YOUR POLICY AT A GLANCE

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HOW TO READ YOUR POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

WHAT TO DO WHEN AN ACCIDENT OR LOSS HAPPENS . . . . . . . . . . . . . . . . . . .1

VEHICLES WE INSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

PART I—LIABILITY COVERAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2COVERAGE A—BODILY INJURY LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2COVERAGE B—PROPERTY DAMAGE LIABILITY . . . . . . . . . . . . . . . . . . . . . . . .2

PART II—UNDERINSURED MOTORIST COVERAGES . . . . . . . . . . . . . . . . . . . . . . . . . .3COVERAGE C—BENEFITS FOR BODILY INJURY

CAUSED BY AN UNDERINSURED MOTORIST . . . . . . . . . . . . . . . . . . . . . . . . .3COVERAGE D—BENEFITS FOR PROPERTY DAMAGE

CAUSED BY AN UNDERINSURED MOTORIST . . . . . . . . . . . . . . . . . . . . . . . . .3

PART III—PERSONAL INJURY PROTECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5COVERAGE E—MEDICAL PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5COVERAGE F—LOSS OF INCOME BENEFIT

AND EXTRA EXPENSE BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5COVERAGE G—AUTO ACCIDENTAL DEATH . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

PART IV—DAMAGE TO YOUR AUTO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6COVERAGE H—COLLISION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6COVERAGE I—COMPREHENSIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6COVERAGE J—TOWING AND EMERGENCY ROAD SERVICE . . . . . . . . . . . . . . .7COVERAGE K—AUTO RENTAL

AND TRAVEL EXPENSE REIMBURSEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . .8

POLICY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

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HOW TO READ YOUR POLICYThis policy is a legal contract that must be read and applied as a

whole. One portion can’t be separated from another. For exam-ple, the “Policy Provisions” apply to all policy parts.

Start with the portions before “Part I.” As you examine them,read the basic statements of coverage first, then the portions after

each basic statement. They further modify and explain the cover-age or, in some cases, subtract from coverage that might otherwiseapply. Read “Policy Provisions” last.

Key words in the “Definitions” appear in this contract in darktype.

Your policy contract begins with this section. The insurancedescribed in this policy is issued by PEMCO Mutual InsuranceCompany or PEMCO Insurance Company to the insured(s)named on the “Declarations” as policyholder(s). The Companyinsuring you is shown on the “Declarations.” “We,” “our,” and“us” refer to the Company insuring you.

We’ll provide you with the insurance described in this policy. In

AGREEMENTreturn, you’ll pay for the insurance and do all the things requiredof you by the “Policy Provisions.” The coverages and limits youchose are shown on the “Declarations” of this policy.

This contract, the “Declarations,” and any attached endorse-ments contain all the agreements between you and the Companyinsuring you.

DEFINITIONS“You” and “your” mean the person named as an insured on the

“Declarations” and that person’s spouse if a resident of the samehousehold.

“Accident” means an unexpected and unintended occurrenceresulting from ownership, maintenance, or use of a motor vehicleor a trailer, which causes bodily injury or property damage.

“Auto” means a private passenger automobile with no less thanfour wheels. It also means a self-propelled utility or recreationalvehicle (pickup truck, van, panel truck) with no less than fourwheels and a gross vehicle weight of no more than 10,000 poundsas rated by the manufacturer. It also means a self-propelled motorhome equipped as living quarters.

“Bodily injury” means physical injury to the human bodyincluding sickness, disease, or death arising from the injury.

“Disability” means disability that prevents the injured coveredperson from performing the essential duties of his or her occupa-tion. “Disabled” means suffering from a disability as defined.

“Family member” means any resident of your household relatedto you by blood, marriage, or adoption. It includes your residentfoster children.

“Income” means salary, wages, commissions, professional fees,and profits from an individually owned business or farm.

“Insured” or “covered person” means any person or organiza-tion protected by the coverage involved.

“Motor vehicle” means a self-propelled land vehicle designed tobe operated primarily on public roads. It doesn’t include vehiclesoperated on rails or crawler treads, snowmobiles, all-terrain vehi-cles, ground-effect vehicles, motorcycles, mopeds, riding lawn-mowers, golf carts, or farm equipment.

NOTE: In “Part II—Underinsured Motorist Coverages,”“motor vehicle” means any self-propelled land vehicle.

“Occupying” means in, on, getting in or out of, loading orunloading, or operating.

“Property damage” means physical injury to or destruction oftangible property, including its loss of use.

“Trailer” means a vehicle designed to be pulled by an auto. Itdoesn’t include a trailer while it’s used for business or commercialpurposes or as a residence or passenger trailer.

“Underinsured motorist” means an owner or driver who is oper-ating an underinsured motor vehicle.

WHAT TO DO WHEN AN ACCIDENT OR LOSS HAPPENSIf you’re involved in an accident, you or someone acting for you

or for a covered person must notify us as soon as possible. Thequickest way is by telephone. Tell us how and when the accidentor loss happened and the extent of any injuries or damage. Alsotell us the names and addresses of all injured persons and witness-es. If we need other information to investigate the accident, we’llask for it. We may require all the information in writing.

File an accident report with the proper state authority and notifythe police immediately of all theft losses

You or a covered person must cooperate with us in investigatingthe accident or loss, settling claims, and defending lawsuits. Youor a covered person also must send to us promptly all papers

dealing with claims or lawsuits. You or a covered person may berequired to show us your auto or damaged property.

