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C. The following is added and supersedes any provi- (2) The Commissioner of Insurance finds sions to the contrary: that the exposure to potential losses will NONRENEWAL threaten our solvency or place us in a hazardous condition. A hazardous con- 1. Subject to the provisions of Paragraphs C.2. dition includes, but is not limited to, a and C.3. below, if we elect not to renew this condition in which we make claims policy, we will mail or deliver written notice stat- payments for losses resulting from an ing the reason for nonrenewal to the first earthquake that occurred within the pre- Named Insured shown in the Declarations and ceding two years and that required a re- to the producer of record, at least 60 days, but duction in policyholder surplus of at not more than 120 days, before the expiration least 25% for payment of those claims; or anniversary date. or We will mail or deliver our notice to the first (3) We have: Named Insured, and to the producer of record, (a) Lost or experienced a substantial at the mailing address shown in the policy. 2. Residential Property reduction in the availability or scope p y of reinsurance coverage; or This provision applies to coverage on real (b) Experienced a substantial increase property used predominantly for residential in the premium charged for reinsur- purposes and consisting of not more than four ance coverage of our residential dwelling units, and to coverage on tenants' property insurance policies; and household property contained in a residential unit, if such coverage is written under one of the Commissioner has approved a plan the following: for the nonrenewals that is fair and equitable, and that is responsive to the Capital Assets Program (Output Policy) Cover- changes in our reinsurance position. age Part Commercial Property Coverage Part c. We will not refuse to renew such coverage solely because the first Named Insured has Farm Coverage Part — Farm Property — Farm cancelled or did not renew a policy, issued Dwellings, Appurtenant Structures And House- by the California Earthquake Authority that hold Personal Property Coverage Form included an earthquake policy premium a. We may elect not to renew such coverage surcharge. for any reason, except as provided in b., c. d. We will not refuse to renew such coverage and d. below: solely because corrosive soil conditions ex- b. We will not refuse to renew such coverage ist on the premises. This Restriction (d.) solely because the first Named Insured has applies only if coverage is subject to one of accepted an offer of earthquake coverage. the following, which exclude loss or dam- However, the following applies only to in- age caused by or resulting from corrosive surers who are associate participating soil conditions: in- surers as established by Cal. Ins. Code (1) Capital Assets Program Coverage Form Section 10089.16. We may elect not to re- (Output Policy); new such coverage after the first Named (2) Commercial Property Coverage Part — Insured has accepted an offer of earth- Causes Of Loss—Special Form; or quake coverage, if one or more of the fol- lowing reasons applies: (3) Farm Coverage Part — Causes Of Loss Form — Farm Property, Paragraph D. (1) The nonrenewal is based on sound Covered Causes Of Loss—Special. underwriting principles that relate to the coverages provided by this policy and 3. We are not required to send notice of nonre- that are consistent with the approved newal in the following situations: rating plan and related documents filed a. If the transfer or renewal of a policy, without with the Department of Insurance as re- any changes in terms, conditions, or rates, quired by existing law; is between us and a member of our insur- ance group. s ort, RiskMs nsge/nentDivision REVIEWED&APPROVED BY: 3 YY aI tt� ,Id ACW41.4 Risk Management Specialist IL 02 70 09 08 © ISO Properties, Inc., 2007 Page 3 of 4