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Paramount Insurance Company Maryland Liability and Physical Damage Rates SAFE DRIVER, TRANSFER AND MULTI-CAR DISCOUNTS ON LIABILITY AND PHYSICAL DAMAGE “B” VIOLATION DISCOUNTS PREFERRED RATE CLASS UP TO 6 YEAR SAFE DRIVER DISCOUNTS SYMBOLS UP TO 25 FOR 2010 AND PRIOR VEHICLES SYMBOLS UP TO 59 FOR 2011 AND SUBSEQUENT VEHICLES UP TO $32,000 VEHICLE VALUE DEDUCTIBLES TO $1750 RATE QUOTING SERVICE FROM OUR UNDERWRITING DEPARTMENT The Company That Appreciates Your Business

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Paramount Insurance Company

Paramount Insurance Company

Maryland Liability and Physical Damage Rates

SAFE DRIVER, TRANSFER AND MULTI-CAR DISCOUNTS ON LIABILITY AND PHYSICAL

DAMAGE

“B” VIOLATION DISCOUNTS

PREFERRED RATE CLASS

UP TO 6 YEAR SAFE DRIVER DISCOUNTS

SYMBOLS UP TO 25 FOR 2010

AND PRIOR VEHICLES

SYMBOLS UP TO 59 FOR 2011 AND SUBSEQUENT VEHICLES

UP TO $32,000 VEHICLE VALUE

DEDUCTIBLES TO $1750

RATE QUOTING SERVICE FROM

OUR UNDERWRITING DEPARTMENT

The Company That Appreciates Your Business

Mailing Address: PO Box 47520

Baltimore, MD 21244

Business Hours: 9:00AM to 4:15PM Monday – Friday

Underwriting Department Binders and Customer Service: Telephone Numbers: Baltimore Area (410) 944-1267 Outside of Baltimore (240) 533-3000 24-hr Automated Binder Service (after normal business hours, weekends, and holidays): Phone: (410) 944-1267 then press option #1

Fax Number: (410) 505-1708

Claims Department Telephone Numbers: Baltimore Area (410) 944-6882 Outside of Baltimore (240) 533-3001 Fax Number: (410) 505-1717

TABLE OF CONTENTS

Binders 1 Limits of Liability 2 Eligibility 2 Vehicle Acceptability 3 -Unacceptable Vehicles by Manufacturer 3 -Specific Unacceptable Vehicles 3 Unacceptable Risks 4 Proof of Maryland Ownership 4 Policy Expense Constant 5 Policy Period 5 Short-term Policies 5 Territory Definitions 6 Age Group Determination 6 Comprehensive and Collision Deductible Options 6 Driver Class 6 Preferred Class (Class P) 7 Drivers 7 Phantom Driver 7 Inexperienced Drivers 7 Optional Coverages 8 -Towing & Labor 8 -Rental Reimbursement 8 -Full Window Glass 8 Discounts 9 Transfer Discounts 9 Safe Driver Discounts 11 “B” Violation Discounts – Current Policyholders 13 “B” Violation Discounts – New Business Policies 13 Multi-Car Discounts 14 Business Use 14 Extra Hazard Surcharge 14 Applications 15 Voided Applications 17 Inspection of Vehicles 17 Sound Reproducing Equipment 17 Driving Records 18 At Fault Accidents 18 Point Surcharge 18 -Driving Record Surcharges 19 Exclusion Procedures 22 Endorsements 23 Cancellations 25 Rewrites and Reinstatements 26 Claims 27 Premium Development 28

Obtaining Binders: Paramount writes 1 vehicle per policy. A binder will need to be obtained for each vehicle placed with Paramount. Binders are good for 30 days (unless a prior written agreement has been approved by Paramount Insurance Company). ALL BINDERS (New Business, Renewals & Re-writes) MUST BE CALLED OR FAXED (see inside cover page for phone numbers) to Paramount at the time the application is signed and the premium or down payment has been paid to the producer – UNLESS USING THE ELECTRONIC ON-LINE SYSTEM. Producers needing to obtain a binder after regular business hours, weekends/holidays should call our 24-hour Automated Binder Service. Binders will be effective the date and time called in (unless a later date is requested) and will expire at 12:01am on the 30th day following the effective date. ANY BINDER NOT CALLED OR FAXED TO PARAMOUNT WILL NOT BE EFFECTIVE UNTIL THE DATE RECEIVED IN PARAMOUNT’S OFFICE. Binders may not be extended. All new binders issued are subject to a 45-day Underwriting Period (starting with the effective date of coverage) and may be cancelled if it does not meet our Underwriting Guidelines by sending the insured a cancellation notice to be effective no less than 15 days after the mailing of the notice.

An expense fee will be charged for any binder not issued as a policy. Cancellation of Binders: A producer may cancel a binder by calling Paramount Insurance Company and advising the reason for cancellation of the binder. If coverage was afforded under the binder, the earned premium and expense fee for the time the binder was in force MUST be remitted to Paramount. New Business Effective 03/14/11 Renewal Business Effective 04/28/11 1

BINDERS

Binders will Expire if the appropriate paperwork (THE APPLICATION, MVR, LEGIBLE COPY OF THE MARYLAND MD TITLE OR MD REGISTRATION (IN THE OWNER’S NAME), AND A CHECK FOR THE APPROPRIATE PREMIUM) is not received in our office within 30 days after the binder is effective. ANY APPLICATION RECEIVED AFTER 30 DAYS WILL BE EFFECTIVE THE DATE RECEIVED AT PARAMOUNT’S OFFICE.

1. Statutory limits of 30/60/15 BI/PD and Uninsured Motorist limits equal to the BI/PD limits. 2. Full Personal Injury Protection (PIP) must be provided unless a form is signed for Limited

PIP. The PIP form MUST be completed in its entirety and signed by the applicant or the FULL PIP premium will be charged.

3. LIABILITY ONLY IS ACCEPTABLE (see #6 under Unacceptable Vehicles). 4. Liability Coverage for vehicles over 20 years old are NOT acceptable – except for Class “P”

drivers with a 2yr or greater Safe Driver Discount. Model Years are calculated as of October 1st each year (example: in October 2010 – model years 2011-1991 are acceptable).

In order to be eligible for coverage, the following rules apply: 1. The applicant MUST be the owner or co-owner of the vehicle being insured. 2. The applicant MUST:

A. be a resident of (live in) the State of Maryland, unless military risk stationed in Maryland; B. have a VALID Maryland driver’s license or VALID Maryland learner’s permit (MUST be

accompanied by an individual with a VALID Maryland driver’s license) at the time the application is written. Any applicant not having a VALID Maryland driver’s license or VALID Maryland learner’s permit MUST be excluded from the policy. Any other individual who regularly drives the vehicle and lives outside the household that is not eligible for coverage MUST be excluded from the policy at the time the application is written.

**Applications received without A and B listed above will be cancelled for non-qualified driver.

3. The vehicle being insured MUST be registered in the State of Maryland and MUST meet Paramount’s Underwriting Guidelines to be eligible for coverage.

4. A non-U.S. citizen licensed with a VALID Maryland driver’s license and proof of Maryland residency is eligible for coverage.

5. Post Office Boxes are acceptable as a mailing address, however a garaging address MUST be provided for rating purposes. If a policy has been written and the applicant moves out of state, we will send the proper cancellation notice since the application then becomes ineligible for coverage.

