Farmers Homeowners Plus

1. Farmers Homeowners Plus Covering the things that make your house a home Sales Agent Support Training Course #1 Presentation Slides, Version 1.7 Service performed by 1

2. A s you know, it doesn’t take a fire or a theft to disrupt the inner workings of your home. In fact, it’s usually the little things that cause the biggest headaches. Which is why we’re introducing Farmers Homeowners Plus -- an in-home service contract designed to keep your home running smoothly. It picks up where your homeowner’s policy leaves off, covering major components from the wiring in your walls to the dishwasher in your kitchen. And it does so with confidence. The Agent Support Training Course is designed as a resource for ideas and suggestions to help you market this product. These are not scripts, they are suggestions only. 1

3. It's as easy as 1 It's as easy as 2 It's as easy as 3 Training Course Outline It’s as easy as . . . 1, 2, 3 ! • Product Information & Selling Procedures • Completing the Application • Penetrating the Contract into Your Market • Stories that Sell • Handling Objections • What’s in it for me ? • Goal Setting & Achievement Learn Product & Selling Procedures Learn Sales Techniques Sell & Achieve 4

4. It's as easy as 1 Product Information &Selling Procedures 5

5. It's as easy as 1 Here’s what’s covered • Additional Coverage Items • Central A/C • Garbage Disposal • Trash Compactor • Garage Door Opener • Kitchen Refrigerator • Water Heater • Washer and Dryer • Well Pumps • Multiple Basic Coverage Items • Basic Coverage • Plumbing System • Heating System • Electrical System • Oven/Range/Cooktop • Built-in Dishwasher • Built-in Microwave • Stand-alone Freezer • Sump Pump • Pool • Spa • Surcharges • Oil Furnace • Per 1,000 square feet for homes in excess of 4,000 square feet Coverage for unexpected financial loss due to failure or breakdown 6

6. It's as easy as 1 Product Features • Complete coverage • No limit on the number of service calls • Low $230 annual coverage cost for Basic Coverage • Only a $50 deductible (per individual occurrence/breakdown) If additional service calls are necessary for the same claim within the first 90 days following a repair, additional deductibles are not charged. • No home inspection • No restrictions due to age of home or appliance/system • If necessary, appliance/system replacement with like kind and quality . . . covers the working half of your customers’ homes ! 7

7. It's as easy as 1 Product Features • Service performed by Sears HomeCentral • Over 14,000 trained and directly employed service specialists nationwide • Access to 4.2 million parts -- world’s largest electronic library • 1.1 million in-home repairs per month • All service is backed by by Sears’ 100-year commitment to quality and customer service • One toll-free number for all service calls -- (800) 654-4477 • Call anytime -- day or night (24 hours/day, 7 days/week, 365 days/year) • Convenient appointments that fit your schedule • Emergency service available â 8

8. It's as easy as 1 Additional Product Information • Farmers Homeowners Plus product is sold under the Horizontal Marketing Agreement • Coverage is for one year • Effective date of the contract (coverage) begins 30 days after the date the application and contract fee are received by the agent • Appliances/systems must be in working order when the contract is purchased • Basic Coverage covers homes up to 4,000 square feet • Larger homes are available for coverage at a surcharge 9

9. It's as easy as 1 Advantages for your customers • Picks up where Homeowners coverage leaves off • Reduces the anxiety of worrying about repairing major items • Can simplify budgeting for major item replacements • Services are performed by Sears HomeCentral’s national network of service specialists • All your customers need to do is call the toll-free number to receive service â 10

10. It's as easy as 1 Market Research -- Background • A recent national study indicated that: • 50% of all respondents were interested in finding out more about the contract (after the contract was fully described to them) • > 30% were interested in purchasing the contract • Consumers showing the strongest interest: • anticipated breakdowns (older home, older appliances, longer occupancy in home) • were not certain who to call for specific breakdowns • owned extended warranties or maintenance agreements on some household items • Time-starved dual-worker households . . . you could achieve a 30%+ closing ratio ! You can use these ideas as qualification questions with your customers! 11

11. It's as easy as 1 Market Research -- Background (continued) • According to the national survey: • Age and income level played no significant role related to contract interest. • No significant differences based on geography. • Breadth of coverage and quality of service were more important than price. • Gender played no significant role related to contract interest. • The convenience that this contract provides was attractive to two-income households. 12

