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added, increased or changed risk is included in the policy. I. Place us in violation of California law or the laws of the state where we are domiciled; or ii. Threaten our solvency. (7) A change by you or your representative in the activities or property of the commercial or industrial enterprise, which results in a materially added, increased or changed risk, unless the added, increased or changed risk is included in the policy. b. We will mail or deliver advance written notice of cancellation, stating the reason for cancellation, to the first Named Insured, at the mailing address shown in the policy, and to the producer of record. at least: (1) 10 days before the effective date of cancellation if we cancel for nonpayment of premium or discovery of fraud, or (2) 30 days before the effective date of cancellation if we cancel for any other reason listed in paragraph 3.a. B. The following provisions is added to the Cancellation Common Policy Condition: 7_ Residential Prnperty This provision applies to coverage on real property which is used predominantly for residential purposes and consisting of not more than four dwelling units, and to coverage on tenants' household personal property in a residential unit, if such coverage is written under this policy: a. If such coverage has been in effect for 60 days or less, and is not a renewal of coverage we previously issued, we may cancel this coverage for any reason, except as provided in b. and c. below. b. We may not cancel solely because the first Named Insured has: (1) Accepted an offer of earthquake coverage; or (2) Cancelled or did not renew a policy issued by the California Earthquake Authority (CEA) that included and earthquake policy premium surcharge. However, we shall cancel this policy if the first Named Insured has accepted a new or renewal policy issued by the CEA that includes an earthquake policy premium surcha ge but fails to pay the earthquake policy premium surcharge authorized by the CEA. c. We may not cancel such coverage solely because corrosive soil conditions exist on the premises. This restriction (c.) applies only if coverage under the Special Property Coverage Form, which excludes loss or damage caused by or resulting from corrosive soil conditions. C. The following is added and supersedes any provisions to the contrary: NONRENEWAL 1. Subject to the provisions of paragraphs C.2. and C.3. below, if we elect not to renew this policy, we will mail or deliver written notice stating the reason for nonrenewal to the first Named Insured shown in the Declarations and to the producer of record, at least 60 days but not more than 120 days, before the expiration or anniversary date. We will mail or deliver our notice to the first Named Insured, and to the producer of record, at the mailing address shown in the policy. 2. Residential Property This provision applies to coverage on real property used predominantly for residential purposes and consisting of not more than four dwelling units, and to coverage on tenants' household property contained in a residential unit, if such coverage is written under this policy. a. We may elect not to renew such coverage for any reason, except as provided in b., c. and d. below: b. We will not refuse to renew such coverage solely because the first Named Insured has accepted an offer of earthquake coverage. However, the following applies only to insurers who are associated participating insurers as established by Cal. Ins. Code Section 10089.16. We may elect not to renew such coverage after the first Named Insured has accepted an offer of earthquake coverage, if one or more of the following reasons applies: (1) The nonrenewal is based on sound underwriting principles that relate to the coverages provided by this policy and that are consistent with the approved rating plan and related documents filed with the Department of Insurance as required by existing law; (2) The Commissioner of Insurance finds that the exposure to potential losses will threaten our solvency or place us in a hazardous condition. A hazardous condition in which we make claims payments for losses resulting from an earthquake that occurred within the Page 2 of 4 Form SS 01 21 03 17