6. Leased vehicles (from leasing companies) may be written as long as a copy of the lease agreement is provided.

New Business Effective 03/14/11 Renewal Business Effective 04/28/11 2

LIMITS OF LIABILITY

ELIGIBILITY

Refer to the chart below for unacceptable vehicles by manufacturer and specific unacceptable vehicles by make and model. The following are unacceptable: 1. Any altered, customized or modified vehicles (includes cars, vans, pick-ups, or SUV’s). 2. Vans or Pickups used for ANY type of delivery (see Business Use Surcharge on page 15). 3. Any vehicle valued higher than $32,000 (before any rebates) based on the lesser of cost

new (not including tax, title, license, etc.) or current N.A.D.A. value. 4. Any vehicle 2010 and prior rated by PortaSymbol or ISO higher than 25 for Physical

Damage Coverage. Liability Only is acceptable for ALL vehicles (regardless of symbol) unless the vehicle is on the “Specific Unacceptable Vehicles” chart listed below.

5. Any vehicle 2011 and subsequent rated by PortaSymbol or ISO higher than 59 for Physical Damage Coverage. Liability Only is acceptable for ALL vehicles (regardless of symbol) unless the vehicle is on the “Specific Unacceptable Vehicles” chart listed below.

6. Comprehensive coverage written without collision. 7. Any vehicle with a model year over 20 years old are NOT acceptable – except for Class “P”

drivers with a 2yr or greater Safe Driver Discount. Model years are calculated as of October 1st each year (example: in October 2010 - model years 2011 -1991 are acceptable).

8. Pick-up trucks and vans exceeding ¾ ton capacity. 9. Conversion Vans or Pick-ups. 10. Vehicles used for commercial purposes. 11. Vehicles CAN NOT be rented or leased to others. We DO accept vehicles leased from

leasing companies. 12. Any vehicle NOT registered (titled) in the State of Maryland. 13. Any vehicle registered in the State of Maryland as antique, replica, or historic. 14. Motorcycles. 15. Dune buggies. 16. Vehicles equipped for racing or speed competition. 17. Two-seat sports cars. 18. Electric Vehicles. New Business Effective 03/14/11 Renewal Business Effective 04/28/11 3

VEHICLE UNACCEPTABILITY

UNACCEPTABLE VEHICLES BY MANUFACTURER

Alfa Romeo Fiat MG Porsche Bertone Lada Maserati Triumph DeLorean Lancia Opel Yugo

SPECIFIC UNACCEPTABLE VEHICLES

2-Seat Sports Cars Ford F350 Nissan NV Antique or Historic Vehicles Ford Transit Connect Nissan Z’s & ZX’s Electric Vehicles GMC G-Series Vans Pontiac Fiero Chevrolet Corvette Honda CRX Scion/Toyota iQ Chevrolet G-Series Vans Honda CR-Z Smart Fortwo Chevrolet Spark Hummer (All) Subaru XT Dodge Ram Van Lexus LX’s Suzuki Samurai Dodge Sprinter Mini (All) Suzuki X-90 Dodge Stealth Mitsubishi 3000 Toyota Celica Supra Ford E-Series Vans Nissan Armada

Unacceptable Drivers will be given a rate at 200% of the highest acceptable driver rate (7pts). The following are unacceptable: 1. Liability Coverage for vehicles over 20 years old are NOT acceptable – except for Class “P”

drivers with a 2yr or greater Safe Driver Discount. Model years are calculated as of October 1st each year (example: in October 2010 – model years 2011 -1991 are acceptable).

2. Any individual who DOES NOT possess a VALID Maryland driver’s license or VALID Maryland learner’s permit (MUST be accompanied by an individual having a VALID Maryland driver’s license).

3. Any individual with more than 7 points as defined by the Paramount Driving Record Surcharge Chart.

4. Any individual with more than one D.U.I. or D.W.I. 5. Any individual with more than one at fault accident. 6. Any risk for which ALL drivers are not Maryland residents, unless military risks stationed

in Maryland. 7. Applicants who have been convicted of insurance fraud, or who have given false

information on a previous application. 8. Physical Damage ONLY is not acceptable. All existing Physical Damage only policies will

continue to be offered a Renewal as long as the Risk is still acceptable to Paramount. Proof of Maryland ownership MUST be provided with the application. The following will be accepted as proof of Maryland ownership: 1. A valid Maryland registration (temporary or permanent) in the applicant’s name

(applicant MUST be owner or co-owner of the vehicle). Out-of-State registrations are NOT acceptable as proof of Maryland ownership.

2. A Maryland title in the applicant’s name (applicant MUST be owner or co-owner of the vehicle). Out-of-State titles or titles signed over are NOT acceptable as proof of Maryland ownership.

3. Maryland bill of sale in the applicant’s name. Out-of-State bill of sales are NOT acceptable as proof of Maryland ownership.

4. A Maryland Title/Registration Receipt from the Motor Vehicle Administration. Policies received without proof of Maryland ownership will be 45-day cancelled for Missing Information until the proof of Maryland ownership is received. If an application is received in one person’s name without proof of ownership, and then it is determined that a different person owns the vehicle once the policy has been issued, Paramount will need all new paperwork (Application, PIP Form, Driver Exclusion Form(s) (if applicable) and a No Loss Letter signed by the owner. A NEW policy number will then be given under the current owner and the old policy cancelled. New Business Effective 03/14/11 Renewal Business Effective 04/28/11 4

UNACCEPTABLE RISKS

PROOF OF MARYLAND OWNERSHIP

Liability and Physical Damage will each have a non-refundable, fully-earned, expense fee added to the developed premium (see chart below).

Annual term only (see Short Term Policies for exceptions). Paramount policies are written on a yearly basis. Short term policies MAY be written if the insured purchases an additional vehicle mid-term and wants to match expiration dates with an existing policy. These policies will be written on a pro-rata basis, with the total short-term premium calculated using the standard pro-rata premium calculation. Expense fees are fully earned. If you are unsure of the correct pro-rata factor, please call our Underwriting Department. Expense Fees for short-term policies will be calculated in the following manner: Re-Writes may also be written short-term (see Re-Writes Section on page 26).

New Business Effective 03/14/11 Renewal Business Effective 04/28/11 5

7 MONTHS TO 1 YEAR

LESS THAN 7 MONTHS

LIABILITY

PHYSICAL DAMAGE

$60

$70

$30

$35

POLICY PERIOD

SHORT TERM POLICIES

POLICY EXPENSE CONSTANT (hereinafter referred to as “Expense Fee”)

7 MONTHS TO 1 YEAR

LESS THAN 7 MONTHS

LIABILITY

PHYSICAL DAMAGE

$60

$70

$30

$35

Territory definitions are determined by zip code (see back page of this book). Determination of the vehicle’s age group is by model year. For Comprehensive and Collision deductibles options, see the rate guide. If you need further assistance for any deductibles not shown, call our Underwriting Department. Rating will be based on the highest rated licensed driver (whether residing in the household or outside the household), even if that person is already rated with another insurance company. See Paramount’s Driver Class Chart. *SINGLE includes persons who are not married, widowed, divorced, separated or living apart from their spouse. Drivers who have a birth date within thirty (30) days of inception of the policy, where the driver’s class changes, will be rated based on the older age. Proof of Marriage is required when one of the following conditions exists (the insured will be rated as single until proof of marriage is received): 1. When the insured and subsequent driver has different last names but listed as married on

the application. 2. When the insured is listed as married and the spouse does not live in the household or does

not have a driver’s license. 3. When the insured is listed as married and no spouse information is listed on the application. Proof of Marriage is also required for married males under 30 years of age or married females under 25 years of age. New Business Effective 03/14/11 Renewal Business Effective 4/28/11 6