12. It's as easy as 1 Market Research -- Background (continued) • Existing homeowners insurance policies do not provide repair/replacement coverage for - home appliances - heating and cooling systems - plumbing and electrical systems that fail due to normal wear and tear • Traditional service contracts available to your customers: • Service contract from retailers for individual products • Service contract from after market companies for individual products • Home Warranty program sold by real estate agents during a home sale The things that make your house a home 13

13. It's as easy as 1 Market Research -- Background (continued) • New breeds of service contract products on the horizon: • New types of service contracts from manufacturers, retailers, utility companies, mortgage companies and service companies for individual products and bundles of products • New Home Warranty programs sold by real estate agents for home sales • New breeds of policies sold by insurance agents/companies: • Mechanical breakdown insurance policies • Whole-home mechanical breakdown service contracts Who is talking to your customers ? 14

14. It's as easy as 1 Target Market • Individuals or families who reside in single-family dwellings • Your existing customers that own insurance policies -- Home, Life, and Auto • Prospective home buyers • Home sellers • New customers • Prospective customers 15

15. It's as easy as 1 Cancellations & Transfers • Customers may transfer coverage to the buyers when they sell their home • Customers may cancel the contract at any time • Farmers may cancel the contract for the following reasons: • non-payment of contract fee • non-payment of deductible • material misrepresentation of fact 16

16. It's as easy as 1 Renewals • The contract will be renewed annually upon payment of renewal fee • Customers need only pay the renewal fee within 30 days of receiving the renewal invoice to avoid cancellation Renewals 17

17. It's as easy as 1 Payment Options & Mailing Locations • Total contract fee paid with the application • Two-payment option -- half of the total contract fee with the application (2nd half is due in 60 days with a $3.00 service fee) • Four-payment option--25% of the contract fee with the application. The remaining payment will be billed in three equal installments every 60 days. A $3.00 service fee will apply to each installment. • Payment Method--Credit Card (Visa/MC), Check (payable to Farmers Insurance) • Addresses for forwarding applications & payments: Via Regular Mail Via Overnight Mail Administrative Services Farmers Homeowners Plus P.O. Box 1236 Stamford, CT 06904-1236 Administrative Services Farmers Homeowners Plus 750 Washington Blvd. Stamford, CT 06901 18

18. It's as easy as 1 Contract fee collection & receipting process • Contract fee is not submitted through the normal ACA process. • A receipt is written to the customer from the Farmers Receipt book. • As there is no contract number available to enter in the receipt, enter the product name--Farmers Homeowners Plus--for the description. • The yellow receipt copy is to be given to the insured, the pink receipt copy can be maintained in the customer’s file, and the original can be filed with the daily ACA paperwork. • Deposit a cash payment into the agency trust account. Remit a check for the same amount to Farmers Insurance. Send the check with the customer’s application to Administrative Services (DO NOT SEND CASH WITH THE APPLICATION). • Credit card information is completed on the application and forwarded to Farmers Insurance Administrative Office. 19

19. Farmers Agent Training Guide Application Farmers Home Plus Farmers Home Plus It's as easy as 1 Toolbox of Sales Support Materials Training Materials Brochures & Marketing Supplies Counter Card #36-0059 Homeowners Plus Brochure#36-4058 Sales Agent Support Training Course #1 Stuffer #36-3058 Agent Training Guide#32-7802 Application Supplies Remittance Envelope SRN 25-4133 Homeowners Plus Application #31-4126 SALES TOOLBOX 20

20. It's as easy as 1 Support Phone Numbers • Support from Farmers • Contact the Value Added Representative at your state office • To order supplies from the Sales Toolbox, fax your order to the Material Distribution Customer Service Center -- (909) 628-5433, or phone urgent requests to (909) 591-1456 • Support from Sears Home Administrative Services Company • For contract and customer inquiries, call the Sales Agent Hotline -- (800) 310-3340 • 9:00 AM - 5:00 PM Local Time • Farmers Homeowners Plus Customer Service Line (for customers) -- (800) 654-4477 • 24 hours/day, 365 days/year 21