We may require an injured covered person to be examined by adoctor we select. The person must cooperate and be examinedwhen and as often as we reasonably require. We’ll pay the expensesfor such examinations. The insured or covered person must giveus permission to obtain medical reports and records.

If you’ve selected any “Damage to Your Auto” coverage, youmust protect the auto from more damage. If you don’t do this,we won’t pay for any further damage. We’ll pay your reasonableexpenses to protect the auto. We may require you to file with us“Proof of Loss” under oath after the accident.

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VEHICLES WE INSUREWe insure each auto registered solely in your name if it’s

described on the “Declarations.” We also insure an auto you leaseon a long-term basis (at least 12 months) if it’s described on the“Declarations,” but we don’t provide coverage for the lessor ofthat auto or for you while the lessor is driving or has assumed con-trol of the leased auto. We also insure any auto you acquire dur-ing the policy period to replace a described auto. Coverage for areplacement auto will be the coverage listed on the “Declarations”for the vehicle it replaces. You must report a replacement auto tous during the policy period or within 30 days of acquiring it,whichever is longer. We’ll also insure any additional auto youacquire during the policy period if we insure all other autos youown. An additional auto is insured only if you notify us within30 days of acquiring it.

We insure a trailer you own while it’s used with an auto weinsure. For “Collision” and “Comprehensive” coverages, the trailermust be described on the “Declarations” and a premium shownfor those coverages, or you must report the trailer to us within 30days of acquiring it.

We insure a substitute auto or trailer you don’t own when ittemporarily replaces an auto or trailer we insure. But the auto ortrailer you own must be out of use because it’s being serviced orrepaired or it’s been stolen or destroyed.

We insure a motor vehicle you or a family member don’t ownwhen you are operating it with the owner’s permission. Thisdoesn’t include a motor vehicle furnished or available for yourregular use. If the other motor vehicle is a type defined as “auto”in this policy, then all purchased coverages apply. If it isn’t, then“Collision,” “Comprehensive,” “Auto Rental and Travel ExpenseReimbursement,” and “Towing” coverages don’t apply.

We insure an auto you’re operating when it’s owned by a familymember other than your spouse, unless the auto is furnished oravailable for your regular use. But no “Damage to Your Auto”coverage applies.

We insure a trailer you don’t own when you use it with theowner’s permission, but only when the trailer isn’t furnished oravailable for your regular use and is being used with an auto weinsure.

We insure an auto or trailer you or a family member don’t ownif you or a family member are operating the auto or using thetrailer with the owner’s permission and if the vehicle isn’t fur-nished or available for regular use by you or a family member. Atrailer must be used with an auto we insure.

PART ILIABILITY COVERAGES

COVERAGE A—BODILY INJURY LIABILITYCOVERAGE B—PROPERTY DAMAGE

LIABILITYWe’ll pay the damages for bodily injury and property damage to

others if you or a family member are legally responsible because ofan accident involving a motor vehicle we insure.

We’ll also pay additional benefits.

Additional BenefitsThese benefits are in addition to our limit of liability for damages.

l We’ll pay for the cost to investigate an accident involving amotor vehicle insured by this policy. We’ll also defend a cov-ered person, hire and pay a lawyer, and pay all defense costs ifthe covered person is sued by someone for damages because ofan accident involving a motor vehicle insured by this policy—even if the accusations aren’t true. But we won’t be obligated topay for the cost of any further investigation or further defense ofthe covered person after we’ve paid our entire limit of liabilityfor damages.

l If the person who sues you tries to tie up your property by anattachment, we’ll arrange and pay for a bond to release the attach-ment. But you’ll have to pay the cost of the additional amountof the bond if the bond required is more than the policy limit ofliability available to you.

l If a covered person loses a lawsuit we defend, we’ll pay the courtcosts. If we decide to appeal, we’ll pay the cost of appeal bonds.We’ll also pay interest on the full amount of the judgment, evenif it’s higher than the policy limit of liability. And we’ll pay thisinterest from the day the judgment is entered until we’ve offeredthe other party the amount of the judgment up to the full limitof liability available under this insurance.

l We’ll pay up to $200 a day for loss of wages, but not otherincome , a covered person might have for attending hearings or atrial at our request because of a lawsuit against that covered per-son.

l We’ll pay up to $300 for the cost of any bail bond required ofyou because of an accident or traffic-law violation involving amotor vehicle insured by this policy.

l We’ll pay up to $1,000 of your expenses for first aid to others atthe scene of an accident involving a motor vehicle we insure.

Protection for Othersl We’ll pay the damages for bodily injury and property damage

to others if any other person is legally responsible because of anaccident while using, with your permission, an auto we insureunder this coverage.

l We’ll pay the damages for bodily injury and property damageto others if any other person or organization is legally responsi-ble. But we’ll only pay if the bodily injury and property damageto others is caused by acts or omissions arising from an accidentthat involves, and occurs while, you, a family member, or a dri-ver with your permission are using an auto you own that weinsure under this coverage.

l We’ll pay the damages for bodily injury and property damageto others if any other person or organization is legally responsi-ble. But we’ll only pay if the bodily injury and property damageto others is caused by acts or omissions arising from an accidentthat involves, and occurs while, you or a family member areusing an auto you don’t own that we insure. That other personor organization is not protected if the nonowned auto is ownedby, leased, or hired to that person or organization.

