KENTUCKY CANCELLATION AND NONRENEWAL CLAUSE

The following provisions shall apply and supersede any provisions to the contrary contained in the insurance to which this clause is attached.

1. CANCELLATION NOTICE. This insurance may be cancelled by the Assured at any time by written notice or by surrender of this contract of insurance to the correspondent issuing this insurance. This insurance may also be cancelled with or without the return or tender of the unearned premium by the Underwriters by mailing notice of cancellation to the Assured at the last mailing address known by the Underwriters. The Correspondent shall maintain proof of mailing of such notice on a recognized U.S. Post Office form and a copy of such notice shall be sent to the Assured's producer. The mailing of such notice as aforesaid shall be sufficient proof of notice and this insurance shall terminate at the date and hour specified in such notice.
2. CANCELLATION NOTICE PERIOD. Notice of cancellation must be mailed at least 14 days prior to the effective date of cancellation during the first 60 days of coverage. After coverage has been effective for 61 days or more, all notices must be mailed at least 75 days prior to the effective date of cancellation. Where cancellation is for non-payment of premium, 14 days' notice shall be given.
3. RETURN PREMIUM. In the event of cancellation, the Underwriters shall refund the paid premium less the earned portion thereof. The earned premium shall be calculated as stated in the insurance to which this clause is attached. If the insurance does not provide for calculation of the earned premium, the following shall apply: (A) If this insurance is cancelled by the Assured, the Underwriters shall retain the short rate proportion of the premium hereon, or of any minimum premium stipulated herein, in accordance with the table below. (B) If this insurance is cancelled by the Underwriters, the Underwriters shall retain the pro rata proportion of the premium hereon, or of any minimum premium stipulated herein.
4. REASON FOR CANCELLATION. If this insurance has been in effect for 60 days or less the Underwriters may cancel this insurance. After coverage has been effective for 61 days or more the Underwriters can cancel only for one of the following reasons: (a) non-payment of premium; (b) discovery of fraud or material misrepresentation made by the Assured or with the Assured's knowledge in obtaining the insurance, continuing the insurance or in presenting a claim under the insurance; (c) discovery of wilful or reckless acts or omissions on the Assured's part which increase any hazard insured against; (d) the occurrence of a change in the risk which substantially increases any hazard insured against after the insurance has been issued or renewed; (e) a violation of any local fire, health, safety, building or construction regulation or ordinance with respect to any insured property or the occupancy thereof which substantially increases any hazard insured against; (f) the Underwriters are unable to reinsure the risk covered by this insurance, or (g) a determination by the Commissioner of Insurance of the State of Kentucky that the continuation of this insurance could place the Underwriters in violation of the insurance code or regulations of the State of Kentucky.
5. NOTICE OF NONRENEWAL. For the purpose of this clause any period of insurance for less than 6 months shall be considered to be a period of insurance of 6 months; and any period of insurance of more than 1 year or any insurance with no fixed expiration date shall be considered a period of insurance of 1 year. If the Underwriters elect not to renew this insurance, the Underwriters will mail or deliver written notice of non-renewal, stating the reason for non-renewal, to the Assured at the last mailing address known to the Underwriters, at least 75 days before the expiration date of the period of insurance. If notice of non-renewal is not provided pursuant to this condition, coverage under the same terms and conditions shall be deemed to be renewed for the ensuing period of insurance upon payment of the appropriate premium until the Assured has accepted replacement coverage with another insurer or until the Assured has agreed to the non-renewal. If the Underwriters mail or deliver a renewal notice to the Assured at least 30 days before the end of the period of insurance, stating the renewal premium and its due date, the insurance will terminate without further notice unless the renewal premium is received by the Underwriters or the correspondent by the due date. If this insurance terminates because the renewal premium has not been received by the due date, the Underwriters will within 15 days, mail or deliver to the Assured at the last known mailing address known to the Underwriters a notice stating that the insurance was not renewed and the date it was terminated. If notice is mailed, proof of mailing shall be sufficient proof of notice.

Rules applicable to insurance with terms less than or more than one year:

1. If insurance has been in force for one year or less, apply the short rate table for annual insurance to the full annual premium determined as for an insurance written for a term of one year.
2. If insurance has been in force for more than one year:
   1. Determine full annual premium as for insurance written for a term of one year.
   2. Deduct such premium from the full insurance premium, and on the remainder calculate the pro rata earned premium on the basis of the ratio of the length of time beyond one year the insurance has been in force to the length of time beyond one year for which the insurance was originally written.
   3. Add premium produced in accordance with items (1) and (2) to obtain earned premium during full period insurance has been in force.

LKI 2722b (02/13)

NMA2722b

25/06/2013