TERRITORY DEFINITIONS

AGE GROUP DETERMINATION

COMPREHENSIVE AND COLLISION DEDUCTIBLE OPTIONS

DRIVER CLASS

The rated driver must be 30 years of age or older and must be validly licensed for a minimum of 24 continuous months. Drivers with a learner’s permit, suspended, revoked, or eligible status not acceptable for Class P. A maximum of one minor violation (our Driving Record Surcharge C) per driver within the last 36 months. The rated driver must have been continuously insured for at least one year and have been offered a renewal with Paramount or another carrier. Paramount requires that the following individuals be shown on EACH application: 1. Named Insured (MUST be driver #1 on the application). 2. Co-Owner of the vehicle (if applicable) whether they are licensed or residing in the same

household. 3. Any individual age 14 or over who resides in the same household as the applicant,

regardless if they drive the vehicle or not. 4. Anyone who drives the vehicle not residing in the same household. 5. Any individual shown on the C.L.U.E. Report as having driven the applicant’s vehicle

whether living in the same household or not. 6. Any individual shown on proof of prior insurance either as a driver or excluded driver. 7. Any individual added from the Claims Department as either living in the household or having

driven the named insured’s vehicle. Individuals added to the policy will be rated on based on their Age, Points, and Safe Driver Discounts. If the individual is the Highest Rated Driver, the policy will be rated on this driver and the policy premium re-calculated. Any individual on the policy not meeting Paramount’s Underwriting guidelines MUST be excluded from coverage. See Paramount’s Exclusion Procedures on page 22. A Phantom Driver will be used when there are more vehicles than drivers. Paramount will rate the correct Driver Class and Points on the highest rated vehicle; all subsequent vehicles with Paramount will be rated with a Phantom Driver (Class P Rate with 0 points). Any driver who has a valid driver’s license (consisting of a valid regular and/or provisional license) for less than a total of 18 month shall be subject to an inexperienced driver point charge. Suspended or revoked licenses count towards the 18 months. New Business Effective 03/14/11 Renewal Business Effective 04/28/11 7

PREFERRED CLASS (CLASS P)

PHANTOM DRIVER

INEXPERIENCED DRIVERS

DRIVERS

Paramount offers the following coverages, each of which is only available for purchase at the original inception of the policy: Towing and Labor must be purchased at policy inception and cannot be added mid-term. Rental Reimbursement is subject to a maximum limit of 30 days or $1500, whichever is less. This benefit is payable with any collision claim. Payout per day is determined by the table above. Quote for any other coverage please call. For an additional premium, the deductible for glass breakage paid under comprehensive will be reduced to $0. Use the following table to determine the appropriate premium: Full Window Glass is NOT available on Collision only or Liability only policies. You can increase your commission on the ENTIRE policy by an additional 2% by writing the usual Comprehensive and Collision along with our Towing & Labor, Rental Reimbursement AND Full Window Glass Coverage. ALL THREE coverages MUST be written with the Comprehensive and Collision policy AT INCEPTION or RENEWAL in order to get the additional commission.

New Business Effective 03/14/11 Renewal Business Effective 04/28/11 8

OPTIONAL COVERAGES

1. TOWING & LABOR:

Annual Prem. - $12 Limit/Occur. - $50

2. RENTAL REIMBURSEMENT:

Annual Prem. - $35 $65 $130 $260 Limit/Day - $15 $25 $50 $100

3. FULL WINDOW GLASS:

Comp. Deductible Rate

$500 $55 $750 $63 $1000 $70

Comp. Deductible Rate

$100 $33 $250 $46 $350 $50 $400 $52

If the “rated” driver has a violation or At Fault Accident, the discounts for new policies will be calculated in the following manner: Group A (7pts): Remove ALL Safe Driver and Transfer Discounts; Group B (5pts): Remove 1 year Safe Driver and 1 year Transfer; Group C (1,2pts): No change in discounts. For Paramount Renewals or Companions, we will penalize Safe Driver Discount only.

ANY vehicle being transferred from another carrier to Paramount is entitled to a Transfer Discount. Transfer Discounts do NOT apply to Paramount Renewals. They apply only to the first year coverage transfers to Paramount. A newly purchased vehicle that does not have prior insurance is not entitled to a Transfer Discount. Transfer Discounts can be given if coverage is being transferred from a deleted vehicle to the new vehicle. Paramount will offer a Transfer Discount on policies in all of its’ Territories except for Territories 21 and 22 for Liability. The total MAXIMUM combined Transfer and Safe Driver Discount for Liability Coverage is 40% (3 yr Transfer + 3 yr Safe Driver). The total MAXIMUM combined Transfer and Safe Driver Discount for Physical Damage Coverage is the 3 yr Transfer + 3 yr Safe Driver Discount (see Physical Damage Discount chart on each rate page by Territory). THE TRANSFER DISCOUNT WILL BE EQUAL TO THE SAFE DRIVER DISCOUNT. THIS RULE DOES NOT APPLY TO ADDITIONAL VEHICLES FOR THE SAME INSURED UNLESS (COMPANION POLICIES) PRIOR INSURANCE CAN BE SUPPLIED FOR EACH VEHICLE.

See page 10 for Transfer Discount percentages for Liability. Refer to the Physical Damage Rate pages in this manual for the Transfer Discount percentages for Physical Damage.

New Business Effective 03/14/11 Renewal Business Effective 04/28/11 9

DISCOUNTS

TRANSFER DISCOUNTS

To qualify for the Transfer Discount, the VEHICLE being insured MUST meet the following requirements: LIABILITY: PHYSICAL DAMAGE:

Refer to the Physical Damage Rate pages in this manual for the Transfer Discount percentages for Physical Damage.

New Business Effective 03/14/11 Renewal Business Effective 04/28/11 10

TRANSFER DISCOUNTS - Continued

Discount Year

Insuring Vehicle MUST have

Discount Given

1 year prior insurance coverage

(maximum 30 day lapse)

1 year

5%

2 year prior insurance coverage (maximum 30 day lapse)

2 year

11%

3 year prior insurance coverage (maximum 30 day lapse)

3 year

8%

Safe Driver Discounts apply to the following coverages:

Liability Coverage Comprehensive and Collision Coverage.

To qualify for any of the Safe Driver Discounts, an offer to renew from the previous carrier and/or declaration page(s) showing the appropriate period of time, must accompany the original application. THE TRANSFER DISCOUNT WILL BE EQUAL TO THE SAFE DRIVER DISCOUNT. THIS RULE DOES NOT APPLY TO ADDITIONAL VEHICLES FOR THE SAME INSURED UNLESS PRIOR INSURANCE CAN BE SUPPLIED FOR EACH VEHICLE. The total MAXIMUM combined Transfer and Safe Driver Discount for Liability Coverage is 40% (3 yr Transfer + 3 yr Safe Driver). The total MAXIMUM combined Transfer and Safe Driver Discount for Physical Damage Coverage is the 3 yr Transfer + 3 yr Safe Driver Discount (see Physical Damage Discount chart on each rate page by Territory). Renewal quotations issued by Paramount will include all applicable discounts, BASED ON THE INFORMATION AVAILABLE AT THE TIME OF THE QUOTE.

