25 Days Every 30 Days 6 25.00% 5 30 Days Every 30 Days 6 30.00% 5 30 Days Every 30 Days 6 40.00% 5 30 Days Every 30 Days Term Down # of Payments 1st Pay Due Billing 12 8.30% 10 20 Days Every 30 Days 12 10.00% 10 25 Days Every 30 Days 12 11.00% 10 30 Days Every 30 Days 12 12.50% 10 30 Days Every 30 Days 12 15.00% 10 30 Days Every 30 Days 12 20.00% 10 30 Days Every 30 Days 5

VIOLATION CLASSIFICATIONS Violation Group Minor Intermediate Major Clean Alcohol/Drug Alcohol/Drug At-Fault Accident Unverifiable MVR Foreign Driver s License Inexperienced Operator Unacceptable Risk Points 1 pt. 2 pts. 5 pts. 2 pts. 3 pts. 3 pts. 2 pts. 2 pts. 2 pts. 12 pts. MAJOR VIOLATIONS Driving while license suspended/revoked Reckless/Careless/Negligent Driving Felony involving vehicle Hit and run Leaving scene of accident Failure to stop and render aid Operating vehicle without owner s consent Falsify police report Fleeing/attempting to elude a police officer Racing Speeding greater than 30 mph over posted INTERMEDIATE VIOLATIONS Driving on sidewalk Excessive acceleration Failure to control vehicle School bus passing violation Wrong way on one-way street Wrong side of roadway Allowing unlicensed operator to drive MINOR VIOLATIONS Speeding up to 30 mph over posted and all other moving traffic violations, equipment violations, safety and brake related violations, including spilling or losing load on highway not listed under Major or Intermediate Violations ALCOHOL/DRUG VIOLATIONS Hallmark has two different levels of Alcohol / Drug violations: DUI Otherwise Clean - Any alcohol or drug related motor vehicle offense (including refusal to take test, illegal possession or open container violation) where the offense is the only chargeable violation (no other moving violations or At-Fault Accidents) for an individual. DUI - Any alcohol or drug related motor vehicle offense (including refusal to take test, illegal possession or open container) where the individual has any moving violation or at-fault accident on their MVR. AT-FAULT-ACCIDENTS Accidents are considered chargeable unless: Applicant was struck in the rear and not charged Judgment for the full amount of loss from the other insurance company Payment was made under Uninsured / Underinsured Motorist coverage Auto was lawfully parked and applicant was struck by a hit-and-run driver and the accident was reported to authorities within 24 hours 6

CHARGEABLE PERIOD AND PROCEDURES Points will be charged to drivers with violations within the previous 36 months. When a driver is added mid-term, accidents and violations will be charged for the 36 month period prior to the date the driver is added. If two or more violations or accidents are from the same occurrence, charge for only one of the violations or accidents unless accident occurs in conjunction with a DWI/DUI, then both violation and accident will be charged. The order of selection for determining the chargeable violation is: (1) Major, (2) DWI/DUI, (3) Accident, (4) Intermediate, and then (5) Minor Violation. Accidents noted on the MVR or application will be considered at-fault unless proof is secured to verify that the insured was not-at-fault. Accidents involving animals are not-at-fault. Accidents involving hitting another vehicle or object as a result of swerving to avoid an animal are at-fault. UNACCEPTABLE / INELIGIBLE OR PROHIBITED: DRIVERS Driver has been convicted of a felony, assault, manslaughter, attempted homicide, or homicide. Drivers under 21 years of age, if any vehicle is not a PPA type (PPA, Van, Pickup, SUV) vehicle. Drivers under the minimum age for state licensing or with a suspended, canceled, or revoked license. Drivers convicted of insurance fraud. Drivers with more than 10 violation points. Drivers with 3 or more at-fault claims within any 12 month time period. VEHICLES Dump trucks, tow trucks, car carriers, and emergency vehicles. Vehicles requiring ICC or Motor Vehicle Carrier Act endorsements. Vehicles requesting Physical Damage Coverage with a stated amount value greater than $50,000. Vehicles with a GVW in excess of 16,000 lbs. Tow trucks, car carriers, and emergency vehicles. Vehicles used to haul gasoline, liquefied petroleum, propane, butane, explosives or acids. Vehicles used for livery - taxicabs, limousines, buses or other vehicles used for carrying passengers (real estate risks with private passenger autos are acceptable). Unbaffled tank trucks or trailers (milk haulers). Vehicles garaged outside the state of Arizona. RISKS Fleets of more than 10 power units. Leasing or rental firms Ice Cream Vans/Trucks Armed security services Mobile equipment (i.e., all vehicles designed for off-road use). Repossession businesses or towing risks involved in auto repossession. 7

