1. Bonded Builders Risk Management SM Bonded Builders Warranty Group Bonded Builders Insurance Services Protecting Home Builders for over 20 years

2. Bonded Builders Risk Management SM A combined risk management concept of insurance and warranty products coupled with services tailored to residential home builders and their homeowner clients A combined risk management concept of insurance and warranty products coupled with services tailored to residential home builders and their homeowner clients –Bonded Builders Warranty Group –Bonded Builders Insurance Services –Bonded Builders Education Service

3. What are the known “risks” facing Home Builders today? Unsold inventory Unsold inventory Fixed expenses Fixed expenses –People –Warranty Commitment Diminishing home/lot value Diminishing home/lot value Increased materials costs Increased materials costs Decrease in quality of materials Decrease in quality of materials Scarcity of loans Scarcity of loans Inadequate insurance coverages Inadequate insurance coverages

4. What are the unknown “risks” facing Home Builders today? A neighbor gets hurt on job site A neighbor gets hurt on job site A painter burns the house down A painter burns the house down A major piece of rental equipment is destroyed A major piece of rental equipment is destroyed A framer uses wet lumber A framer uses wet lumber A backlog in roofing paper delays project A backlog in roofing paper delays project

5. What is the ultimate “risk” facing Home Builders today? Construction Defect Litigation?

6. Construction Defect Litigation – The Risks Post-closing claims arising from construction defects and faulty workmanship –Real –Alleged Poor or Lack of Completed Operations defense from Contractors General Liability (CGL)

7. SOLUTION: Bonded Builders Insurance Service Both Proactive and Reactive Proactive Solution: Proactive Solution: –Third-Party Express Warranty Reactive Solution: Reactive Solution: –Contractor General Liability Insurance

8. Managing Construction Defect Litigation Proactive: Proactive: –Combined CGL and Third-Party Warranty –Non insurance risk transfer Reactive: Reactive: –Traditional insurance

9. Bonded Builders Insurance Services Our Protection Plus SM Program: A combined program including: contractor general liability contractor general liability structural warranty structural warranty sub-contractor agreements sub-contractor agreements supported by education and training seminars supported by education and training seminars Express Written Warranty: Sets expectations Sets expectations Defines responsibilities Defines responsibilities Controls homeowner disputes Controls homeowner disputes Contractor General Liability: Obtain solid tort liability protection Obtain solid tort liability protection Builder Contracts / Agreements: Establish your goals and expectations – subcomtractors and homeowner Establish your goals and expectations – subcomtractors and homeowner Education Seminars Centered around relevant builder issues Centered around relevant builder issues Mitigate Potential Coverage Gaps Define Warranty Terms/Conditions Outline Dispute Procedures Detours Litigation Educate Through Training Seminars Protection Plus SM

10. Bonded Builders Insurance Services - Protection Plus Program SM Program Requirements Warranty: –Builder Contract w/ Warranty Disclosures –Acknowledgement Form Insurance: Sub-Contractor Management Sub-Contractor Management –Minimum Insurance Requirements –Executed Sub-Contractor Agreements

11. Bonded Builders Risk Management Bonded Builders Warranty Group (BBWG) Warranty Products: Provide the builder with the advantages of an express written warranty contract between the builder and homeowner Provide the builder with the advantages of an express written warranty contract between the builder and homeowner Set clear construction standards and expectations for the builder and homeowner Set clear construction standards and expectations for the builder and homeowner Establish a highly effective process for resolving disputes between the builder and homeowner Establish a highly effective process for resolving disputes between the builder and homeowner

12. Bonded Builders Insurance Services What are the benefits of Protection Plus SM Program? Drives an Express Written Warranty that disclaims implied warranties Drives an Express Written Warranty that disclaims implied warranties Establishes contractual performance standards, expectations and responsibilities for the builder and homeowner regarding their new home and/or remodel Establishes contractual performance standards, expectations and responsibilities for the builder and homeowner regarding their new home and/or remodel Creates a contractual process that settles disputes via alternative methods that favor conciliation, mediation and arbitration over costly litigation Creates a contractual process that settles disputes via alternative methods that favor conciliation, mediation and arbitration over costly litigation Sets builders with the contractual means to deflect construction defect litigation to the warranty dispute resolution process and not the CGL policy Sets builders with the contractual means to deflect construction defect litigation to the warranty dispute resolution process and not the CGL policy Provides targeted marketing and advertising tools to enhance new home sales Provides targeted marketing and advertising tools to enhance new home sales

13. For additional information including submission requirements, please contact: Toll-free 1-800-749-0381 www.BondedBuilders.com John Hubbard x3820 Director of Business Development Insurance, warranty and risk management provided by member companies of Bankers Financial Corporation. The description in this presentation does not include all terms, exclusions and conditions in the policy and/or document and is not intended to be relied upon by potential insureds and/or builder- members. Please contact Bonded Builders or your insurance agent for a complete description of the scope and limitations of coverages/services. David Broyles x3018 Vice President of Marketing