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                                                                    EXHIBIT 10.1

                               SAFECO CORPORATION
                    DEFERRED COMPENSATION PLAN FOR DIRECTORS
                   AS AMENDED AND RESTATED ON NOVEMBER 4, 1998
                       (AS LAST AMENDED FEBRUARY 5, 2003)

1.       PURPOSE

The purpose of this Deferred Compensation Plan ("Plan") is to provide for
deferral of payment of all or any portion of the annual retainer, meeting fees,
and any other fees or retainers payable to non-employee directors of SAFECO
Corporation ("Company"); dividend equivalents payable on Restricted Stock Rights
("RSRs") granted to such directors; and all or any part of amounts payable in
settlement of RSRs granted to non-employee directors and certain gains realized
by such directors on stock-for-stock exercises of options to purchase the
Company's common stock ("Common Stock").

2.       ADMINISTRATIVE COMMITTEE

The Board shall from time to time appoint a committee to administer this Plan
(the "Administrative Committee"). The Administrative Committee shall have full
power and authority to construe and interpret the Plan. Members of the
Administrative Committee who are otherwise eligible to participate in this Plan
may do so while serving as members of that Committee, provided that no member
shall be entitled to vote or take any other action as part of the Committee with
respect to his or her benefits under the Plan. Decisions of the Administrative
Committee shall be final and binding upon the directors, their legal
representatives and beneficiaries. Approval by the Administrative Committee of
any election or request made by a director or the legal representative or
beneficiary of a director shall be subject to the sole discretion of the
Administrative Committee.

3.       ELIGIBILITY

Any non-employee director of the Company is eligible to participate in the Plan.

4.       ELECTION TO DEFER FEES

         (a)      Deferral Election. A non-employee director may elect to defer
                  all or a specified percentage of the annual retainer, meeting
                  fees, and any other fees or retainers (all of the foregoing
                  are collectively referred to as "Fees") that may thereafter
                  become payable by executing and delivering to the
                  Administrative Committee an election ("Deferral Election")
                  stating the dollar amount or percentage of the Fees to be
                  deferred.

         (b)      Timing. To be effective, a Deferral Election must be filed
                  with the Administrative Committee by December 31 of the year
                  prior to the year in which the Fees are payable, except that
                  any director newly elected to the Company's Board of Directors
                  shall have 30 days following the date of such director's
                  election in which

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                  to file an irrevocable Deferral Election covering Fees payable
                  during the remainder of the current year. A Deferral Election
                  filed by December 31 shall be irrevocable for the next year
                  and will thereafter remain in effect indefinitely on a
                  year-by-year basis until participation in the Plan terminates,
                  or until the Deferral Election is amended or revoked by a new
                  Deferral Election, which shall take effect the following year.

         (c)      Special Rule for New Fees. If, during the course of a year, a
                  non-employee director becomes eligible to receive a type of
                  Fee for which the director was not eligible on December 31 of
                  the prior year, the director may file a Deferral Election with
                  respect to any payments of such Fee payable during the
                  remainder of the current year, provided the Deferral Election
                  is made before the earlier of (i) 30 days following the date
                  the director becomes eligible for the Fee, and (ii) the date
                  the Fee or any portion thereof is payable.

5.       ELECTION TO DEFER GAINS ON STOCK-FOR-STOCK OPTION EXERCISES

         (a)      Deferral of Qualifying Gains. A non-employee director may
                  elect to defer Qualifying Gain (as defined below) realized on
                  the exercise of one or more non-qualified stock options to
                  purchase Common Stock, provided the option exercised was
                  granted under a plan or program that permits deferral of gain
                  with respect to such option.

                  (i)      Qualifying Gain. "Qualifying Gain" means the net
                           value accrued upon exercise of an option using a
                           stock-for-stock payment method (i.e., the amount by
                           which the total value of the shares exercised exceeds
                           the total value of the shares used to pay the
                           exercise price). For example, a director elects to
                           defer the Qualifying Gain accrued upon exercise of an
                           option to purchase 1,000 shares of Common Stock at an
                           exercise price of $20 per share when the Common Stock
                           has a current fair market value of $25 per share. The
                           director delivers 800 shares of Common Stock (worth
                           $20,000) to pay the exercise price. In return, the
                           director receives 800 shares of Common Stock worth
                           $20,000 and the director's Account (as defined below)
                           is credited with a Qualifying Gain of $5,000.