UNACCEPTABLE /INELIGIBLE / PROHIBITED RISK, OR VEHICLE ADDED DURING POLICY TERM If ineligible during the policy term and outside the cancellation period, the policy will be up-rated. MATERIAL MISREPRESENTATION Material misrepresentation on the application may affect the insured s eligibility to receive the benefits of our insurance contract. It is the insured s responsibility and obligation to truthfully and fully complete their application for insurance. The company has the right to not pay a claim on a policy if information presented on an application or renewal questionnaire is false, misleading or results in a premium change or results in us accepting an otherwise unacceptable risk. The company may cancel or rescind the policy in accordance with state guidelines, or collect the additional premium due from inception should misrepresentation be discovered. AGENCY FUNDS Any agency funds that are returned from the bank unpaid must be replaced immediately with good funds. Recurring instances of returned funds could result in immediate cancellation of the agency contract. FINAL UNDERWRITING AUTHORITY THIS MANUAL MAY NOT ADDRESS every aspect that might affect the acceptance or continuation of a particular vehicle or driver. For this reason, the company RESERVES THE RIGHT TO remain the final authority in the acceptance or continuation of any risk. BINDING AND EFFECTIVE DATES Producer must be properly appointed and issued a producer number prior to binding any policies. Applications for coverage must be consistent with the written program guidelines and producer agreement. The down payment or full premium must accompany the application or endorsement. Applications and endorsements processed through the Point Of Sale System ( POS ) will be bound effective the date and time assigned by the system. All other applications and endorsements will be bound no earlier than the date and time the application is signed by the applicant and agent, provided the envelope containing the fully completed application along with all required documentation is postmarked within 48 hours from binding. If coverage is not bound as indicated, the effective date and time of coverage will begin no earlier than 12:01 A.M. the day following the postmark. The postmark used is the U.S. Postal Service Postmark (a company postage machine meter mark is not considered U.S. Postmark). Applications will not be accepted with a future effective date exceeding sixty days from the current date. Applications or endorsements may not be bound to cover a loss which occurred before the application is signed. POLICY ISSUANCE, RENEWALS AND LAPSE IN COVERAGE Invoices will be mailed directly to the insured and billed in installments. Premium MUST be postmarked or received in the agent s office before the end of the grace period for continuous coverage. The lapse in coverage period cannot extend beyond 60 days from the renewal date. If received after 60 days from the renewal date, the payment will be returned and a new policy must be submitted. 8