See pages 12 for the Safe Driver Discount percentages for Liability. Refer to the Physical Damage Rate pages in this manual for the Safe Driver Discount percentages by Territory for Physical Damage.

New Business Effective 03/14/11 Renewal Business Effective 4/28/11 11

SAFE DRIVER DISCOUNTS

ADDING DRIVERS MID-TERM: If a request is received to add a Driver mid-term, his/her rates will be based on: -Driver Age -Driver Points -Driver Safe Driver Discounts (SAFE DRIVER DISCOUNTS WILL BE REMOVED FROM THE POLICY UNLESS PROOF OF PRIOR COVERAGE FOR THE DRIVER BEING ADDED IS RECEIVED). If the new driver being added is the Highest Rated Driver, the policy will be rated on this driver and the policy premium re-calculated.

To qualify for the Safe Driver Discount, the RATED DRIVER MUST meet the following requirements (unless such operator is the highest rated driver on another Paramount policy): LIABILITY:

New Business Effective 03/14/11 Renewal Business Effective 04/28/11 12

Discount Year

Rated Driver MUST Have

Discount Given

1 year

1 year prior coverage (no more than a 30 day lapse) and no A/B violations in the last 12 months

10%

2 year

2 year prior coverage (no more than a 30 day lapse) and no A/B violations in the last 24 months

19%

3 year

4 year

5 year

6 year

3 year prior coverage (no more than a 30 day lapse) and no A/B violations in the last 36 months

Paramount Renewal or Companion Policies Only – Transfer Discounts are not

applicable. (1 year minimum with Paramount) 4 years total prior

coverage

Paramount Renewal or Companion Policies Only – Transfer Discounts are not

applicable. (2 year minimum with Paramount) 5 years total prior

coverage

32%

Paramount Renewal or Companion Policies Only – Transfer Discounts are not

applicable. (3 year minimum with Paramount) 6 years total prior

coverage

44%

47%

50%

SAFE DRIVER DISCOUNTS - Continued

Paramount will offer a “B” Violation Discount to any policyholder CURRENTLY insured with Paramount Insurance Company at renewal, who has had no more than one Group “B” violation or At Fault Accident during the policy year.

The Discount for CURRENT policyholders will be applied to the renewal policy in the following manner:

*Drivers rated as Class P on the current Paramount policy will be rated as Class A on the renewal policy.

Paramount will offer a “B” Violation Discount to any New Business policy transferred to Paramount from another company with a MINIMUM two years continuous insurance coverage and no more than one Group “B” violation or At Fault Accident. The Discount for NEW BUSINESS policies (adding an additional vehicle or transferring in from another carrier) will be applied to the new policy in the following manner:

*Policies being transferred from another carrier will be eligible for a Transfer Discount equal to the Safe Driver Discount.

New Business Effective 03/14/11 Renewal Business Effective 04/28/11 13

“B” VIOLATION DISCOUNT – CURRENT POLICYHOLDERS

6 Year Safe Driver Discount

5 Year Safe Driver Discount + 5pts*

“B” VIOLATION DISCOUNT – NEW BUSINESS POLICIES

CURRENT POLICY

PARAMOUNT POLICY

3 Year Safe Driver Discount

2 Year Safe Driver Discount

2 Year Safe Driver Discount + 5pts*

1 Year Safe Driver Discount + 5pts*

CURRENT PARAMOUNT

POLICY

RENEWAL

POLICY

4 Year Safe Driver Discount

3 Year Safe Driver Discount

3 Year Safe Driver Discount + 5pts*

2 Year Safe Driver Discount + 5pts*

2 Year Safe Driver Discount

1 Year Safe Driver Discount

1 Year Safe Driver Discount + 5pts*

No Safe Driver Discount + 5pts*

5 Year Safe Driver Discount

4 Year Safe Driver Discount + 5pts*

A Multi-Car Discount of 5% on Liability and 10% on Physical Damage will be applied to any risk insuring more than one vehicle in the same household, even if the other vehicles carry Liability Only with another carrier. To apply the discount, please provide a copy of the current declaration page with the other carrier, showing coverage on the vehicle. If the other vehicle is already insured with Paramount, refer to the current policy number so that the discount can be applied to both policies. 1. Two or more vehicles written at inception: All policies will be given a 5% Liability and 10%

Physical Damage discount. 2. Second or subsequent vehicle added mid-term: Both vehicles will receive a 5% Liability

and 10% Physical Damage discount effective the date of the addition of the second or subsequent vehicle. If the second vehicle is for short term, the pro-rata premium will apply.

When rating multiple cars, please assign the highest rated driver to the highest rated car. When there are more vehicles than drivers, the unassigned vehicle or vehicles are rated Class P with 0 points (Phantom Driver). Multi-car Discounts will be removed at renewal if the other vehicle is insured with another company. Proof of the Multi-Car Discount MUST be provided at renewal. We will accept copies of declaration pages from other carriers as proof of Multi-Car Discount. A 20% Business Use Surcharge is applicable to any vehicle used in business (not including commuting to and from work). Example are: Pizza Delivery (including part time), Sales People, etc. See #2 under Unacceptable Vehicles on page 3.

An Extra Hazard Surcharge of 20% will apply on all convertibles to Comprehensive and Collision Coverage.

New Business Effective 03/14/11 Renewal Business Effective 04/28/11 14

MULTI-CAR DISCOUNT

BUSINESS USE

EXTRA HAZARD SURCHARGE

Paramount writes 1 vehicle per policy. A NEW APPLICATION and supporting paperwork IS REQUIRED for EACH VEHICLE placed with Paramount. Effective January 1, 2007 – All NEW applications are subject to a 45-day Underwriting Period. The Underwriting Period starts on the POLICY EFFECTIVE DATE. Applications MUST be cancelled during this 45-day Underwriting Period if: 1. Any or all risks on the policy do not meet our Underwriting Guidelines 2. The application is missing paperwork of ANY kind, or 3. Any application that has an Additional Premium Applications received that are considered to be late, or applications that are to be taken back to an earlier Effective Date will be issued the DATE IT IS RECEIVED AT PARAMOUNT if 1 or more of the above issues exists. Once an application meets our Guidelines, any missing paperwork is received and all money is received, the policy can be taken back to its original Policy Effective Date with a Signed No Loss Letter. ONLINE APPLICATIONS: The following documents must be received by paramount during the 30 day binding period: 1. APPLICATION: Page 1 and 2 of the Maryland Automobile Insurance Application signed by

the OWNER or CO-OWNER of the insuring vehicle. PLEASE GIVE THE BINDER DECLARATION PAGE TO THE INSURED.

2. PIP FORM: the form is automatically generated when the application is bound. It must be signed by the OWNER or CO-OWNER of the insuring vehicle.

3. EXCLUSION FORM: this form is automatically generated when the application is bound. It must be signed by the OWNER or CO-OWNER of the insuring vehicle.

4. FINANCE AGREEMENT: include a copy with the application. 5. NO LOSS LETTER: This form is automatically generated when you enter an effective date

that is prior to TODAY’s DATE. It must be signed by the OWNER or CO-OWNER of the insuring vehicle.

6. DISCOUNT PAPERWORK: Provide any paperwork that will provide proof of the discount you chose on the application screen.

