1. Mechanical Breakdown Insurance

2. Horizontal Marketing Value added marketing strategy Building customer loyalty Focus on agent, “I’m here to help” Now your Farmers Agent can help you with a whole lot more.

3. Horizontal Products Auto loans Auto buying service Education loans Real estate and mortgage assistance program Mechanical Breakdown Insurance (MBI)

4. Mechanical Breakdown Insurance

5. The Need Cars are more expensive Customers keep cars longer Increased demand for warranties Dealerships offer coverage

6. The Solution Farmers MBI Program Value added product for customer Agent/customer relationship Excellent commission opportunity

7. MBI Overview Coverage beyond manufacturer’s warranty Coverage for specified mileage and time

8. Parties Agent Purchaser Insurer Administrator

9. Due Diligence Familiarity with MBI product Strong claims operation Excellent customer service Expansion of product

10. Marketing support Ease of use ‘A+’ rating from AM Best Flexibility in financing Due Diligence Continued...

11. Mechanical Breakdown Insurance

12. –Founded in 1922 –A+ A.M. Best rating –Extensive claim and policy service experience –Member of Zurich Financial Services

13. MBI Overview Terminology Market Potential Why Customers Buy MBI Coverage Reasons to Sell Sales Oppourtunities

14. Terminology Manufacturer’s Warranty Vehicle Service Contract (VSC) Mechanical Breakdown Policy (MBI)

15. 1996 Vehicle Market Source: Wall Street Journal 1/7/97. Breakdown of Sales Volume

16. Reasons Why Customers Buy Mechanical Breakdown Coverage Don’t want to worry about repairs Concerned about rising repair costs No warranty on (used) vehicle Have bought coverage in the past Like trip interruption feature Vehicles are more expensive People are keeping their vehicles longer UUG Survey Results Nov. 1997

17. Reasons to Sell MBI Agents receive 20% commission up to $160 per policy Commission paid up front Charge back only if policy is cancelled in first 12 months

18. Insurance quote prior to purchase Vehicle change notification –Can purchase within 30 days of vehicle purchase Farmers Friendly Review –Can purchase anytime if within manufacturer’s basic warranty (97 or newer) and less than 30,000 miles Marketing support materials Sales Opportunities

19. MBI in Detail Coverage Options Rental Reimbursement Trip Interruption Retail Parts and Labor Simple Steps for Filing a Claim Required Maintenance

20. Coverage Provides coverage for mechanical defects and faulty workmanship by the manufacturer Powertrain (Named Parts) –Engine, Transmission, Drive Axle Preferred (Named Parts) –Adds: Air Conditioning/Heating, Electrical, Suspension, Brakes, Interior/Exterior, Steering Comprehensive (All Risk) –Provides coverage for all mechanical failures except those specifically excluded

21. Rental Reimbursement First day rental for covered repairs Allowance based on labor hours Up to three days for parts delays Six days maximum per occurrence

22. Trip Interruption Coverage Reimbursement for $100 per day for food and lodging. Maximum of three days. Must be at least 100 miles from home. Complements Farm-Tow

23. Wear and Use Outside manufacturer’s specifications –Excessive oil consumption –Engine bearings Brake pads, shoes, rotors, drums, manual clutch disks, pressure plate and clutch release bearings are excluded from coverage.

24. Retail Parts and Labor Retail parts reimbursement Posted labor rate

25. Simple Steps for Filing a Claim Where can the repairs be made? –Any licensed repair facility that warrants its’ work (unless still within mfg. warranty) Authorize repair facility to diagnose vehicle. Call 888/240-8803 for authorization prior to work being performed. After vehicle is repaired, customer pays $100 deductible to repair facility. Three convenient payment options –Direct payment to repair facility –Credit card payment to repair facility –Customer reimbursement

26. Required Maintenance Must comply with manufacturer’s recommended maintenance schedule. Customer may perform own maintenance but must retain receipts. Breakdowns caused by lack of proper maintenance will result in claim denial.

27. How to Complete The Sale Eligibility Terms Payment Options Rating and Remit

28. Eligibility Vehicle must have less than 75,000 miles and be a 1992 or newer. Customer must be a member of Farmers Insurance Exchange and have liability, comprehensive and collision coverage. The MBI policy must be purchased within30 days of the vehicle purchase unless the vehicle has less than 30,000 miles and is still within manufacturer’s warranty.

29. Examples Your customer notifies you that they purchased a vehicle last week. During a Farmers Friendly Review you discover that your customer bought a new vehicle last year that has 24,000 miles

30. TERMS Eligibility Available TermsMileage Age 6 years/100,000 miles0-12,00097-99 6 years/60,000 miles0-30,00097-99 5 years/75,000 miles0-30,00097-99 4 years/60,000 miles0-30,00097-99 3 years/45,000 miles0-75,00094-99 2 years/30,000 miles0-75,00092-99

31. Coverage Eligibility 0-30,000 Powertrain Preferred Comprehensive 30,001 - 75,000 Powertrain Preferred

32. RATING & REMITTING PROCESS Calculating a rate –make/model –model year –odometer reading Completing an application

33. PAYMENT OPTIONS Single premium 24 equal payments

34. SINGLE PREMIUM Complete application Collect check for total amount made payable to Farmers Insurance Exchange Mail all the above in pre-addressed remit envelope to Shawnee Mission, Kansas

35. 24 Month Payment Option Complete application Collect check for first payment made payable to Farmers Insurance Exchange Complete ACH authorization form Collect voided check Mail all the above in pre-addressed remit envelope to Shawnee Mission, Kansas

36. Is the Policy Cancellable? Yes, at the customer’s request. Refund computed pro-rata. Is the Policy Transferable? Yes, the policy can be transferred in conjunction with the sale of the vehicle.

37. Supplies Available to be ordered from Farmers Materials Distribution Center

38. AGENT SUPPORT 888/236-3099 CUSTOMER SERVICE and CLAIMS 888/240-8803

39. Farmers Gets You Back Where You Belong.