                  (ii)     Valuation of shares. For purposes of calculating the
                           Qualifying Gain, shares shall be valued at the price
                           at which the last sale of the Common Stock was made
                           prior to 1:00 p.m. Pacific Time on the NASDAQ Stock
                           Market on the date the option is exercised.

         (b)      Stock Option Election. An election to defer Qualifying Gain on
                  a stock option exercise shall be valid only if: (i) a separate
                  irrevocable election ("Stock Option Election") is completed
                  and signed by the director with respect to the stock option;
                  (ii) the Stock Option Election is delivered to and accepted by
                  the Administrative Committee at least six months before the
                  director elects to exercise the stock option; (iii) the
                  exercise price is paid in Common Stock (either through
                  physical

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                  delivery or attestation); and (iv) the director complies with
                  such other rules as the Administrative Committee may establish
                  from time to time.

6.       ELECTION TO DEFER RSR SETTLEMENTS AND RSR DIVIDENDS

         (a)      Deferral of RSR Settlement Amounts. A non-employee director
                  may elect to defer amounts payable in settlement of RSRs ("RSR
                  Settlement Amounts") granted to such director by executing and
                  delivering to the Administrative Committee a Deferral Election
                  indicating the RSR Settlement Amounts that the director wishes
                  to defer. RSR Settlement Amounts may be deferred only if the
                  underlying RSR was granted under a plan or program that
                  permits the deferral of RSR Settlement Amounts.

         (b)      Deferral of RSR Dividend Equivalents. A non-employee director
                  may elect to defer dividend equivalents payable on RSRs ("RSR
                  Dividend Equivalents") granted to such director by executing
                  and delivering to the Administrative Committee a Deferral
                  Election indicating that the director wishes to defer RSR
                  Dividend Equivalents. Any such election to defer RSR Dividend
                  Equivalents must include all RSR Dividend Equivalents declared
                  during the following year. RSR Dividend Equivalents may only
                  be deferred if the underlying RSR was granted under a plan or
                  program that permits the deferral of RSR Dividend Equivalents.

         (c)      Timing of Elections.

                  1.       RSR Settlements. A non-employee director may file a
                           Deferral Election with respect to RSR Settlement
                           Amounts with the Administrative Committee no later
                           than December 31 of a year, provided that such
                           Deferral Election shall not be effective if the
                           non-employee director's membership on the Board
                           terminates within one year of the date on which such
                           Deferral Election is filed. Notwithstanding this one
                           year rule, if, during the course of a year, a
                           non-employee director first becomes eligible to
                           receive RSRs, the director may file a Deferral
                           Election for RSR Settlement Amounts, provided that
                           the Deferral Election is made within 30 days
                           following the date the director is notified of
                           eligibility for the RSR. A non-employee director may
                           revoke or change a previous Deferral Election made
                           with respect to RSR Settlement Amounts, provided that
                           such revocation or change shall not be effective if
                           the non-employee director's membership on the Board
                           terminates within one year of the date on which such
                           revocation or change is filed with the Administrative
                           Committee.

                  2.       RSR Dividend Equivalents. A Deferral Election with
                           respect to RSR Dividend Equivalents must be filed
                           with the Administrative Committee by December 31 of
                           the year prior to the calendar year in which the RSR
                           Dividend Equivalents are declared and shall be
                           irrevocable with respect to the RSR Dividend
                           Equivalents declared in such calendar year.
                           Notwithstanding the foregoing, if, during the course
                           of a year, a non-employee director first becomes
                           eligible to

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                           receive RSRs, the director may file a Deferral
                           Election with respect to any RSR Dividend Equivalents
                           declared during the remainder of the current year,
                           provided that the Deferral Election is made within 30
                           days following the date the director is notified of
                           eligibility for the RSR and applies only to RSR
                           Dividend Equivalents declared after the date the
                           Deferral Election is filed.