7. MARYLAND REGISTRATION, MARYLAND TITLE OR MARYLAND BILL OF SALE: a CURRENT copy MUST be included with the application.

8. CHECK for FULL PREMIUM: MUST be included with the application. Any documentation submitted with the application must be completed in its entirety and signed by the applicant (owner or co-owner of the vehicle). New Business Effective 03/14/11 Renewal Business Effective 04/28/11 15

APPLICATIONS

PAPER APPLICATIONS: In order to facilitate processing in the timeliest manner possible, all areas of the application must be COMPLETED IN ITS ENTIRETY. This includes, but is not limited to, the following: 1. NAMED INSURED: The applicant (named insured) MUST be the owner or co-owner of

the vehicle. The original application must be COMPLETED IN ITS ENTIRETY (address, occupation and employer, phone numbers of both home and work of the owner), and MUST be SIGNED and DATED by the applicant. THE NAMED INSURED MUST MATCH THE MARYLAND REGISTRATION, MARYLAND TITLE, OR MARYLAND BILL OF SALE.

2. LOSS PAYEE: List the full name and address for the lienholder of the vehicle (if applicable). This is MANDATORY on all vehicles 4 years old and newer.

3. POLICY PERIOD: List BOTH policy inception date and expiration date on the application. 4. COVERAGES: Fill in ALL coverages being purchased. Remember, the optional coverages

can only be added at inception or at renewal. PHYSICAL DAMAGE ONLY is NOT acceptable. All existing Physical Damage Only policies will continue to be offered Renewals as long as the Risk is still acceptable to Paramount. Full Window Glass is not available on Collision Only or Liability Only policies.

5. DRIVER INFORMATION: Paramount REQUIRES the names of the owner, co-owner, ALL persons 14 and over residing in the same household (licensed or not), and any other driver, regardless of residency. See the Drivers Section on page 7 for individuals who should be listed on the application. A copy of the MVR on all drivers listed on the application and an MVR on all members of the household must accompany the application. If a driver or a member of the household is to be excluded or does not meet Paramount’s eligibility requirements, we need an exclusion form signed by the applicant (see page 22 for Exclusion Procedures). If the producer gets a “no hit” record from the MVA for an operator who produced a valid Maryland license, we will need a copy of the license and the no hit record from the MVA. Paramount will charge 3pts for any unverifiable driving record.

6. ACCIDENTS/VIOLATIONS: Paramount requires that the month, day, and year of all accidents and violations, including out of state, be shown.

7. VEHICLE IDENTIFICATION NUMBER: MUST be shown clearly and accurately. 8. VEHICLE RATING INFORMATION: Year, make, model (including 2dr or 4dr), symbol and

vehicle age MUST be written clearly on the application. New Business Effective 03/14/11 Renewal Business Effective 04/28/11 16

APPLICATIONS - Continued

Paramount reserves the right to change the quoted premium to a developed premium on all electronic applications.

The following documents must be received with the application during the 30-day binding period:

A. PREMIUM FINANCE AGREEMENT (if applicable) B. CHECK for the FULL PREMIUM matching the application (less commission); C. MOTOR VEHICLE REPORTS (MVRS) on ALL DRIVERS; D. Any paperwork necessary to give the Safe Driver and/or Transfer Discount; E. Signed EXCLUSION FORM (if applicable) for ANY driver in the household not

having a VALID Maryland driver’s license, or ANY driver (whether living in the household or not) who does not meet Paramount’s Eligibility Requirements. Exclusion forms must include the appropriate policy number(s) and completed in its entirety;

F. A copy of the MARYLAND REGISTRATION, MARYLAND TITLE, and/or MARYLAND BILL OF SALE IN THE APPLICANT’S NAME (showing the applicant as the owner or co-owner of the vehicle);

G. Signed PIP Form. The PIP Form MUST be COMPLETED IN IT’S ENTIRETY and SIGNED BY THE APPLICANT (OWNER OR CO-OWNER OF THE VEHICLE) or the Full PIP Premium will be charged. PIP Forms MUST include the policy number.

**If PIP is to be changed at Renewal, a NEW PIP FORM with the correct PIP Coverage checked MUST be received with the Renewal Application and MUST be signed by the Named Insured. If this form is not included with the Renewal Application, PIP Coverage will remain the same until the new form is received. Paramount does NOT void applications, binders or policies. To cancel a binder, please refer to the “Cancellation of Binders” Section on page 1 of this manual. To cancel a policy, please refer to the “Cancellations” Section on page 25. No inspections of the vehicle are required. Coverage is excluded unless the equipment is permanently installed by the manufacturer. New Business Effective 03/14/11 Renewal Business Effective 04/28/11 17

APPLICATIONS - Continued

INSPECTION OF VEHICLES

SOUND REPRODUCING EQUIPMENT

VOIDED APPLICATIONS

It is suggested that you determine the proper rate for all drivers of the vehicle from their driving record BEFORE you submit the application to the company. You MUST send a copy of the driving records of ALL driver’s listed on Paramount’s application (for hand-written applications ONLY). Any unverifiable driving record will be charged 3 points.

All at fault accidents are charged at the inception of the policy and at renewal. Accidents cannot be charged mid-term. Please see the current rate book for the points assigned each at fault accident. If adding an additional vehicle mid-term, that policy is subject to all normal Underwriting Guidelines. Paramount uses C.L.U.E. reports (Comprehensive Loss Underwriting Exchange) to determine at fault accidents. At fault accidents are charged for: any Property Damage payout over $400; any Collision claim where the estimated damages are over $400; and any Bodily Injury payout over $400. Claim Types as specified on the C.L.U.E. reports are indicated as follows: CO = Collision ME = Medical Expenses BI = Bodily Injury UM = Uninsured Motorist PD = Property Damage UN = Underinsured Motorist PI = Personal Injury Protection TL = Towing & Labor CP = Comprehensive RR = Rental Reimbursement MP = Medical Payment OT = Other

Refer to the following Driving Record Surcharge chart to determine points. Paramount charges 1 point for the FIRST moving violation, 2 points for EACH ADDITIONAL moving violation. Paramount also charges 5 points for the FIRST at fault accident, and 5 points for EACH ADDITIONAL at fault accident. New Business Effective 03/14/11 Renewal Business Effective 04/28/11 18

DRIVING RECORDS

AT FAULT ACCIDENTS

POINT SURCHARGE TABLE

Individuals with more than 7 points (as defined by the chart below) are unacceptable.