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Those Not Protectedl This coverage doesn’t apply to damage or loss of any property

you or a covered person own, rent, have charge of, or are trans-porting. But it does cover property damage to a house or pri-vate garage you’re renting when that property damage is causedby an accident otherwise covered and for which a covered per-son is legally liable.

l We don’t protect anyone, who intentionally or by directioncauses bodily injury or property damage, against liability arisingfrom such bodily injury or property damage.

l We don’t protect anyone whose accident is covered by an atomicor nuclear energy liability policy. By law such policies protect allpersons involved in the accident, no matter who is at fault.

l We don’t protect the insured or any covered person against aclaim for bodily injury to his or her employee if Worker’s Com-pensation benefits are required or available to that employee.

l We don’t protect against the liability of an insured’s employeefor bodily injury or property damage to a fellow employee suf-fered in the course of the employment.

l We don’t protect the insured or any person against the assess-ment of punitive damages.

Excluded Uses of Motor Vehiclesl We don’t protect any person’s liability resulting from ownership

or operation of a motor vehicle while it’s being used to transportpersons or deliver property for compensation of any kind. Thisdoesn’t apply to a shared-expense car pool.

l We don’t protect any person while employed or otherwiseengaged in the business or occupation of selling, repairing, serv-icing, transporting, storing, or parking motor vehicles, includingroad testing and delivery. But this coverage will protect you, afamily member, or a partner, agent, or employee of you or afamily member for the ownership, maintenance, or use of anauto you own and we insure.

Limits of LiabilityThe amount shown on the “Declarations” for “each person”

under this coverage is the most we’ll pay in damages under thiscoverage for bodily injury to any one person for any one accident.

The amount shown on the “Declarations” for “each occurrence”under this coverage is the most we’ll pay in damages for bodilyinjury for any one accident. And, the amount we’ll pay for “eachoccurrence” is subject to the liability limit shown for “each per-son” on the “Declarations.”

The amount shown on the “Declarations” for “each occurrence”under this coverage is the most we’ll pay in damages for propertydamage for any one accident.

These limits are the most we’ll pay for any one accident regard-less of the number of covered persons, claims made, or vehicles orpremiums shown on the policy, or premiums paid, or vehiclesinvolved in an accident.

NOTE: A motor vehicle and attached trailer are considered onemotor vehicle in determining the liability limit.

COVERAGE C—BENEFITS FOR BODILYINJURY CAUSED BY AN UNDERINSUREDMOTORISTIf you’ve selected this coverage as shown by the charge on the

“Declarations,” we’ll pay for bodily injury damages you or a fami-ly member sustain when those damages are caused by an underin-sured motorist . But the damages must result from an accidentinvolving the operation, maintenance, or use of an underinsuredmotor vehicle. And the damages caused by the underinsuredmotorist must be those that you or a family member are legallyentitled to recover from the underinsured motorist.

We’ll protect anyone occupying, with your permission, an autowe insure.

Coverage C does not apply to punitive damages.

COVERAGE D—BENEFITS FOR PROPERTYDAMAGE CAUSED BY AN UNDERINSUREDMOTORISTIf you’ve selected this coverage as shown by the charge on the

“Declarations,” we’ll pay the damages, less the requireddeductible, for property damage you or a family member sustainwhen those damages are caused by an underinsured motorist.But the damages must result from an accident involving the oper-ation, maintenance, or use of an underinsured motor vehicle.And the damages caused by the underinsured motorist must bethose that you or a family member are legally entitled to recoverfrom the underinsured motorist.

We’ll protect anyone occupying, with your permission, an autowe insure.

Coverage D does not apply to punitive damages.

Definition of Underinsured Motor VehicleSome drivers carry no automobile insurance, while others have

limits inadequate to pay damages if an accident occurs.The nature of “Underinsured Motorist Coverages” makes a

detailed definition of underinsured motor vehicle necessary.An underinsured motor vehicle is:

l one to which no liability insurance policy or bond applies at thetime of the accident

l one to which a liability policy or bond applies at the time of theaccident, but the limit of the liability policy or bond is inade-quate to pay the full amount a covered person is legally entitledto recover as damages

l one that has a liability policy or bond that applies at the time ofthe accident, but the insurance or bonding company is orbecomes insolvent or denies coverage to its insured for that acci-dent

l a hit-and-run vehicle whose driver or owner can’t be identifiedand that vehicle causes an accident resulting in bodily injury toor property damage sustained by a covered person

l a phantom vehicle, which is an unidentified vehicle that causesan accident although there’s no physical contact with theinsured or with a vehicle the insured is occupying at the time ofthe accident.NOTE: If no physical contact occurs with the vehicle causing

the accident, facts of the accident must be corroborated by com-petent evidence other than testimony of a person having anunderinsured motorist claim resulting from the accident. Theaccident must be reported to the appropriate law enforcementagency within 72 hours after it occurs.

PART IIUNDERINSURED MOTORIST COVERAGES

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An underinsured motor vehicle is not: l one owned by or regularly furnished for use by you or a family

member while you or any family member is using it, except thatthis provision does not apply to you or any family member forclaims under Coverage C

l a motor vehicle or trailer to which the liability coverage of thispolicy applies, except that this provision does not apply to youor any family member for claims under Coverage C

l a land motor vehicle or trailer if it’s operated on rails or crawlertreads or if it’s for use as a residence or premises

l one owned by any governmental entity, including its sub-div-isions or agencies; or operated by an employee or agent of anygovernmental entity, including its subdivisions or agencies,while in the course of employment. This exclusion will notapply if the governmental entity is unable to satisfy a claimbecause of financial inability or insolvency.

