the aais artisans and businessowners programs

1. The AAIS Artisans and Businessowners Programs Joseph S. Harrington, CPCU, director of corporate communications Dec. 14, 2004 Audio: dial 877/326-2337 Conference ID: x5518405

2. Before We Begin Interactive seminar View PowerPoint� presentation over Internet Hear commentary over telephone Raise questions verbally or by �chat� function To use chat: Click �Exit Full Screen� To go back: Click �View,� select �Full Screen� Speed at which slides appear depends on-- Your Internet connection Your computer�s speed Your server�s speed

3. Before We Begin, cont. Please adhere to antitrust guidelines Observe guidelines at all times When communicating by phone When using �chat� function

4. 4 Two Programs for Small Business Artisans Program AP-100 Contractors Special Policy Open perils property coverage Form provides property and liability coverage Option to write liability coverage only Businessowners Program BP 0100 01 04 Businessowners Standard Policy Named perils property coverage BP 0200 01 04 Businessowners Special Policy Open perils property coverage Liability coverage identical in each

5. 5 Two Programs for Small Business, cont. An approach long used and still usedby many companies BOP: Storefronts, offices, workshops; now restaurants and warehouses Artisans: Businesses with greater off-premises exposures Different rating bases Industry�s only standardized Artisans program

6. 6 Artisans and BOP eligibility

7. 7 Artisans and BOP eligibility, cont.

8. 8 Artisans and BOP eligibility, cont.

9. 9 Ineligible classes Artisans Risks that lease or rent equipment to others General contractors Contractors involved in demolition Contractors regularly involved in projects with construction costs over $1 million Contractors involved in moving buildings

10. 10 Ineligible classes, cont. Businessowners Auto dealers, repair, service, salvage Bars Churches Farms Condominium buildings (except office or residential) Contractors (unless off-premises operations are less than 25% of annual sales) Financial institutions (except buildings leased to others for use as financial institution offices) Household personal property Manufacturing (except for eligible classifications) Parking lots or garages (unless incidental to eligible risk) Places of amusement

11. 11 AAIS BOP, 2004 Revision Countrywide manual; state exception pages Expanded size of eligible risks Maximum square footage increased from 15,000 to 25,000 Maximum sales increased from $1 million to $3 million Additional liability rating for off-premises operations Inland marine-type coverage for computers Expanded coverage for building glass Dependent locations income coverage Expanded number of pollution liability options

12. 12 AAIS BOP, 2004 Revision, cont. Newly added Restaurant classification Properties open to the public with on-premises cooking No seasonal operations closed for more than 30 days a year Alcohol can be no more than 25% of sales Bars are ineligible; no liquor liability coverage Split property and liability rating for restaurants Property: Loss costs based on $1,000s property value New restaurant rate group Credits for limited cooking and automatic fire suppression Debits for absence of exhaust system; unsafe conditions Liability: Loss costs based on $1,000s gross sales; vary by territory

13. 13 AAIS BOP, 2004 Revision, cont. Other new classifications Wholesale Operations More than 20 eligible operations listed in Class Table Up to 25% of floor area can be open to the public Up to 25% of annual gross sales can be from retail Warehouses New eligibility for self-storage facilities designed to store property of others New classification for facilities designed forprivate storage of insured�s goods 20 new �traditional� classes Home improvement stores, convenience stores, office machine and appliance stores, printing supply stores, medical/surgical supply stores, and mail box/packaging outlets

14. 14 AAIS BOP, 2004 Revision, cont.

15. 15 AAIS BOP, 2004 Revision, cont. Additional Property Coverages Antennas, Fences, and Signs Counterfeit Money or Money Orders Debris Removal Fire Department Service Charges Forgery Glass (frames, boarding, temporary glass, obstructions) Increased Cost � Ordinance or Law Inventory and Appraisal Expenses Limited Fungus and Related Perils Pollutant Clean Up and Removal Recharge of Fire Extinguishing Equipment Removal

16. 16 AAIS BOP, 2004 Revision, cont. Additional Property Coverages, Special form only Collapse (updated definition of collapse) Tearing Out and Replacing (following water loss) Lock and Key Replacement (following burglary) Property Coverage Extensions Building Property � Off Premises Newly Acquired Buildings Trees, Shrubs, and Plants Accounts Receivable Business Personal Property � Acquired Locations Business Personal Property � Off Premises Personal Effects Valuable Papers and Records

17. 17 AAIS BOP, 2004 Revision, cont. Optional Property Coverages

18. 18 AAIS BOP, 2004 Revision, cont. Additional Income Coverages Earnings from Dependent Locations Newly Acquired Locations Income Coverage Extensions Alterations and New Buildings Fungus and Related Perils Interruption by Civil Authority Period of Loss Extension Income coverage exclusions and limitations Leases, Licenses, Contracts, or Orders Strikes, Protests, and Other Interference Unnecessary Expenses Software

