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C. The following is added and supersedes any (2) The Commissioner of Insurance provisions to the contrary: finds that the exposure to po- Nonrenewal tential losses will threaten our 1. Subject to the provisions of Paragraphs solvency or place us in a haz- C.2. and C.3. below, if we elect not to ardous condition. A hazardous renew this policy, we will mail or de- condition includes, but is not liver written notice, stating the reason limited to, a condition in which for nonrenewal, to the first Named In- we make claims payments for sured shown in the Declarations, and to losses resulting from an earth - the producer of record, at least 60 days, quake that occurred within the but not more than 120 days, before the preceding two years and that expiration or anniversary date. required a reduction in We will mall deliver our notice to the policyholder surplus of at least first Named Insured, and to the pro- 25% for payment of those ducer of record, at the mailing address claims; or shown in the policy. (3) We have: 2. Residential Property (a) Last or experienced a sub- This provision applies to coverage stantial reduction in the real property used predominantly foror availability or scope of re - residential purposes and consisting of insurance coverage; or not more than four dwelling units, and (b) Experienced a substantial to coverage on tenants' household increase in the premium _ property contained in a residential unit, charged for reinsurance if such coverage is written under one of coverage of our residential the following: property insurance policies; Commercial Property Coverage Part and Farm Coverage Part -Farm Property - the Commissioner has ap- Farm Dwellings, Appurtenant Structures proved a plan for the And Household Personal Property Cov- nonrenewals that is fair and equitable, and that is respon- a. We may elect not to renew such sive to the changes in our re - coverage for any reason, except as insurance position. provided in b., c. and d. below. c. We will not refuse to renew such b. We will not refuse to renew such coverage solely because the first Named Insured has cancelled or did coverage solely because the first not renew a policy, issued by the Named Insured has accepted an of- California Earthquake Authority, fer of earthquake coverage. that included an earthquake policy However, the following applies only premium surcharge. to insurers who are associate par- d. We will not refuse to renew such ticipating insurers as established by coverage solely because corrosive Cal. Ins, Code Section 10089.16. We soil conditions exist on the prem- may elect not to renew such cov- ises. This restriction (d.) applies erage after the first Named Insured only if coverage is subject to one of has accepted an offer of earthquake the following, which exclude loss or coverage, if one or more of the fol- damage caused by or resulting lowing reasons applies: from corrosive soil conditions: (1) The nonrenewal is based on (1) Commercial Property Coverage sound underwriting .principles Part - Causes Of Loss - Special that relate to the coverages Form; or provided by this policy and that are consistent with the ap- (2) Farm Coverage Part -Causes Of proved rating plan and related Loss Form - Farm Property, documents filed with the De- Paragraph D. Covered Causes partment of Insurance as re- Of Loss - Special. quired by existing law; IL 02 70 09 12 © Insurance Services Office, Inc., 2012 Page 3 of 4