21. It's as easy as 1 Completing the ApplicationSee pages 6-9 of the Agent Training Guide 22

22. It's as easy as 1 Exercise -- Filling Out An Application • Fill out an application using the following information: • Application Header Information: • Check -- New Application • Application date -- today’s date • Assigned Agent -- your agent information • Product Type -- House, Condo, etc. • 1. Household/Contract Information: • Homeowner -- John A. Farmers • Property Address -- 123 Bluebird Lane • <Local City>, <State> <Zip Code> • <County> • <Nearest Cross Streets> • Mailing Address -- 2244 Rocky Road • <Local City>, <State> <Zip Code> • Applicant’s Phone (Home) -- (<Local Area Code>) 333-1240 • Applicant’s Phone (Business) -- (<Local Area Code>) 444-5500 • House Square Footage -- 5,200 23

23. B. Additional Item Coverage -- Enter Quantities and Extended contract fee It's as easy as 1 Exercise -- Filling Out An Application (cont.) • Fill out an application using the following information: • 2. Coverages: • A. Basic Coverage: • All contracts must include basic coverage contract fee • B. Additional Item Coverage: • Item Quantity • Air Conditioning system 1 • Pool 1 • Garage Door Opener 1 • Stand Alone Freezer 1 • Additional Refrigerator 1 • 3. Surcharges: • Item Quantity • Per 1,000 square feet for homes • in excess of 4,000 square feet 2 • 4. Payment Information: • 1 Pay, 2 Pay or 4 Pay • Check or Visa/Master Card 24

24. It's as easy as 2 Penetrating the Service Contract. . . Into YOUR MARKET ! 25

25. It's as easy as 2 Penetrating Quickly into Your Market • Phone or send mail solicitations to your current customer base • All of your customers should be key targets - this contract can be sold to anyone at anytime! • Discuss Homeowners Plus during Farmers Friendly Reviews and renewal conversations with your customers • Network with local realtors to sell the contract to Home Sellers • Contact each customer with a Homeowners policy renewing the next month and ask if he/she wants “complete” coverage 26

26. It's as easy as 2 Penetrating Quickly into Your Market (cont.) • Contact customers who have lived in their homes > 5 years • Contact your customers who are moving • The contract can be transferred to the purchaser of the home • Serviced by Sears HomeCentral • Customer is protected until the sale is made--maximizes home sale profit • Added protection makes home more desirable to purchasers • Gives you a foot in the door with the home purchaser--automatic new customer who can purchase home, life, and auto from you • Cross-market the contract with: • A home, life, or auto quote â 27

27. It's as easy as 2 Penetrating Quickly into Your Market (cont.) • Package the folder, stuffer, and other marketing support materials in mailers to your customers • Feature counter cards and posters at your agency • Use the Homeowners Plus contract in an innovative way to solicit new business to new prospects (SELL IT AS A STAND-ALONE Service Contract) • Refer your customers who own personal computers to the Farmers internet website at www.farmersinsurance.com 28

28. It's as easy as 2 Stories that Sell What stories sell the Farmers Homeowners Plus contract ? This section is designed to serve as a resource for ideas and suggestions to help you market the Homeowners Plus contract. 29

29. It's as easy as 2 If the customer has more ways of saying NO than you have to encourage him/her to say YES, then who loses? (because he/she will not get a chance to receive all of the benefits from the Farmers Homeowners Plus contract). You, Your Agency, and most of all Your Customer 30

30. It's as easy as 2 The “Risk Avoidance Sell” CUSTOMER: “You’ve mentioned a few times that this contract covers the working half of my home. What do you mean?” YOU: “What I mean is: Standard homeowners insurance only provides coverage for liability and catastrophic loss of the structural parts of your house. That’s only 1/2 of your home! Unless you purchase the Homeowners Plus contract that provides breakdown coverage for your appliances and home systems, the items that you depend on every day are not covered. Without Farmers Homeowners Plus, you have to manage the cost of breakdowns, which can drain large amounts from your bank account when you least expect it, or when you least desire it!” 31