Those Not Protectedl We don’t protect anyone occupying a motor vehicle we insure

while it’s being used to transport persons or deliver property forcompensation of any kind. This doesn’t apply to a shared-expense car pool.

l We don’t protect anyone occupying a motor vehicle you or afamily member own which is not insured under the liabilitycoverage of this policy.

l We don’t protect anyone occupying a motor vehicle furnishedor available for regular use by you or a family member and oper-ated by you or that family member which is not insured underthe liability coverage of this policy.

l We don’t protect anyone operating, occupying, or using amotorcycle or motor-driven cycle at the time of accident.

l We don’t protect anyone whose claim is based on, derived from,or the result of the bodily injury or death of a person who is nota covered person for underinsured motorist insurance benefitsunder this policy.

Payment of DamagesUnder these coverages, we may pay the covered person, his or

her legal representative, or anyone else authorized by law toreceive payment.

If there is no liability policy or bond, the amount of any damageswill be reduced by the amount paid by or on behalf of anyoneresponsible for bodily injury or property damage to a coveredperson.

When we pay damages under these coverages, the covered per-son must repay us out of any amounts recovered from anyoneliable for his or her bodily injury or property damage. The cov-ered person must protect our right to recover our money. But wewon’t exercise this right to the extent that it would reduce the cov-ered person’s full recovery of damages.

At our request, the covered person must cooperate with us, andrepresentatives of our choice, to recover the payments we’ve madeunder these coverages. Our expenses to recover payments alsomust be paid to us out of any money recovered.

Other InsuranceIf this policy and any other policy providing underinsured

motorist coverage applies to the same loss, the maximum limit ofliability under all policies will be the highest limit of liability thatapplies under any one policy. If other underinsured motorist cov-erage applies, we’ll pay only our fair share of the loss. That shareis our proportion of the total underinsured motorist insurancethat applies to the loss. But any insurance we provide when youor a covered person use a vehicle you don’t own will be excessover any other collectible insurance.

The phrase “any other policy providing underinsured motoristcoverage” used above includes other PEMCO policies, whether ornot purchased by you, and policies issued by any other insurer.

“Coverage D” benefits will be excess over any other collectibleinsurance.

Limitation PeriodNo person will be entitled to underinsured motorist benefits

under this coverage unless, within three years of either the date ofaccident or the covered person’s 18th birthday (whichever islater), we receive notice in writing from the covered person ortheir representative that the covered person intends to make anunderinsured motorist claim against this policy.

Agreement and ArbitrationA covered person’s legal right to recover damages against the

underinsured motorist or the amount of damages is settled byagreement between us.

If we and the covered person don’t agree, the disagreement mustbe settled by arbitration on written request of either of us.

An arbitrator will be selected by Judicial Arbitration andMediation Services, Inc. (JAMS). We will pay the fees of JAMS.All other arbitration expenses, including attorney fees and feespaid to medical or other expert witnesses, will be paid by the partyincurring them.

Unless both parties agree otherwise, arbitration will take place inthe county where the covered person lives. The decision of thearbitrator will be binding on the covered person and us.

Limits of Coverage CThe amount shown on the “Declarations” for “each person”

under this coverage is the most we’ll pay in damages for bodilyinjury to any one person for any one accident.

The amount shown on the “Declarations” for “each occurrence”under this coverage is the most we’ll pay in damages for bodilyinjury for any one accident. And, the amount we’ll pay for “eachoccurrence” is subject to the liability limit shown for “each per-son” on the “Declarations.”

These limits are the most we’ll pay for any one accident regard-less of the number of covered persons, claims made, or vehicles orpremiums shown on the policy, or premiums paid, or vehiclesinvolved in an accident.

Limits of Coverage DThe amount shown on the “Declarations” for “each occurrence”

under this coverage is the most we’ll pay for property damage forany one accident.

This limit is the most we’ll pay for any one accident regardless ofthe number of covered persons, claims made, or vehicles or premi-ums shown on the policy, or premiums paid, or vehicles involvedin an accident.

Subject to this maximum, the limit of our liability is the actualcash value of the damaged property or the amount needed torepair or replace it with like kind and quality, whichever is less.

Coverage D DeductibleIf the property damage is caused by a hit-and-run or phantom

vehicle, a deductible of $300 will apply to the claim of each cov-ered person. If the property damage is caused by any otherunderinsured motor vehicle, a deductible of $100 will apply tothe claim of each covered person.

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COVERAGE E—MEDICAL PAYMENTSIf you’ve selected this coverage as shown by a charge on the

“Declarations,” we’ll pay necessary and reasonable medical expensesfor a covered person for bodily injury suffered in an accident. If acovered person dies as a result of the accident, we’ll pay a maxi-mum of $3,000 for funeral expenses. We’ll pay these expenses ifthe bodily injury or death is suffered while occupying a motorvehicle or trailer we insure or caused by being struck by a self-pro-pelled land vehicle. But we’ll only pay medical and funeralexpenses incurred within three years from the date of the accident.

We’ll also pay the above expenses for you or a family memberwhile passengers with the owner’s permission in a motor vehiclenot owned by or regularly furnished for use by you or a familymember .