Driving Record Surcharges Description Pts Type Code EQUIPMENT - BALD TIRES - SAFETY BELT 0 M EQP ENT HWY FR/CROSSOVER W/O YIELD RGHT OFWAY 1 C FTY ENT/EMERGE FROM ALLY/DRWAY/BLDG W/O STOP 1 C FTY FAIL TO EXERCISE DUE CARE FOR PEDESTRIAN 1 C FTY FAIL TO STOP/YIELD AT INTERSEC/TURN HWY 1 C FTY FAIL TO STOP AND PROCEED SAFELY AT RR 1 C FTY FAIL TO STOP FOR PEDESTRIANS CROSSNG IN CRSWLK 1 C FTY FAIL TO STOP,GRANT BLND DEAF PED RGHOWAY 1 C FTY FAIL TO STOP/YIELD WHEN ENTERING HWY 1 C FTY FAIL TO YIELD RGHT MAKING LEFT OR U TURN 1 C FTY FAIL TO YIELD RGHT OF WAY AT INTERSECTN 1 C FTY FAIL TO YIELD RGHT OF WAY AT T INTERSECT 1 C FTY FAIL TO YIELD RIGHT OF WAY TO EMERG VEH 1 C FTY FAIL TO YIELD RIGHT OF WAY TO FUNERAL 1 C FTY FOLLOWING ANOTHER VEH TOO CLOSELY 1 C FTY DR VEHICLE IN VIO OF LIC RESTRICTION 1 C LIC DR/ATMPT TO DR MV ON HWY WITH EXP LIC 1 C LIC DR/ATMPT TO DR MV ON LEARNERS W/O SUPERV 1 C LIC DR/ATMPT TO DR MV WITH IMPROPER CL LIC 1 C LIC CROSS PROPERTY/LEAVE RDWY TO AVOID TRAF CONTROL DEV 1 C MOV DR A MOTOR VEH ON A SIDEWALK 1 C MOV DR A VEH WITH VIEW OBSTRUCTD/NOT IN CTRL 1 C MOV DR IMPROPERLY ON DIVIDED HWY 1 C MOV DR IN IMPR MANNER TO CAUSE SKID/SPIN WHL 1 C MOV DR ON CNTL ACCESS HWY WHEN PROHIBITED 1 C MOV DR TO LEFT OF CNTR OF RD WHERE PROHIBTED 1 C MOV DR TO THE LEFT IN A NO PASSING ZONE 1 C MOV DR VEH ON HWY WHILE CONSUMING ALCOHOL 1 C MOV DRIVE MOTOR VEH IN NEGLIGENT MANNER 1 C MOV FAIL TO DR ON EXT RIGHT SIDE OF RD 1 C MOV FAIL TO DR ON RD IN DESIGNATED LANE 1 C MOV FAIL TO OBEY A LANE OF DIR CONTROL SIGNL 1 C MOV DRIV FAIL TO STOP AT RED TRAFF SIGNAL BEFORE RIGHT TURN 1 C MOV New Business Effective 03/14/11 Renewal Business Effective 04/28/11 19

POINT SURCHARGE TABLE - Continued

DRIVER FAIL TO STOP AT STEADY CIRCULAR RED SIGNAL

1

C

MOV

FAIL STOP FOR STOPPED VEHICLE OPERATING FLASH RED LTS 1 C MOV IMPR PASSING/FAIL PERMIT VEH TO PASS 1 C MOV PASSING ON RGHT WHEN NOT PERMITTED 1 C MOV UNSAFE BACKING OF MOTOR VEH 1 C MOV WILLFULLY DISOBEY ORDER/DIR/SUMMONS OF OFFICER 1 C MOV COAST DWNGRADE IN NEUTRAL W/CLUTCH DISENG 1 C MSC DR KNOWINGLY PERM VEH DR W/O REQ SECURITY 1 C MSC DR OVER UNPROTECTED FIRE HOSE W/O CONSENT 1 C MSC DR PASSENGER VEH WITH IMPR PROJECTG LOAD 1 C MSC DR/DAMAGING HWY ROADWAY NOT OPEN TO PUBL 1 C MSC DR/MOVE HEAVY EQUIP VEH ON/ACROSS RR 1 C MSC DRIVING THRU/IN A SAFETY ZONE 1 C MSC DROP/THROW/PLACE TRASH INJ SUBST ON HWY 1 C MSC DRV/TAKING VEH WITHOUT OWNERS CONSENT 1 C MSC FAILURE BY OWNER TO MAINTAIN REQ SECURIT 1 C MSC FOLLOW OR PARK WITHIN 500FT FIRE APPARATIS 1 C MSC KNOWINGLY PERMIT UNAUTH PERSON TO DR VEH 1 C MSC OPEN/FAIL CLOSE DOOR WHEN UNSAFE 1 C MSC PERM/OCCUPY MOB HOME BEING TOWED ON HWY 1 C MSC PLACING TRAFFIC HAZARD ON HWY 1 C MSC UNAUTHORIZE ENT/LEAVNG CNTRL ACCESS HWY 1 C MSC VIOLATE SPECIAL PROV DR THRU TUNNEL 1 C MSC DR AT SPEED NOT REASONABLE AND PRUDENT 1 C SPD DRIVE BELOW MIN POSTED SPEED LIMIT 1 C SPD EXCCED SPEED LIM/FAILURE TO REDUCE SPEED 1 C SPD EXCEED MAX SPEED BY 1-9 MPH 1 C SPD EXCEED MAX SPEED BY 10 MPH 1 C SPD FAIL TO MAINTAIN PSTD MIN SPD ON VEH CRS 1 C SPD FAIL OBEY SIGN/SIGNL/ORDER DIR AT VEH CR 1 C STP FAIL TO OBEY FLASHING TRAFFIC SIGNAL 1 C STP FAIL TO OBEY STOP SIGN AT RR GRADE CROSG 1 C STP FAIL TO OBEY TRAFFIC CONTROL DEVICE 1 C STP FAIL TO OBEY TRAFFIC SIGNAL/SIGN 1 C STP FAIL TO STOP AT RR WHEN CARRNG PASS/CARG 1 C STP FAIL TO STOP AT STOP SIGN/YIELD AT YIELD 1 C STP FAIL TO STOP FOR LIVESTOCK AT LS CROSSNG 1 C STP FAIL TO STOP/PASSING SCH VEH FLASH WARN 1 C STP FAIL TO USE HAND/ARM SIGNL WHEN REQ 1 C TRN IMPROP HAND/ARM SIGNL TO STOP/TURN 1 C TRN New Business Effective 03/14/11 Renewal Business Effective 04/28/11 20

MAKE A PROHIB TURN ON VEH CROSSNG/CROSOV 1 C TRN

MAKE U TURN ON CURV/CREST/GRADE W/PROHIB 1 C TRN START/MOVE VEH UNSAFELY W/O GIVING SIGNL 1 C TRN UNAUTH TURNING/SLOWING/STOPP W/O REQ SIG 1 C TRN USE IMPROPER POSITION/METHOD MAKING TURN 1 C TRN UNVERIFIABLE DRIVING RECORD 3 D UDR AT FAULT ACCIDENT 5 B AAF DR AFTER LIC REF/CANC/SUSP/REVOKED 5 B REV DR WHILE LIC DRIVING PRIV SUSP 5 B REV DR WHILE LIC SUS/REF/REV IN ANOTHER JURS 5 B REV DR/ATMPT TO DR MV/MC ON HWY W/O LICENSE 5 B REV DRIVE MOTOR VEH IN RECKLESS MANNER 5 B RKD EXCEED MAX SPEED BY 30 MPH 5 B RKD FAIL TO CNTRL/REDUCE SPD TO AVOID ACC 5 B RKD DR ACR CNTR LINE/FAIL TO DR RGHT OF RD 5 B WWO FAIL TO DR IN DESIGNATED DIRECTION ONE WAY 5 B WWO INEXPERIENCED DRIVER 7 E INX DR PARTIC AS TIME KEEPR IN RACE/SPD CTST 7 A DRG DR/ATMPT TO DR UNDER INF DRUGS/ALCOHOL 7 A DUI DR/ATMPT TO DR WHILE INTOXICATED 7 A DUI DR/ATMPT TO DR WHILE UNDER INFL OF ALCHL 7 A DUI DR/ATPMT TO DR UNDER INF CNTRL DANG SUBS 7 A DUI FLEEING/ATTEMPT TO ELUDE POLICE OFFICER 7 A FLE TURNING OFF VEH LGHTS TO AVOID IDENTIFTN 7 A FLE FRAUD IN APPL FOR LIC MISUSE LIC TO DRIV 7 A FRD DR FAIL STOP/REMAIN AT ACC OF INJ/DEATH 7 A HAR DR FAIL TO STOP/GIVE INFO ACC UNATT VEH 7 A HAR DR FAIL TO STOP/REMAIN AT PROP DAMG ACC 7 A HAR HOMICIDE BY MOTOR VEH WHILE INTOXICATED 7 A HOM MANSLAUGHTER BY AUTOMOBILE 7 A MSL

