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Conditions <br />Nonrenewal B. This provision applies to coverage on real property which is used predominantly for <br />(continued) residential purposes and consisting of not more than four dwelling units, and to coverage on <br />tenants' household personal property in a residential urat, if such coverage is written under <br />this policy: <br />1. We may elect not to renew such coverage for any reason, except as provided in 2. <br />through 4, below. <br />2. We will not refuse to renew such coverage solely because the first named insured has <br />acceptedd an offer of earthquake coverage. <br />However, the following applies only to insurers who are associate participating <br />insurers as established by Cal. Ins. Code Section 10089.16. We may elect not to renew <br />such coverage after the first mired insured has accepted an offer of earthquake <br />coverage, if one or more of the following reasons applies: <br />a. the nomenewat is bared on sound underwriting principles that relate to the <br />coverages provided by this policy and that are consistent with the approved <br />rating plan and related documents filed with the Department of insurance as <br />required by existing law, <br />b. the Commissioner of Insurance finds that the exposure to potentional losses will <br />threaten our solvency or place as in a hazardous condition. A hazardous <br />condition includes, but is not limited to, a condition in which we make claims <br />payments for losses resulting from an earthquake that occurred within the <br />preceding two years and that required a reduction in policyholder surplus of at <br />least 25% for payment of those claims; or <br />C. we have: <br />(1) lost or experienced a substantial reduction in the availability -or scope of <br />reinsurance coverage; or <br />(2) experienced a substantial increase in the premium charged for reinsurance <br />coverage of our residential property insurance policies; and <br />the Commissioner has approved a plan for the nonrenewals that is fair and <br />equitable, and that is responsive to the changes in our reinsurance position. <br />3. We will not refuse to renew such coverage solely because the first named insured has <br />cancelledor did not renew a policy, issued by the California Fm-thquake Authority that <br />included an earthquake policy premium surcharge. <br />4. We will not refuse to renew such coverage solely because corrosive soil conditions <br />exist on the premises. This restriction (4.) applies only if the coverage provided under <br />this policy excludes loss or damage caused by or resulting from corrosive soil <br />conditions. <br />C. We are not required to send notice of nomcnewal in the following situations: <br />1. If the transfer or renewal of a policy, without any changes in terms, conditions, or <br />rates, is between us and a member of our insurance group. <br />2. If the policy has been extended for 90 days or less, provided that notice has been given <br />in accordance with paragraph A. <br />Percy Conoltions CarAomia Mandatory— CanaWAWon And Nonrenewaf continued <br />Form 80-02-9717(Rev. 9-15) Endorsement Page <br />