Protection for Othersl We’ll pay necessary and reasonable medical expenses and a maxi-

mum of $3,000 in funeral expenses incurred within three yearsfrom the date of the accident for bodily injury or death of anyother person caused by accident while occupying any motorvehicle or trailer we insure. But the person must be occupyingthe motor vehicle or trailer with the owner’s permission.

l We’ll pay necessary and reasonable medical expenses and a maxi-mum of $3,000 in funeral expenses incurred within three yearsfrom the date of the accident for a pedestrian injured or killedby being struck by an auto you own and we insure. But a personinsured for liability coverage under this policy must be drivingthe auto at the time of the accident.NOTES TO COVERAGE E—MEDICAL EXPENSES:Medical expenses are those necessary and reasonable for medical,

dental, hospital, professional nursing, X-ray and ambulance ser-vices, pharmaceuticals, prescription eyeglasses, and prostheticdevices.

COVERAGE F—LOSS OF INCOME BENEFITAND EXTRA EXPENSE BENEFITS

Loss of Income BenefitIf a covered person under “Coverage E—Medical Payments” is

disabled as a direct result of bodily injury caused by an accidentcovered by this policy, we’ll pay for income lost by the coveredperson because of that accident. The lost income period is thatperiod beginning on the 14th day after the accident and ending52 weeks later or when the injured person no longer is disabled ordies, whichever occurs first.

The benefit amount payable under this policy for loss of incomeby any one person for any one accident won’t exceed 85 percentof the lost income or the “per week” limit of liability for “Loss ofIncome” shown on the “Declarations” for “each person” for eachweek of the disability, whichever is less.

This limit is the most we’ll pay regardless of the number of autosand covered persons under this policy or separate charges for“Medical Payments” coverage shown on the “Declarations.”

Extra Expense BenefitsIf a covered person under “Coverage E—Medical Payments” is

disabled as a direct result of bodily injury caused by an accidentcovered under this policy, we’ll pay up to $40 a day, other than tothe covered person’s family members, for expenses reasonably

PART IIIPERSONAL INJURY PROTECTION

incurred for essential services usually performed without pay bythe injured person.

“Extra Expense Benefits” will end one year from the date of theaccident, or when the injured person no longer is disabled or dies,whichever occurs first.

The $40 per day maximum benefit under this coverage is subjectto limits of $200 per week and $7,500 per accident. If the limitof liability for “Medical Payments” coverage shown on the“Declarations” for each person is $35,000, the $200 per week and$7,500 per accident limits shall not apply.

These limits are the most we’ll pay regardless of the number ofautos and covered persons under this policy or separate charges of“Medical Payments” coverage shown on the “Declarations.”

Method of Payment“Loss of Income Benefit” payments are made every two weeks as

they accumulate.

Income RecordsIf we require any records relating to a claim for the “Loss of

Income Benefit,” the injured covered person must give us permis-sion to obtain those records.

Those Not Protected By Coverages E and Fl We don’t protect anyone occupying a motor vehicle we insure

while it’s being used to transport persons or deliver property forcompensation of any kind. This doesn’t apply to a shared-expense car pool.

l We don’t protect you or any family member while occupying amotor vehicle owned by you or furnished for your regular use, ifwe don’t insure that motor vehicle.

l We don’t protect any family member while occupying a motorvehicle owned by the family member or furnished for the familymember’s regular use, if we don’t insure that motor vehicle.

l We don’t protect anyone occupying a motor vehicle or trailerwhile it’s used as a residence.

l We don’t protect any person whose bodily injury results fromthat person’s use of a motor vehicle we insure while that personis engaged in the business or occupation of selling, repairing,servicing, transporting, storing, or parking motor vehicles,including road testing and delivery. But this coverage will pro-tect you, a family member, your partner, or your employeewhile using an auto you own and we insure. We’ll also protectoccupants of that auto while it is being operated by you, a fami-ly member, your partner, or your employee.

l We don’t protect anyone who intentionally causes injury tohimself or herself.

l We don’t protect anyone who is injured while participating in aprearranged or organized racing or speed contest or in practiceor preparation for such a contest.

l We don’t protect anyone whose bodily injury is due to war,whether or not declared, or an act or condition incident to suchcircumstances.

l We don’t protect anyone whose bodily injury results from theradioactive, toxic, explosive, or other hazardous properties ofnuclear material.

l We don’t protect anyone whose bodily injury results or arisesfrom the insured’s use of a motor vehicle in the commission of afelony.

l We don’t protect anyone while occupying snowmobiles, all-ter-

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COVERAGE H—COLLISIONIf you’ve selected this coverage as shown by the charge on the

“Declarations,” we’ll pay for direct and accidental loss or damageto an auto or trailer we insure, as defined in “Vehicles We Insure,”when the auto or trailer is hit by or hits another object or over-turns.

We’ll pay for the damage less the deductible shown on the“Declarations.” We won’t subtract the deductible if the collisioninvolves direct contact with another motor vehicle we insure.

rain vehicles, ground-effect vehicles, motorcycles, mopeds, ridinglawnmowers, golf carts, farm equipment, or vehicles operated onrails or crawler treads.

Loss of Income Benefits Not Provided byCoverage F

l We don’t cover that amount payable or required to be providedunder Worker's Compensation or other similar disability bene-fits law.

Other InsuranceIf other auto medical payments coverage applies, we’ll pay only

our fair share of medical expenses. That share is our proportion ofthe total auto medical insurance that applies.

Other Sources of Compensation, Coverage FIf the covered person has the right to receive any other insurance

or benefit for lost income (other than sick leave or vacation pay),we won’t pay under this coverage until those other sources havepaid. And then our payment will make up only the differencebetween the other insurance or benefit payments and the maxi-mum benefit we would have paid as stated in “Coverage F—Lossof Income Benefit.”