31. It's as easy as 2 The “Convenience Sell” CUSTOMER: “Why should I purchase the contract?” YOU: “Well Mr./Mrs. Customer, like automobiles, home appliances and systems are becoming more and more technical. Not only that, you have more than 15 different types of appliances and systems in your home. Let me ask you: - How difficult is it to find quality servicers for those 15+ types of appliances and systems? … It’s difficult! - How can you be sure of the quality workmanship of those various servicers? …You can’t! - Would the servicer replace your appliance with a model of like kind and quality if your appliance could not be repaired? … No! - And for all of these types of appliances and systems, would you be sure that the servicer would pick up the phone at 1:00 AM to help you if your air conditioning went down? 32

32. It's as easy as 2 The “Convenience Sell” CUSTOMER: “Why should I purchase the contract?” YOU (continued): “Let me ask you: - And how much would you pay for an emergency service call if you needed service at 1:00 AM? - How much would you pay for all of these services (provided 24 hours/day, 365 days/year) if your out-of-pocket expense per service call is only $50? Well, with Farmers Homeowners Plus, you are now worry-free! - All appliances and systems in your home can be covered under one contract. Thus, you have peace of mind knowing that everything is covered! - All appliances/systems are repaired by Sears HomeCentral’s national network of service specialists. This gives you one simple way to handle all breakdowns. “ â 33

33. It's as easy as 2 The “Convenience Sell” CUSTOMER: “Why should I purchase the contract?” YOU (continued): “ Well, with Farmers Homeowners Plus, you are now worry-free! - There’s just one toll-free phone number to call for service 24 hours/day, 365 days/year. This saves you time and offers you wonderful convenience. - All service is backed by Sears’ 100-year commitment to quality and customer service. - Emergency service is available. - If your appliance/system cannot be repaired, then the item will be replaced with another item of like kind and quality--at no additional cost to you! You pay only the deductible! - There are no limits on the number of service calls you can make during the coverage period. - Just one small deductible per breakdown, including any service recalls that are necessary for the same claim within the first 90 days following a repair.” 34

34. It's as easy as 2 The “Why Pay Double? Sell” CUSTOMER: “Is this contract worth the money?” YOU: “Well Mr./Mrs. Customer, would you ever pay twice the amount to repair/replace the appliances and systems in your home? Of course you wouldn’t! I would like to show you how without the Farmers Homeowners Plus contract, you are probably spending double! Over a 10-year period of time, you could spend between $12,000 and $13,000 to repair/replace the appliances and systems in your home -- and that’s just for the Basic Coverage items in the Homeowners Plus contract. $12,000 is about one year of college for a child, a few rooms of nice furniture, or a small boat. If you purchased the Basic Coverage, Air Conditioning, Refrigerator, Washer/Dryer and the Pool Coverage Option of the Farmers Homeowners Plus contract (about $500 per year), you would actually cut the cost of repairs and replacements in half!” 35

35. It's as easy as 2 The “Why Pay Double? Sell” (cont.) If the customer asks you to clarify your $12,000 - $13,000 estimate, use the following information below. YOU: “Here’s how I came up with the estimate. These numbers could be off a bit, but they are pretty close:” 10 years of contract fee ($550/year), plus 20 paid deductibles ($50 each) Routine Repairs, Major Repairs, and Replacements for All Basic Coverage Items, Air Conditioning, and Pool: 36

36. It's as easy as 2 The “Why Pay Double? Sell” YOU: “In addition to cutting your costs in half, you keep control of your annual expenses for home appliance/system repairs and replacements to a low annual fee and a low deductible amount. This helps you avoid large, costly out-of-pocket surprises!” ___________________________________________________________________ POTENTIAL REPLY FROM CUSTOMER: “If this is such a good deal, then how does Farmers make any money? This sounds too good to be true.” YOU: “This contract is very similar to any other service contract-- you may have more claims one year than another. Farmers, like any good company, offers quality products and makes a modest profit.” 37

37. It's as easy as 2 The “Reduction to the Ridiculous Sell” CUSTOMER: “This contract costs too much!” YOU (#1): “Mr./Mrs. Customer, what is more important to you-- the cost of a daily can of soda from the vending machine, or the security of the investment you have in the working parts of your home?” YOU (#2): Use the Why Pay Double? Sell 38

38. It's as easy as 2 Handling Objections Many years ago, a large American shoe manufacturer sent two sales reps out to different parts of the Australian outback to see if they could drum up some business among the aborigines. Some time later, the company received telegrams from both agents. The first one said, No business here…natives don’t wear shoes.” The second one said, “Great opportunity here… natives don’t wear shoes.” unknown 39