7.       DEFERRAL ACCOUNTS

         (a)      Establishment of Accounts. The Company shall establish an
                  account ("Account") in the name of each participating
                  non-employee director, to which all deferred Fees, Qualifying
                  Gains, RSR Settlement Amounts and RSR Dividend Equivalents
                  attributable to the director and the earnings thereon shall be
                  credited. A director's Account shall at all times be a
                  bookkeeping entry only and shall not represent any investment
                  made by the Company on the director's behalf. A director shall
                  be fully vested at all times in the deferred Fees, Qualifying
                  Gains, RSR Settlement Amounts and RSR Dividend Equivalents
                  credited to his or her Account.

         (b)      Crediting of Accounts. Deferrals of Fees shall be credited to
                  the director's Account on the date the Fees would have been
                  paid but for the Deferral Election. Each Qualifying Gain shall
                  be credited to the director's Account on the date that the
                  option to which the gain relates is exercised. RSR Settlement
                  Amounts that are deferred shall be credited to the director's
                  Account on the RSR settlement date. RSR Dividend Equivalents
                  that are deferred shall be credited to the director's Account
                  on the dividend date.

8.       MEASUREMENT FUNDS

         (a)      Allocation Among Measurement Funds. A director's Account shall
                  be allocated among phantom investments (each a "Measurement
                  Fund") designated by the Administrative Committee for use as
                  an index to value the portion, if any, of the director's
                  Account allocated to that phantom investment. The allocation
                  of a director's deferred Fees, Qualifying Gains, RSR
                  Settlement Amounts and RSR Dividend Equivalents shall be
                  governed by the director's most recent Allocation Election
                  (described below) and such rules as the Administrative
                  Committee may establish from time to time. The Account of each
                  director shall be credited (or debited) on a daily basis
                  according to the performance of each Measurement Fund selected
                  by the director.

         (b)      Available Funds. The Measurement Funds available under this
                  Plan at any given time shall be set forth on Appendix A. The
                  Company is under no obligation to offer any particular
                  investment as a Measurement Fund and reserves the right to
                  eliminate, change and add Measurement Funds at any time by
                  action of the Administrative Committee.

         (c)      Allocation Election. Each non-employee director shall file a
                  written election ("Allocation Election") with the
                  Administrative Committee indicating the manner

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                  in which the director's future Qualifying Gains, deferred
                  Fees, RSR Settlement Amounts and RSR Dividend Equivalents are
                  to be allocated among the available Measurement Funds. A
                  director may file a new Allocation Election at any time. An
                  Allocation Election will be given effect no later than the
                  next business day after it is received and accepted by the
                  Administrative Committee.

         (d)      Reallocation Election. Once each year, in accordance with such
                  rules as the Administrative Committee may establish from time
                  to time, a director may file a written election with the
                  Administrative Committee reallocating the director's Account
                  among the available Measurement Funds (a "Reallocation
                  Election"). A Reallocation Election shall be effective as of
                  the next regularly-scheduled quarterly meeting of the
                  Company's Board of Directors held after the Administrative
                  Committee's receipt and acceptance of the director's
                  Reallocation Election, except that a Reallocation Election
                  will not be given effect if it would generate a "non-exempt"
                  transaction for purposes of the rules promulgated under
                  Section 16 of the Securities Exchange Act of 1934, as amended.
                  (A "non-exempt" transaction would result if a director's
                  Reallocation Election would cause a transfer of all or part of
                  the director's Account into (or out of) the Phantom Stock Fund
                  less than six months after the director filed a Reallocation
                  Election electing an opposite-way transfer into or out of that
                  Fund.)

         (e)      No Actual Investment. Notwithstanding any other Plan provision
                  that may be interpreted to the contrary, the Measurement Funds
                  are to be used for measurement purposes only. Neither a
                  director's election of any Measurement Fund nor the crediting
                  or debiting of amounts to the director's Account in accordance
                  with that election shall be construed as an actual investment
                  of the director's Account in any Measurement Fund.