Collection ExpenseIf the covered person becomes obligated to pay attorney fees to

collect damages from another person and those damages includeamounts we’ve paid under “Coverages E and F,” and we’ve beenrepaid for those benefits out of such recovery, then we’ll pay ourfair share of reasonable fees necessary for the collection. But wewon’t pay any attorney fees for amounts recovered or recoverableby us from another insurance company through intercompanyarbitration agreements.

Repayment AgreementWhen we pay “Medical Payments,” or “Loss of Income Benefit,” or

“Extra Expense Benefits,” the person to or for whom payments aremade or that person’s representative must repay us from anyamounts collected from the “Bodily Injury Liability” or “Benefitsfor Bodily Injury Caused by an Underinsured Motorist” coverageof this or any other policy.

ArbitrationIf we and the covered person don’t agree on the amount of pay-

ment under “Personal Injury Protection” coverage, the disagree-

ment must be settled by arbitration on written request of either ofus.

An arbitrator will be selected by Judicial Arbitration andMediation Services, Inc. (JAMS). We will pay the fees of JAMS.All other arbitration expenses, including attorney fees and feespaid to medical or other expert witnesses, will be paid by the partyincurring them.

Unless both parties agree otherwise, arbitration will take place inthe county where the covered person lives. The decision of thearbitrator will be binding on the covered person and us.

Limit of LiabilityThe limit of liability for “Medical Payments” coverage shown on

the “Declarations” for “each person” is the most we’ll pay in“Medical Payments” benefits, not including funeral expenses, foreach person for any one accident, regardless of the number of cov-ered persons, claims made, or vehicles or premiums shown on thepolicy, or premiums paid, or vehicles involved in an accident.

COVERAGE G—AUTO ACCIDENTAL DEATHWe’ll pay the accidental death benefit amount shown on the

“Declarations” on notification of the death of any person forwhom a charge for such coverage is shown on the “Declarations.”The death must result directly from bodily injury caused by acci-dent suffered while occupying or being struck by a motor vehicle.

The death must occur within one year from the date of the acci-dent.

Deaths Not Coveredl This coverage doesn’t apply to death resulting from suicide or

any attempt at suicide, whether the deceased was sane or insane.l This coverage doesn’t apply to death resulting from bodily

injury suffered at work that involves the operation, loading, orunloading of a commercial motor vehicle or any vehicle avail-able for hire by the public.

l This coverage doesn’t apply to death resulting from bodilyinjury suffered at work that involves the repair or servicing ofmotor vehicles.

Payment of Death BenefitIf the deceased is survived by a spouse, we’ll pay the spouse.

Otherwise, we’ll pay the deceased’s estate. The beneficiary orsomeone acting on behalf of that estate must give us writtennotice of death and furnish accident, medical, or other records wemay require. We have the right to require an autopsy.

PART IVDAMAGE TO YOUR AUTO

COVERAGE I—COMPREHENSIVEIf you’ve selected this coverage as shown by the charge on the

“Declarations,” we’ll pay for direct and accidental loss or damageto an auto or trailer we insure, as defined in “Vehicles We Insure,”if the direct and accidental loss wasn't caused by collision.

We’ll pay for the loss or damage less the deductible shown on the“Declarations.”

NOTE: Accidental glass breakage and loss or damage from mis-siles, falling objects, and contact with animals are “Com-prehensive” coverage losses. Other examples are loss caused by

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fire, theft or larceny, explosion, earthquake, windstorm, hail,water, flood, malicious mischief or vandalism, riot or civil com-motion.

If the auto has “Collision” coverage under this policy, you maychoose to have glass breakage covered under “Collision” instead of“Comprehensive” coverage, but only if the breakage was caused bycollision.

COVERAGE J—TOWING AND EMERGENCYROAD SERVICEIf you’ve selected this coverage as shown by the charge on the

“Declarations,” we’ll pay up to the limit shown on the“Declarations” if an auto we insure, as defined in “Vehicles WeInsure,” is disabled. We’ll pay for towing made necessary by thedisablement. We’ll also pay road service labor costs, but only ifthe labor is done at the disablement scene.

Additional Benefitsl We’ll pay up to $300 for damage to or loss of wearing apparel

and luggage that belongs to you or a family member if the dam-age or loss results from a covered “Collision” loss or a“Comprehensive” loss caused by fire, flood, or theft of the entireauto.

l We’ll pay you up to $25 for the cost you incur to transportyourself from the place where your auto becomes disabled froma loss covered by “Collision” or “Comprehensive” coverageunder this policy to your destination or your home.

l We’ll pay costs you incur, up to $20 a day to a maximum of$600, for your transportation if an auto we insure for “Com-prehensive” coverage is stolen. Payments will begin with thosecosts incurred 48 hours after the theft has been reported to usand the police. The benefit ends when your auto is recovered,or we have paid or offered to pay the theft loss, or we have paida total of $600 toward your transportation costs, whicheveroccurs first.

Autos Not Covered by Coverages H, I, and Jl We don’t cover any auto while it’s used to transport persons or

deliver property for compensation of any kind. This doesn’tapply to a shared-expense car pool.

l We don’t cover any auto while it’s used in any prearranged ororganized racing activity.

l We don’t cover any auto you don’t own while it’s used in thebusiness of selling, repairing, servicing, transporting, storing, orparking motor vehicles.

l We don’t cover any auto described on the “Declarations” withany “Damage to Your Auto” coverages if a charge isn’t shown onthe “Declarations” for that particular coverage for that auto.