39. It's as easy as 2 Handling Objections __________________________________________________________________ CUSTOMER: “I already have service contracts on one (or a few ) appliances/systems in my home.” YOU: “Mr./Mrs. Customer, you obviously see the benefits of owning a contract like Homeowners Plus. Why deny yourself of even more benefit by not covering all of the working parts of your home? And why not consolidate your payments (if you have more than one service contract) into this exciting comprehensive contract?” __________________________________________________________________ CUSTOMER: “This contract costs too much!” YOU: Refer to the Why Pay Double? Sell and the Reduction to the Ridiculous Sell. 40

40. It's as easy as 2 Handling Objections (continued) __________________________________________________________________ CUSTOMER: “Over the past several years, I rarely have had the need for service on my home appliances/systems.” YOU: “Mr./Mrs. Customer, that must mean that you are severely past due for several major repairs and replacements in the next few years. Doesn’t it? __________________________________________________________________ CUSTOMER: “This contract costs more than a comparable Home Warranty, service contract, or insurance policy.” [This statement should be incorrect. The Farmers Homeowners Plus is priced competitively. Be sure to examine the details of any competitive offering.] YOU: - Examine the differences in coverage (number of items covered and types of coverage). - Review the features and benefits with the customer. 41

41. It's as easy as 2 Handling Objections (continued) __________________________________________________________________ CUSTOMER: “My house doesn’t need this contract to sell.” YOU: “Your home may not need this contract to sell. Homes sell with and without this contract. However, isn’t it true that the more piece of mind a buyer has, the easier it is to sell a home? You actually benefit in three ways by purchasing Homeowners Plus before you sell your home: #1) You can receive the benefits of the contract between the time you purchase the contract and the time you sell your home. What if you have an unexpected breakdown at this financially-critical time? #2) By purchasing Homeowners Plus, you actually maximize the profit you take from the sale of your home. If the purchaser’s home inspector identifies repairs/replacements covered under the contract, your contract helps you control and minimize your out-of-pocket expenses.” 42

42. It's as easy as 2 Handling Objections (continued) __________________________________________________________________ CUSTOMER: “My house doesn’t need this contract to sell.” YOU (continued): “#3) The Homeowners Plus contract is transferable to the purchaser. This feature limits the purchaser’s risk, and thus makes the sale of the home easier for the seller. #4) If service-related problems pop up after the home sale, the purchaser has some place to go for help.” 43

43. It's as easy as 2 Handling Objections (continued) __________________________________________________________________ MORE DIFFICULT CUSTOMER OBJECTIONS: “My home is new.” “Most of my appliances are new.” “I like to take care of all repairs and replacements myself.” YOU: Try to look for holes in the customer’s objections. Example Questions: “Are all of the customer’s appliances new? What about the systems in the home (plumbing, electrical, heating, A/C)? Are they new also? If one broke down, could the customer repair it himself/herself? Who would the customer call if he/she needed service? How much time is left on the manufacturers’ warranties of the customer’s products? If the customer likes to take care of repairs himself/herself, then who pays for the parts- and what about the customer’s time?” 44

44. It's as easy as 3 What’s in it for me ? 45

45. It's as easy as 3 What’s in it for me? • New Business Commission • Service Commission 18% of contract fee 15% of contract fee 46

46. It's as easy as 3 What’s in it for me? • Differentiates you from the pack ! • Enables you to offer your customers complete home coverage • Helps you achieve your financial and personal goals 48

47. It's as easy as 3 Goal Setting & Achievement If we do what is necessary, all the odds are in our favor... Henry Kissinger 49

48. It's as easy as 3 Your motivations . . . • If you don’t, your competitors will -- and to your customers !!! • Instant additional revenue generator -- great new story !!! • Your customers should own the contract -- it’s good for them !!! • Sales & incentive goals -- Farmers is counting on you !!! 50

49. It's as easy as 3 Personal & professional goal setting Goal Measurement Actual Results Personal income Monthly, ($XXX) Closing ratio % Monthly, (XX)% Self-gen leads (XX) per week Sales revenue Monthly, ($XXX) 51

50. It's as easy as 1 It's as easy as 2 It's as easy as 3 Good Luck !!! Farmers Homeowners Plus 54