9.       PHANTOM STOCK FUND

         (a)      Phantom Stock Fund. Amounts allocated to the Phantom Stock
                  Fund shall be credited in units ("Units" or "Phantom Stock
                  Units") based on the price at which the last sale of Common
                  Stock was made prior to 1:00 p.m. Pacific Time on the NASDAQ
                  Stock Market on the date of crediting (the "Closing Price").
                  Fractional Units shall be credited to three decimal points.

         (b)      Dividends. To the extent cash dividends are paid by the
                  Company on the Common Stock, a director's Account shall be
                  credited with phantom dividends on Phantom Stock Units.
                  Phantom dividends shall equal the product of the dividend paid
                  on a share of Common Stock multiplied by the number of Units
                  in a director's Account on the record date for the cash
                  dividend. Phantom dividends shall be credited to a director's
                  Account in the form of additional Phantom Stock Units. The
                  number of additional Units credited shall be determined based
                  on the Closing Price of the Common Stock on the dividend
                  payment date.

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         (c)      No Actual Shares. No actual shares of Common Stock will be
                  issued directly or indirectly under the Plan in respect of
                  Phantom Stock Units.

         (d)      Reorganizations. In the event of any change in the Common
                  Stock by reason of an issuance of additional shares,
                  recapitalization, reclassification, merger, reorganization,
                  stock split, reverse stock split, combination of shares, stock
                  dividend or similar transaction, the number of Phantom Stock
                  Units held by directors under the Plan shall be
                  proportionately adjusted by the Administrative Committee.

         (e)      No Voting Rights. No voting or other rights of any kind
                  associated with the ownership of Common Stock shall inure to a
                  director by virtue of the director's allocation of all or any
                  part of the director's Account to the Phantom Stock Fund.

10.      DISTRIBUTION OF DEFERRED COMPENSATION ACCOUNT

         (a)      General. Except as otherwise expressly provided in this Plan,
                  no withdrawal or payment shall be made from a director's
                  Account except following the first to occur of the director's
                  death, permanent disability, retirement as a director or other
                  termination of service as a director of the Company. Payments
                  shall be made in accordance with paragraphs (b) and (c) of
                  this Section 10 unless the director has filed an election
                  under paragraph (d) of this Section requesting an alternative
                  distribution type and/or time period. All payments shall be
                  made in cash, regardless of the Measurement Funds selected by
                  the director.

         (b)      Retirement and Disability Distributions. If a director
                  terminates service as a director on account of a permanent
                  disability, as determined by the Administrative Committee, or
                  retires as a director of the Company under the Company's
                  retirement policy for directors as then in effect, the balance
                  in the director's Account shall be paid to the director in 10
                  annual installments, with each installment payable in January
                  as soon as practicable after year-end, commencing the January
                  next following the director's retirement or termination of
                  service. The amount of the installment payable following any
                  given year-end shall be determined by valuing the director's
                  Account as of the close of business on the last business day
                  of the year and then multiplying that value by a fraction, the
                  numerator of which is one and the denominator of which is the
                  remaining number of installment payments.

         (c)      Distributions Following Death and Other Non-Retirement
                  Terminations. If a director dies prior to retirement as a
                  director or terminates service as a director of the Company
                  for any reason besides retirement or a permanent disability,
                  the entire balance of the director's Account shall be paid out
                  in a single lump sum within 30 days after the termination of
                  service or the date the Company is notified, in a form
                  acceptable to the Administrative Committee, of the director's
                  death, as applicable. The value of the director's Account
                  shall be determined as of the date of the director's death or
                  termination of service.

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         (d)      Distribution Election.

                  (i)      Election permitted. A director shall be permitted, in
                           accordance with rules established by the
                           Administrative Committee from time to time, to elect
                           a distribution type and/or period (up to ten years)
                           different from those set forth in paragraphs (b) and
                           (c) above (a "Distribution Election"), provided that
                           distributions must commence no later than the year
                           after the director retires from the Board of
                           Directors or otherwise terminates service as a
                           director.