Losses Not Covered by CoveragesH, I, and J

l We don’t cover loss caused intentionally by or at the direction ofany covered person.

l We don’t cover damage accumulated over time and resultingfrom common road hazards such as pebbles, dust, oil, freshasphalt, and so on. This is considered wear and tear.

l We don’t cover loss due to war.l We don’t cover loss due to radioactive contamination.l We don’t cover damage from wear and tear, freezing, or

mechanical or electrical breakdown, other than burning ofwiring, unless this damage results from a loss otherwise coveredby this policy.

l We don’t cover loss consisting of wet or dry rot, rust, or mold.l We don’t cover tires unless they’re stolen or damaged by fire,

malicious mischief, or vandalism. But we do cover tires dam-aged in connection with another loss covered under “Collision”or “Comprehensive.”

l We don’t cover loss if the auto is or at any time becomes subjectto any bailment lease, conditional sale, purchase agreement,mortgage, or other encumbrance not specifically declared ordescribed in this policy.

l We don’t cover loss due to conversion, embezzlement, or secre-tion by any person who possesses the auto under a bailmentlease, conditional sale, purchase agreement, mortgage, or otherencumbrance.

l We don’t cover any camper unit or canopy you own that’sdesigned for mounting on an auto unless the unit has beenreported to us, is shown on the “Declarations,” and a charge ismade for it.*

l We don’t cover any equipment or accessories contained in amotor home, camper unit, or trailer unless that equipment isbuilt in and forms a permanent part of the vehicle.*

l We don’t cover the cost of repairing or replacing customizedparts or finish on autos such as parts, finish, equipment, decals,furnishings, or paint if the customized part or finish isn’t avail-able from the auto manufacturer as a standard or optional fea-ture. We don’t cover any increased cost of auto repair orreplacement caused by such nonstandard or optional items onthe auto.*

*NOTE: You may purchase coverage for these items for an addi-tional charge. Call us for details.

Special Provisions on Loss by TheftWe cover loss of any device to record or reproduce sound or

images, or any two-way radio, or any accessories of such deviceswhen the device, radio, or accessories are permanently installed inthe insured auto regardless of their location in the vehicle. We’llalso cover a removable slide-out unit or removable faceplates forstereos. We’ll pay only the actual cash value at the time of loss.l We don’t cover loss of tapes, cassettes, cartridges, compact discs,

computer discs, or other accessories that are not permanentlyinstalled, that are used with equipment designed for the repro-duction of sound, images, or information.**

l We don’t cover loss of any telephone, scanning monitor, televi-sion, personal computer, or any device that transmits or receivesvisual or data signals, including accessories, antennas or otherequipment used with such devices, unless they are permanentlyinstalled by the auto manufacturer or the auto manufacturer’sauthorized dealer at the time of the original purchase.**

l We don’t cover loss of radar detectors or other similar devices.**NOTE: You may purchase theft coverage for these items for anadditional charge. Call us for details.

Limit of LiabilityOur limit of liability for loss under these coverages is the actual

cash value of the stolen or damaged property or the amount neededto repair or replace it with like kind and quality, whichever is less.

Payment of LossWe’ll pay you or the owner of the property for the loss. We may

pay for the loss in money, or we may repair or replace the dam-aged or stolen property with like kind and quality. At ourexpense, we may return any stolen property to you or to youraddress shown on the “Declarations.” If we return stolen property,we’ll pay for any damage to the property resulting from the theft.

We may purchase all or part of the property at an agreed orappraised fair value. You may not abandon property to us.

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Right to AppraisalIf we and the owner of the property don’t agree on the amount

of a loss within 60 days after “Proof of Loss” has been filed, theloss amount will be determined by an appraisal.

We and the owner of the property each choose a competentappraiser. These appraisers choose a competent and impartialumpire. The appraisers separately determine the property’s actualcash value and the amount of loss. If they disagree, they’ll submittheir differences to the umpire. An award in writing by two of thethree determines the loss amount.

The owner of the property pays his or her appraiser, and we payours. The umpire cost and all other appraisal expenses are sharedequally between the owner and us.

COVERAGE K—AUTO RENTAL AND TRAVELEXPENSE REIMBURSEMENT

Auto RentalIf you’ve selected this coverage as shown by the charge on the

“Declarations” and the loss is payable under “Coverages D, H, orI,” we’ll pay you for your cost to rent an auto from a rental agencyor garage. We’ll pay you for the rental expense subject to the “perday” and “per occurrence” limits shown on the “Declarations.”

If the auto isn’t driveable because of the loss, this paymentapplies to rental expense incurred from the time of the loss.

If the auto is driveable, this payment applies to rental expenseincurred from the time the auto was left at a repair facility forrepair of the covered loss.

Rental expense coverage ends when the auto has been repaired orwhen we offer to pay for the loss, whichever occurs first.

Travel ExpenseWhen the auto isn’t driveable as a result of a loss covered by

“Auto Rental,” and the loss occurred at least 100 miles from yourhome, we’ll pay you for any necessary expenses incurred for com-mercial transportation for you or a family member from the placeof the accident to either your originally intended destination or toyour home. And we’ll pay you or a family member for meals andlodging costs incurred because of delays en route resulting directlyfrom the accident.

We’ll also pay for meals, lodging, or commercial transportationcosts incurred by you or any person you choose in order to drivethe auto from the place of repair to the originally intended desti-nation or to your home.