New Business Effective 03/14/11 Renewal Business Effective 04/28/11 21

Who to Exclude: 1. Any individual residing in the household without a VALID Maryland Driver’s License

(SUSPENDED, REVOKED, or ELIGIBLE license) MUST be excluded from coverage. 2. Any individual (whether residing in the household or not) who drives the insured vehicle and

who fails to meet Paramount’s Eligibility Requirements MUST be excluded from coverage. 3. Any individual the named insured wishes to exclude from coverage that resides in the

household can be excluded (rate drivers or exclude drivers). 4. Any individual the named insured wishes to exclude from coverage that resides outside the

household can be excluded. Any individual added by Paramount from a C.L.U.E. Report who does not meet Paramount’s Eligibility Requirements will create a minimum 15 day cancellation on the policy if added during the 45-Day Underwriting Period. How to handle driver exclusions: 1. Fill out the exclusion form in its entirety.

A. If an insured has more than 1 policy, an exclusion form should be filled out for each policy OR include ALL of the insured’s policy numbers on the same exclusion form.

B. We do NOT automatically exclude drivers on each policy if only 1 form or 1 policy is shown. Exclusions are applicable to ALL future policies with Paramount unless we are notified IN WRITING to lift the exclusion (see “Lifting an Exclusion” below).

2. The exclusion form MUST be signed by the applicant (owner or co-owner of the vehicle). If a request is received to exclude a driver on an existing Paramount policy, and that driver has had a claim, the exclusion will be effective the day AFTER the loss occurred.

Lifting an Exclusion: Any individual that has been excluded and wishes to be covered at a later date: 1. MUST meet all of Paramount’s eligibility requirements. Proof of eligibility will be required

before an exclusion can be removed. 2. MUST be added back onto the policy by endorsement only, by written request, subject to

approval by Paramount, before coverage can be provided to any individual that had been previously excluded.

3. If a previously excluded driver becomes the Highest Rated Driver, the policy will be re-rated accordingly and a bill will be sent.

New Business Effective 03/14/11 Renewal Business Effective 04/28/11 22

EXCLUSION PROCEDURES

Unacceptable Drivers will be given a rate at 200% of the highest acceptable driver rate (7pts).

Paramount has the right to use the exclusion date requested or to use another date.

ADDING DRIVERS MID-TERM: If a request is received to add a Driver mid-term, his/her rates will be based on: -Driver Age -Driver Points -Driver Safe Driver Discounts (SAFE DRIVER DISCOUNTS WILL BE REMOVED FROM THE POLICY UNLESS PROOF OF PRIOR COVERAGE FOR THE DRIVER BEING ADDED IS RECEIVED). If an endorsement is generated by the agent and the policy premium needs to be adjusted, any additional premium due will be handled like any other addition to the policy. Change requests are to be received within 30 days of the date the agent is notified by the insured. If we receive the request past 30 days, the postmark date or the date received will be used as the effective date. An endorsement change form should be filled out for any changes on the policy. We will bill for an increase in premium unless the policy is to expire within 60 days. In this case, a check for the additional premium MUST accompany the endorsement or the endorsement will not be processed. ADDING DRIVERS MID-TERM: If a request is received to add a Driver mid-term, his/her rates will be based on: -Driver Age -Driver Points -Driver Safe Driver Discounts (SAFE DRIVER DISCOUNTS WILL BE REMOVED FROM THE POLICY UNLESS PROOF OF PRIOR COVERAGE FOR THE DRIVER BEING ADDED IS RECEIVED). To change a driver from “suspended” to “valid”, we require a copy of the reinstatement letter from the MVA, showing the reinstatement of the license. Paramount does not automatically adjust the driver classification. We require that the producer of the policy send us a written request. This also applies to marital status. A copy of the marriage license is required, along with a change request. If the new driver being added is the Highest Rated Driver, the policy will be rated on this driver the policy premium re-calculated. New Business Effective 03/14/11 Renewal Business Effective 04/28/11 23

We will bill for an increase in premium unless the policy is to expire within 60 days. In this case, a check for the additional premium MUST accompany the exclusion or the exclusion will not be lifted.

EXCLUSION PROCEDURES - Continued

ENDORSEMENTS

COVERAGE: If coverage is added to a policy after issuance, such as adding Physical Damage to a Liability Only policy, a check MUST accompany the request for change, and MUST include the insured’s signature (this also applies to deleting coverage). If PIP is changed from FULL to LTD, the coverage date is the date received in the office. Full Window Glass, Towing & Labor, and Rental Reimbursement Coverages can only be added at the time of the inception of the policy or on the renewal date or when changing vehicles. DEDUCTIBLE: To raise deductibles on the policy, the insured’s signature MUST accompany the change request. VEHICLE CHANGES: If there is a change in vehicle, the vehicle that is being added will not be covered if we are not notified within 30 days of the change. If an additional vehicle is being added, we require a new binder be called in. This must be followed up with a completed application and a check. When there is a change in vehicle and the new vehicle is in another person’s name, the current policy will be cancelled and a new policy started. The new owner MUST sign a new application and ALL APPROPRIATE FORMS. LIENHOLDERS: To remove a Lienholder from a policy, Paramount will need:

1. A copy of the clear title, or 2. A letter from the Lienholder (on their letterhead) authorizing removal.

We will no longer accept requests to remove Lienholders without one of the documents listed above. New Business Effective 03/14/11 Renewal Business Effective 04/28/11 24

ENDORSEMENTS - Continued

Cancellations are effective 12:01am on the date of cancellation. Once a cancellation is received by Paramount, it MUST be processed. UNDERWRITING PERIOD CANCELLATIONS: Effective January 1, 2007 – All NEW applications are subject to a 45-day Underwriting Period. The Underwriting Period starts on the POLICY EFFECTIVE DATE. Applications MUST be cancelled during this 45-day Underwriting Period if:

1. Any or all risks on the policy do not meet our Underwriting Guidelines 2. The application is missing paperwork of ANY kind, or 3. Any application that has an Additional Premium

Once an application meets our Guidelines, any missing paperwork is received and all money is received, the policy can be taken back to its original Policy Effective Date with a Signed No Loss Letter. 15 Day Cancellation (Underwriting Period Cancels): This is for non-qualified driver (1 person on the policy only), non-qualified vehicle. This type of cancellation is company generated and is cancelled pro-rata. 45 Day Cancellation (Underwriting Period Cancels): This is for missing proof of ownership, and non-qualified driver (only if there is more than 1 driver on the policy). This type of cancellation is company generated and is cancelled pro-rata. Equity Cancel (Cancel Carry): This is for non-payment of an additional premium to Paramount Insurance Company. This type of cancellation is company generated and is cancelled pro-rata.

