As you know well, in many ways the mortgage field services industry is unlike any other related field. You sometimes find yourself in situations that other general contractors, licensed home inspectors, real estate brokers, or appraisers do not seem to face, situations with exposure to liabilities that are unique to the default industry. Protecting yourself from loss in these circumstances calls for comprehensive and specialized Errors and Omissions (E&O) insurance coverage.

Most of you realize the potential for a claim and are aware of the possible financial repercussions. If you recall, we discussed some of the more serious and costly errors of the past year in Memo 5018. Unfortunately, most standard General Liability (GL) policies do not include coverage that protects against this kind of loss. Safeguard has in the past suffered some significant and damaging financial losses as a result of errors or omissions that were not covered under the contractor or inspector's insurance policies.

You may also be aware that financial institutions, mortgage companies, and loan servicers all have rigorous standards for the type and extent of insurance coverage that they require of their vendors. Our contracts with our clients specify the coverages that we are required to carry, and each contract states that if we fail to meet these requirements, the client will cease directing work orders to us until we prove that we are back in compliance.

Safeguard is also obligated to ensure that any subcontractors we work with are fully and properly insured. In order to make certain that all of our contractors and inspectors are maintaining sufficient E&O insurance coverage to protect our and our clients' interests and to comply with our contractual requirements, Safeguard has developed this Insurance Specifications sheet. This sheet is based on the requirements our clients have set forth, and it establishes the minimum requirements for adequate and acceptable insurance coverage for all of Safeguard's vendors.

While we understand that the current market does not allow for a policy that protects against 100% of all possible losses (for example, mold and asbestos are currently excluded on all policies), we are confident that any policy meeting the specifications set forth in this attachment will provide sufficiently comprehensive insurance coverage to comply with our clients' specifications.

We remain strongly committed to ensuring that our clients' requirements for our full insurance coverage and our inspectors' and contractors' coverage are met. We urge you to review these specifications with your insurance agent to confirm that your policy meets our requirements and that you are fully covered in case a claim should ever arise. Safeguard Properties, Inc. gladly accepts any policy that meets these requirements.

Thank you for your cooperation, and please feel free to contact Nancy.Runyon@safeguardproperties.com or Caroline.Carbone@safeguardproperties.com with any questions about the foregoing.