19. 19 AAIS BOP, 2004 Revision, cont. Standard form named perils Explosion; fire or lightning; riot or civil commotion; sinkhole collapse; smoke; sonic boom; sprinkler leakage; transportation; vandalism; vehicles and aircraft; volcanic action; windstorm or hail Perils excluded, Standard form Civil authority; earth movement or volcanic eruption; fungus or related perils; nuclear hazard; ordinance or law; utility failure; war and military action; water Perils excluded, Special form Same list as for Standard, plus Weather

20. 20 AAIS BOP, 2004 Revision, cont. Additional property exclusions, Standard form Boiler explosion; computer virus or computer hacking; contamination or deterioration; criminal, fraudulent, dishonest, or illegal acts; defects, errors, or omissions; electrical currents; freezing; mechanical breakdown; missing property; neglect; rupturing or bursting; smog; smoke, vapor, or gas; water damage; wear and tear Additional property exclusions, Special form Same list as for Standard form, plus animals; collapse; pollutants; seepage; settling, cracking, shrinking, bulging, or expanding; temperature or humidity; and voluntary parting Collapse Not covered under Standard form Additional coverage under Special form

21. 21 AAIS BOP, 2004 Revision, cont. Inland marine-style computer coverage Additional definitions: Computers, data records, hardware, media, programs and applications, proprietary programs, software Also, Computer Hacking and Computer Virus Physical damage coverage in Special form Provided by exceptions to exclusions For hardware and software, exceptions for: Collapse, earth movement, electrical currents, freezing, smog, smoke/vapor/gas, utility failure, and water For hardware only, exceptions for: Animals, mechanical breakdown, settling/cracking/shrinking/bulging/expanding

22. 22 AAIS BOP, 2004 Revision, cont. Property Endorsements Standard range of property endorsements Complete set of terrorism endorsements Utility interruption and equipment breakdown Limited fungus and related perils (�mold�) coverage Computer virus and computer hacking coverage Installation, installation tools and equipment, builders risk �PACE� extended coverages endorsement �Property Additional Coverage Endorsement� Pre-packaged endorsement providing increased limits for accounts receivable, BPP off-premises, employee dishonesty, forgery, outdoor signs, personal effects, spoilage, and valuable papers and records

23. 23 AAIS BOP, 2004 Revision, cont. Coverage L � Bodily Injury or Property Damage Incorporates products/completed work aggregate limit Includes known injury (�Montrose�) provisions Coverage O � Fire Legal Liability Damage to Short-Term Rented Premises Additional limit Coverage M � Medical Payments Coverage P � Personal and Advertising Injury Merging of two previously separate coverages Each Occurrence and General Aggregate Limits

24. 24 AAIS BOP, 2004 Revision, cont. Personal and Advertising Injury Exclusions Advertising business exclusion expanded to apply to insureds in Web and Internet businesses New exclusions for violation of intellectual property rights and copyright infringement New exclusion for P/AI arising from chat rooms, bulletin boards, etc. owned, hosted or controlled by the insured Pollution exclusion options Limited exception for short-term event Limited exception for designated pollutants Total pollution exclusion Total pollution exclusion with heating equipment/hostile fire exception Limited pollution liability extension

25. 25 AAIS BOP, 2004 Revision, cont. Additional Liability Charge for Off-Premises Operations Additional loss costs and rating step provided Eligible BOP classes include Appliance - service and repair Locksmiths Musical instrument repair Carpet and rug stores Plumbing fixtures and supplies Paint and wallpaper stores

26. 26 AAIS BOP, 2004 Revision, cont. Liability endorsements Standard range of liability endorsements Expanded number of additional insured endorsements Six categories of professional liability endorsements Non-owned/hired auto liability Employment practices and employee benefits liability Claims made endorsements for occurrence-based policies Exclusion related to mold and construction defects

27. 27 AAIS Artisans Program Liability coverage �leads off� Coverage L � Bodily Injury and Property Damage Coverage M � Medical Payments Coverage N � Products and Completed Work Coverage O � Fire Legal Liability Coverage P � Personal Injury and Advertising Injury Built-in broad form contractual liability coverage Liability endorsement options Aggregate limits on a per project basis Limitation of coverage to designated premises or projects Explosion/collapse/underground (�XCU�) damage Voluntary property damage Employment practices and employee benefits Exclusions related to mold and construction defects Limited contractual liability coverage

28. 28 AAIS Artisans Program

29. 29 AAIS Artisans Program Additional Property Coverages Antennas, Fences, or Signs Debris Removal Fire Department Service Charges Glass (building glass) Increased Costs � Ordinance or Law Pollutant Clean Up and Removal Removal Collapse Tearing Out and Replacing Inland marine endorsement options Contractors equipment, contractors tools, installation floater APACE additional coverage endorsements

30. 30 Additional Services Custom product work Filing service Cost quote Contact Rick Maka, Marketing Director 800/564-AAIS (2247), ext. 222 rickm@AAISonline.com