No. 3154-0031-E002
ENDORSEMENT
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Attached to and forming part of FEDERAL TERRORISM ACT AGGREGATE QUOTA SHARE
REINSURANCE AGREEMENT NO. 3154-0031 between PENN-AMERICA INSURANCE COMPANY,
PENN-STAR INSURANCE COMPANY, both of Hatboro, Pennsylvania and PENN-PATRIOT
INSURANCE COMPANY of Richmond, Virginia (hereinafter referred to as the
"Company"), and AMERICAN RE-INSURANCE COMPANY, a Delaware Corporation with
administrative offices in Princeton, New Jersey (hereinafter referred to as the
"Reinsurer").
It is understood and agreed by the parties hereto, that effective 12:01 a.m.,
Eastern Standard Time, July 22, 2004, this Agreement is amended to read as
follows:
1. "Artificial Prosthetic Device Fitters Program" maximum policy limits are
added to ARTICLE IV, COMPLIANCE WARRANTY, and the Article reads as
follows:
ARTICLE IV
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COMPLIANCE WARRANTY
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A. The Company warrants that it will seek to obtain coverage under
the Terrorism Risk Insurance Act and will comply with all
provisions of the Terrorism Risk Insurance Act necessary to obtain
coverage thereunder, with respect to all property and casualty
insurance as defined in the Act, written by the Company, including
but not limited to the prescribed notice and offer of coverage and
the disclosures of premium to the policyholder as required under
the Act.
B. The Company further warrants that:
1. for any policy where the insurer receives a written
statement from the insured that affirmatively authorizes an
exclusion; or
2. where the insured fails to pay the premium charged for
providing terrorism coverage, an exclusion for such
terrorism coverage will be attached to the Company's policy
as permitted under law.
C. The Company shall charge no less than 5% of all other Total Gross
Premium for Certified Terrorism coverage on each policy covered
hereunder unless:
1. The original insured declines such terrorism coverage in
accordance with the Act and such declination is not
prohibited by law.
2. Otherwise prohibited from doing so by law.
D. The Company warrants that all reinsurance in place at the
inception of each Agreement Year hereunder shall remain unchanged
during such Agreement Year or so deemed.
E. The Company and the Reinsurer have mutually agreed to the
Company's underwriting guidelines for Terrorism as respects
certified acts of terrorism.
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No. 3154-0031-E002
The Company warrants that these guidelines shall he applied to all
business reinsured hereunder and shall remain unchanged unless
agreed to in writing by American Re-Insurance prior to the
implementation of any such changes. The terms and conditions of
this Agreement shall take precedence over any other agreement
between the Company and the Reinsurer regarding such guidelines.
F. It shall be deemed that the Company will purchase umbrella
facultative reinsurance and excess general liability reinsurance
covering Extra Contractual Obligations and Excess Judgments
liability as defined within this Agreement for an amount equal to
and in addition to the umbrella policy limit subject to an annual
aggregate limit of $5,000,000. Facultative reinsurance coverage
for any umbrella extra contractual obligations or excess judgments
liability shall inure to the benefit of this Agreement.
G. Professional Liability - $1,000,000 each occurrence and $2,000,000
general aggregate.
H. Professional Liability "Slender Lady Program" - $1,000,000 each
occurrence and $3,000,000 general aggregate.
I. Professional and General Liability "Artificial Prosthetic Device
Fitters Program - $1,000,000 each occurrence and $3,000,000
general aggregate.
II. The "Artificial Prosthetic Device Fitters Program" is added as an
exception to Exclusion B.1 of the EXCLUSIONS Article and the exclusion
reads as follows:
1. Professional Liability or Errors and Omissions Coverage other than
for the following:
a. "Beau-T-Pak";
b. Barbers;
c. Opticians;
d. Veterinarians that treat household pets;
e. Morticians;
f. Clergy;
g. Employee Benefits Liability (E&O Coverage);
h. Druggists;
i. "Day Care Pak";
j. "Adult Day Care";
k. "Health Club Pak";
l. "Instructor Pak";
m. In-Home Day Care;
n. "Pet Pak";
o. "Wellness Pak";
p. "Massage Program";
No. 3154-0031-E002
q. "Slender Lady Program"; or
r. "Artificial Prosthetic Device Fitters Program".
III. The "Artificial Prosthetic Device Fitters Program" is added as an
exception to Exclusion C.22 of the Exclusions Article and the exclusion
reads as follows:
21. Products Liability or Completed Operations Liability related to:
a. Drugs, except for liability arising from the retail sale or
wholesale distribution of drugs by insureds not engaged in
their manufacture;
b. Chemicals, except for liability arising from the retail
sale or wholesale distribution of household chemicals by
insureds not engaged in their manufacture;
c. Insecticides and pesticides, except sales that are 20% or
less of insured's total sales;
d. Aircraft or aircraft parts;
e. Animal feed, other than custom-blended grains without
chemical or pharmacological additives, except sales that
arc 20% or less of insured's total sales;
f. Cosmetics manufacturing, except for the manufacture of
soaps or shampoos where the insured's receipts are less
than 10% of total sales or skin and hair care products
prepared at beauty salons or similar establishments,
g. Tobacco and tobacco products, but this exclusion shall not
apply to liability arising from the retail sale or
wholesale distribution of tobacco products by insureds not
engaged in their manufacture;
h. Automobiles, trucks, motorcycles and all-terrain vehicles
or component pans critical to the operation of the
foregoing, hut Lbs exclusion shall not apply to the
liability arising from the retail sale or wholesale
distribution of component parts critical or non-critical to
the operation of the foregoing not engaged in their
manufacture;
i. Fiberglass, but this exclusion shall not apply to liability
arising from the retail sale or wholesale distribution of
fiberglass products by insureds not engaged in their
manufacture;
j. Firearms, except sales that are 20% or less of insured's
total sales;
k. Medical equipment; except for the "Artificial Prosthetic
Device Fitters Program";
l. Elevator or hoist manufacturing, installation, inspection,
service or repair;
m. Security and alarm system manufacturing, installation,
inspection, service or repair, except for coverage as
provided for in the Company's guidelines as of 9/01/01; or
n. Fire suppression system manufacturing, installation,
inspection, service or repair, except for coverage as
provided for in the Company's guidelines as of 9/01/01.
No. 3154-0031-E002
IN WITNESS WHEREOF the parties hereto have caused this Endorsement to be
executed in duplicate in Hatboro, Pennsylvania, this 10th day of September,
2004;
ACCEPTED:
PENN-AMERICA INSURANCE COMPANY
PENN-STAR INSURANCE COMPANY
PENN-PATRIOT INSURANCE COMPANY
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and in Princeton, New Jersey, this 9th Day of September 2004.
AMERICAN RE-INSURANCE COMPANY
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Vice President
DATED: August 9, 2004
RG/rg