ENDORSEMENTS All endorsements that generate an additional premium must be paid pursuant to the calculation of premium due as generated by the POS system. (Examples may include: adding a vehicle, coverage or driver, territory address change, driver class change, etc.) For date and time bound, please refer to the binding and effective dates section. To process endorsement requests submitted through the mail, we require: Agent number and name of representative handling request for change Policy number, effective date and requested change with all required information Additional premium Signed endorsement requests are required for the following: Addition or Deletion of UM coverage (signed selection/rejection required) Deletion of any coverage or vehicle Request to exclude a driver (signed driver exclusion required) DOCUMENT RETENTION For all policies issued by the agent through the POS system, it is the agents responsibility to secure the required documentation upon binding and retain this information in the insured s file for a period of seven (7) years after the last policy renewal expiration date. Any and all documentation must be made available upon company request. CANCELLATIONS NO FLAT CANCELLATIONS. To effect a cancellation, the Company must be relieved of the obligation to provide coverage to the Insured and Lien holder (if applicable). A cancellation effective date will not be more than 30 days prior to receiving the request. CLAIMS All claims should be reported directly to our claims service, by calling 1-800-486-5616. Please have the insured report the claim. If the agent takes the claim and fails to fax or telephone the information within 24 hours, agent could be responsible for any fines imposed by the ARIZONA DEPARTMENT OF INSURANCE. SEVERE WEATHER RESTRICTIONS Whenever the National Weather Service issues a hurricane, tornado, hail or other severe weather watch or warning and the storm is within 100 miles of the location of the proposed risk, coverage acceptance is limited as follows: No new business policies may be written or bound. Physical Damage may not be endorsed onto existing policies. Renewals of the company s expiring policies may be written in the normal manner providing there is no increase in exposure to the company. Normal binding authority will resume after the watch and/or warning is lifted by the National Weather Service, providing there is no forecast of an imminent reoccurrence. Applications with an effective date/postmark combination which violate the prohibitions listed above will be rejected and no coverage will have existed. PREMIUM CALCULATION Premiums are calculated by using the Rate Order of Calculation table. Developed premium by line of coverage is rounded to the nearest whole dollar. For example: $100.50 would be $101.00 and $100.49 would be $100.00. 9

TERRITORIES All territories are determined according to the zip code in which the vehicle is garaged. DRIVER TO VEHICLE ASSIGNMENT Drivers are assigned by applying the highest rated driver to the highest rated vehicle, the second highest driver to the second highest vehicle, and so on. When there are more cars than drivers, the highest to highest rule is used, until there are no more drivers to assign, at that point, the Unassigned Driver Class is applied to remaining vehicles. MARRIED VERSUS SINGLE CLASSIFICATION Married drivers not living with their spouse must be rated as single unless career obligations or military service require them to live away from home for a period of time. Married means a driver living with their spouse or otherwise meeting the statutory definition of married. EXCLUSION OF NAMED DRIVER All employees, members of the household, and/or any frequent drivers who will be at least 15 years of age during the policy term must be listed on the application as a driver and be properly licensed; otherwise, they must be excluded by driver exclusion endorsement. The excluded drivers full name, date of birth and relationship must be listed on the exclusion. The named insured may not be excluded unless prior approval is received from underwriting. If member in household attains 15 years of age during policy period, they must be qualified as a driver or excluded at time of renewal. ADDITIONAL/CUSTOM EQUIPMENT Additional and Custom Equipment MUST be photographed by the insured or agent, listed on the application, and the total amount included in the vehicle s Stated Amount. The total AEQ amount cannot exceed 25% of the vehicle s value. Also, all Additional and Custom Equipment must be permanently attached to the vehicle. SPECIAL RULES 1. Active military and their spouses may furnish an out-of-state drivers license and their military ID. 2. Collision and Other Than Collision not written without Liability coverage. 3. Collision and Other Than Collision are only written in combination. 4. if spouse is excluded, proof of marriage may be required. VEHICLE INSPECTIONS / PHOTOGRAPHS A vehicle inspection along with two (2) photographs are REQUIRED for all vehicles with Custom Equipment and for vehicles with Prior Damage. FEES: POLICY FEE A $60 fee will apply to all new and renewal policies. In the event of cancellation, policy fees are fully earned. INSTALLMENT FEE A $9 fee will apply to each premium installment. 10

LATE FEE A $7 fee will apply to all payments made after the due date. NSF / RETURNED PAYMENT FEE A $30 fee will apply to all returned payment items. SR-22 FEE A $20 fee will apply to all drivers requesting an SR-22 filing. ADDITIONAL INSURED FEE A $25 fee will apply to each Additional Insured on the policy. WAIVER OF SUBROGATION FEE $100 fee will apply for a blanket Waiver of Subrogation. Please call for midterm waivers or to add entries to a current waiver. 11