Premium Finance Cancellations: We will honor Premium Finance request date as long as we receive the request in our office within thirty (30) days of the requested cancel date. If the request is received after the thirty (30) days, we will cancel the policy using the postmark date. On faxed cancels, we look at the date on the top of the faxed copy. This type of cancel is pro-rata (effective October 1, 1998) and a gross check is sent to the finance company of record. The agent will owe Paramount Insurance Company the unearned commission. New Business Effective 03/14/11 Renewal Business Effective 04/28/11 25

CANCELLATIONS

**IF A POLICY IS CANCELLED BY PARAMOUNT FOR MORE THAN 1 REASON, WE WILL USE THE EARLIEST CANCEL DATE. Example: missing proof of ownership (45-day cancel) and additional premium (equity cancel) – a 45-day notice will be issued since this cancel comes first.**

Applications received that are considered to be late, or applications that are to be taken back to an earlier Effective Date will be issued the DATE IT IS RECEIVED AT PARAMOUNT if 1 or more of the above issues exists.

Insured’s Request to Cancel: We need either the insured’s copy of Paramount’s declaration page, or a written request signed by the insured, advising the effective date and reason for the cancellation. This type of cancel is pro-rata. Physical Damage Only policies CANNOT be cancelled using FR19’s. We will accept tag return receipts from the Motor Vehicle Administration to cancel insured’s request without a signature from the insured. 10 Day Cancellation: This is for non-payment of an additional premium to Paramount Insurance Company. This type of cancellation is company generated and is cancelled pro-rata. Flat Cancellation: There will be no flat cancellation after inception of the policy, unless the insured’s down payment check bounces. We require a copy of the front and back of the bounced check. The only other time we will cancel flat is if we receive proof of duplicate coverage with the same effective date and we receive the request within thirty (30) days. Rescinding Cancellations: Paramount does not rescind cancellations. If the policy has been cancelled in error, we will handle it just like any other reinstatement. We require a letter stating this along with proof of payment made prior to the cancel date. This means a copy of the payment log, copy of money log that was taken in for that date, copy of the receipt given to the insured, along with copies of the receipt before and after the insured’s receipt and a signed No Loss Letter back to the Cancellation Date will be required. Rewrites:

Policies can be rewritten, with a lapse in coverage, on a pro-rata basis. A binder must be obtained on all rewrites. Re-Writes entered online thru our electronic system will be bound automatically. Discounts will remain in effect if the Paramount policy is rewritten within thirty (30) days of cancellation. Reinstatements:

A policy must be acceptable to Paramount in order to reinstate. Paramount has the right to reject or deny any reinstatement requested. Paramount also has the right to have a No Loss Letter or Named Driver Exclusion at any time prior to the reinstatement being approved. A Non-payment reinstatement MUST be received within 60 days of the effective cancel date. After 60 days, Paramount reserves the right to deny any reinstatement request. Reinstatement requests must be submitted with the Return Premium and a signed No Loss Statement.

PLEASE NOTE: IF AN INSURED CANNOT SIGN A NO LOSS LETTER DUE TO AN ACCIDENT, THE POLICY WILL NOT BE REINSTATED.

New Business Effective 03/14/11 Renewal Business Effective 04/28/11 26

CANCELLATIONS - Continued

REWRITES AND REINSTATEMENTS

Premium Finance Cancellations: Policies cancelled for non-payment to the Premium Finance Company will be reinstated without a lapse in coverage if:

1. Payment is made to the Premium Finance Company 2. The return premium check is returned to Paramount. Any additional premiums on the

policy MUST be paid at the time of rewrite or reinstatement; 3. A No Loss Letter is signed by the insured for the cancellation date (policy number

MUST be on the No Loss Letter); and 4. A request is received from the Premium Finance Company to reinstate the policy.

If ANY of the above items are missing and not received within 30 days, the policy will remain cancelled. Cancellation for Nonpayment to Paramount: Policies cancelled for non-payment to Paramount Insurance Company will be reinstated without a lapse in coverage if:

1. Payment for the additional premium is received by Paramount; 2. The return premium check is returned to Paramount; and 3. A No Loss Letter is signed by the insured for the cancellation date (policy number MUST

be on the No Loss Letter), or proof is received that the additional premium was paid PRIOR TO the cancellation date.

Missing Information, Non-Qualified Driver, or Missing Proof of Maryland Ownership Cancellations: Policies cancelled for Missing Information, Non-Qualified Driver or Missing Proof of Maryland Ownership will be reinstated without a lapse in coverage if:

1. The missing information, completed signed exclusion, or proof of Maryland ownership (Maryland registration, Maryland title or Maryland Bill of Sale) is received;

2. The return premium check is returned to Paramount. Any additional premiums on the policy MUST be paid at the time of rewrite or reinstatement; and

3. A No Loss Letter is signed by the insured for the cancellation date if the missing paperwork is received after the cancellation date (policy number MUST be on the No Loss Letter). If the proof is received PRIOR TO the cancellation date, a No Loss Letter is NOT required.

All claim reports for any losses should be made as soon as possible, by telephone to Paramount Insurance Company by your office or the insured directly. Call (410) 944-6882 in the Baltimore Area or (240) 533-3001 outside of Baltimore. Claims can be reported Monday through Friday from 9:00am until 4:15pm. If you are calling to report a claim during non-business hours, you will receive a recording asking you to leave your name and telephone number where you may be reached during the day. A representative will contact the insured the next business day to take the report. New Business Effective 03/14/11 Renewal Business Effective 04/28/11 27

REWRITES AND REINSTATEMENTS - Continued

CLAIMS

To Determine the Liability Premium: 1. Determine the Territory by using the Zip Code chart. 2. Develop the Driver Class by using the Driver Class Chart at the bottom of the rate page. 3. Develop the Points by using the Driving Record Surcharge Chart chart found on the bottom

of the rate page (see the Underwriting Manual for the complete Driving Record Surcharge chart).

4. Premiums include Full PIP. If Limited PIP is requested, subtract the Limited PIP Adjustment (see chart).

5. Apply all applicable discounts. 6. Add Policy Expense Fee to the developed premium. To Determine the Physical Damage Premium: 1. Determine the Territory by using the Zip Code chart. 2. Obtain the symbol from PortaSymbol:

-1990 symbols stay the same; -for 1989 and older PortaSymbol, see Rate chart for conversion. 3. Develop the Driver Class by using the Driver Class chart at the bottom of the rate page. 4. Develop the Points by using the Driving Record Surcharge chart found on the bottom of the

rate page (see the Underwriting Manual for the complete Driving Record Surcharge chart). 5. All rates are with 250/250 deductibles. To change deductibles, see Deductible

Options/Factors chart. 6. Apply all applicable discounts. 7. Add Policy Expense Fee to developed premium. The total policy premium is an estimated premium, which is subject to change pending verification of the motor vehicle report (MVR), C.L.U.E. report, and any other information necessary to underwrite the policy. The company reserves the right to adjust the estimated premium. Any further questions refer to Paramount’s Underwriting Manual or call our Underwriting Department at (410) 944-1267 in the Baltimore Area and (240) 533-3000 from outside the Baltimore Area. New Business Effective 03/14/11 Renewal Business Effective 04/28/11 28

PREMIUM DEVELOPMENT