Limits of LiabilitySeveral limits of liability apply to “Coverage K.”We’ll pay up to $150 for “Travel Expense.”If the auto isn’t repaired because we declare it a total loss (other

than theft of the entire auto), we’ll pay you five times the “per day”limit for the auto rental shown on the “Declarations” in place of anyother payment under the “Auto Rental” section of “Coverage K.”

If the damaged vehicle isn’t driveable and you incur rentalexpense before we declare the damaged vehicle a total loss, we’llpay the incurred rental expense up to the “per day” limit shownon the “Declarations” for each day plus five times the “per day”limit for auto rental shown on the “Declarations.”

If “Auto Rental” or “Travel Expense” reimbursements are paidunder any other coverage in this policy, the amount we payreduces the amount payable under “Coverage K.”

The most we’ll pay for all benefits under “Coverage K” for anyone accident won’t exceed the “per occurrence” limit shown onthe “Declarations.”

Policy Period and TerritoryThis policy is issued for the period shown on the “Declara-

tions” and applies only to accidents, occurrences, and losses dur-ing that period within the United States of America, its common-wealths, territories, or possessions, or in Canada, or between theirports.

Our Right to SettleWe may settle any claim or suit if we believe it’s proper.

Our Right to Recover PaymentAfter we’ve made any payment under this policy, we have the

right to recover the payment from anyone else who may be heldresponsible. You and anyone we protect must sign any papers anddo whatever is necessary to enable us to exercise this right. Youand anyone we protect must not do anything that would adverselyaffect this right. We won’t exercise our right to recover paymentto the extent that this would reduce full recovery of damages foryou or anyone we protect.

Your CooperationYou and any covered person agree to cooperate by giving us

information that relates to your policy and answering all reason-

able requests for that information. We may also require you orthe covered person to be examined under oath.

Concealment or FraudWe don’t provide coverage for an insured who intentionally has

concealed or misrepresented any material fact or circumstance,made false statements with intent to deceive, or engaged in fraud-ulent conduct relating to this insurance.

Financial Responsibility Laws and “No-Fault” Laws

If you’ve selected “Bodily Injury Liability” and “Property Dam-age Liability” coverages, we’ll extend those coverages to complywith the minimum requirements of any financial responsibility or“no-fault” law of any state or province in which you or any cov-ered person may have an accident.

Changes in Your PolicyYou automatically get the benefit of any improved policy cover-

age if the change doesn’t require additional premium.The only other way this policy can be changed is by our policy

endorsement or amendment.

POLICY PROVISIONS

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Changes in Cost of InsuranceIf you acquire a replacement auto or additional auto during the

policy period, we’ll adjust the premium as of the date you acquireit. Any premium adjustment will be according to our rules andrates when the change occurs.

If we learn after policy issue that a change in circumstancesmaterially affects our risk, we’ll adjust the premium for the rest ofthe policy period according to our rules and rates.

Additional charges or a refund of less than $2 resulting from pol-icy changes will be waived.

Waiver of DeductiblesWhen there is a covered loss under both this policy and another

policy issued to you by a PEMCO insurance company, only onedeductible will apply to the entire covered loss. The deductiblewill be the highest of all applicable deductibles.

Transfer of This PolicyYou can’t transfer this policy to any person or organization with-

out our written consent. But if you die, the policy will continuein force for the rest of the policy period for family members, legalrepresentatives acting within their capacity, and anyone havingproper temporary custody of your insured auto.

Cancellation of This PolicyYou may cancel this policy any time by letting us know the date

you want the cancellation to take effect. If you request cancella-tion, we’ll charge only for the time we’ve protected you. But we’llretain any refund less than $2.

We may cancel for nonpayment of premium, which is the mostcommon reason. We also may cancel within the first 60 days thepolicy is in effect.

If we cancel within the first 30 days, or any time for nonpaymentof premium, we must mail notice to you at the address shown onthe “Declarations” at least ten days before cancellation is to takeeffect. If the cancellation reason is nonpayment of premium, youmay keep the policy in force by paying the required amount with-in that ten-day period.

In all other cases, we must mail notice to you at least 20 daysbefore the cancellation date.

After the policy is in effect for 60 days, we’ll cancel only for non-payment of premium or if your driver’s license or that of a familymember or any other person who regularly uses your insured autohas been suspended or revoked during the policy period.

Renewal—Continuous Protection PlanYou don’t need to ask us to renew your policy. We guarantee

continuous protection and renewal at the rates then in force forthe coverages provided unless we mail to you a written nonrenewalnotice at least 20 days before the policy period ends. But youmust make your insurance payments when due.

Other Insurance—Primary and ExcessInsuranceThe insurance we provide for any auto described on the

“Declarations” or for any replacement or additional auto weinsure under this policy is primary. That is, it pays even if otherinsurance applies.

Any insurance provided by this policy for any motor vehicle youdon’t own is excess. That is, it protects you after the limit of pri-mary insurance provided by another policy or loss-protection planis exhausted or if there’s no primary insurance or loss protectionfor that motor vehicle.

Sometimes, other primary insurance is available for a motorvehicle when our insurance also is primary. Or, other excessinsurance is available for a motor vehicle when our insurance isexcess. In either case, we’ll pay only our fair share of any loss ordamage. That share is our proportion of the total liability limitthat applies to the loss. This definition of “our fair share” appliesto all parts of this policy except “Parts II and III.”

Legal ActionNo legal action may be brought against us until the insured or

covered person has complied with all policy provisions.

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This policy is signed by our President on behalf of the Company and becomes valid when it’s countersigned on the “Declarations” by our authorizedrepresentative.

President

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