                  (ii)     Procedure. To be effective, a Distribution Election
                           must be made in writing and be received by the
                           Administrative Committee at least 12 months prior to
                           the director's retirement or termination of service
                           as a director of the Company, except that the
                           12-month waiting period shall not apply if the
                           termination of service was due to the director's
                           death or permanent disability. Except as provided in
                           paragraph (iv) below, a director may revoke a
                           Distribution Election by written notice or file a new
                           Distribution Election with the Administrative
                           Committee at any time, subject to the above 12-month
                           waiting period, except that a Distribution Election
                           shall become irrevocable once the director is within
                           12 months of normal retirement under the Company's
                           retirement policy for directors as then in effect.

                  (iii)    Entire Account. Any Distribution Election filed by a
                           director shall apply to his or her entire Account,
                           including both the amounts credited to the Account
                           prior to the date of the Distribution Election and
                           those credited thereafter, without regard to how the
                           Account may be allocated among investment options.

                  (iv)     Elections by first-time directors. In the case of a
                           director making his or her first Deferral Election
                           under this Plan, a Distribution Election filed with
                           the Administrative Committee at the same time as the
                           director's initial Deferral Election shall be given
                           effect even if the director terminates service as a
                           director less than 12 months later. A Distribution
                           Election filed at the same time as the director's
                           initial Deferral Election shall be irrevocable for 12
                           months.

         (e)      Tax Distributions. If, for any reason, all or any portion of a
                  director's Account becomes taxable to the director prior to
                  distribution in accordance with the Plan, a director may
                  petition the Administrative Committee for a special
                  distribution of the taxable portion. Upon the grant of such a
                  petition, which shall not be unreasonably withheld, the
                  Company shall promptly distribute to the director the portion
                  of his or her Account that has become taxable.

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11.      BENEFICIARIES

A director may designate one or more beneficiaries to receive amounts payable
under the Plan in the event of the director's death. To designate beneficiaries,
the director shall complete a beneficiary designation form in accordance with
the Administrative Committee's rules and procedures as in effect from time to
time. A director may change a beneficiary designation at any time by filing a
new beneficiary designation form with the Administrative Committee. Upon the
Administrative Committee's acceptance of the new form, all beneficiary
designations previously filed shall be canceled. If the director names someone
other than his or her spouse as primary beneficiary, a spousal consent, in the
form designated by the Administrative Committee, must be signed by the
director's spouse and returned to the Administrative Committee. If the director
fails to designate a beneficiary or if the designated beneficiary predeceases
the director, then the unpaid amounts in the Account of a deceased director
shall be paid to the director's surviving spouse, or, if the director has no
surviving spouse, to the personal representative of the director's probate
estate.

12.      ANNUAL STATEMENTS

At least annually, the Company will provide each non-employee director with a
statement showing the deferred Fees, Qualifying Gains, RSR Settlement Amounts
and RSR Dividend Equivalents credited to the director's Account and any
additional amounts credited (or debited) thereto in accordance with the
director's Allocation Election(s) and the provisions of this Plan.

13.      TERMINATION OR AMENDMENT OF THE PLAN

The Plan may be terminated, modified, or amended from time to time by resolution
of the Board of Directors. If the Plan is terminated, all amounts accrued in
directors' Accounts before termination will remain subject to the provisions of
the Plan as though the Plan had not been terminated.

14.      DIRECTORS' RIGHTS

         (a)      No Funding or Interest in Company Assets. Amounts deferred and
                  accrued under the Plan remain the property of the Company, and
                  no director or other person shall acquire any property
                  interest in any assets of the Company on account of
                  participation in the Plan. A director's rights are limited to
                  receiving from the Company the payments provided for in the
                  Plan. The Plan is unfunded, and to the extent that any
                  director acquires a right to receive payments from the Plan,
                  such right shall be no greater than the right of an unsecured
                  creditor of the Company.

         (b)      Transferability. Interests in the Plan may not be transferred,
                  assigned, pledged or encumbered. Prior to the time payment of
                  an Account is actually made to a director, the director shall
                  have no rights by way of anticipation or otherwise to assign
                  or dispose of any interest under the Plan.

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15.      GOVERNING LAW

This Plan shall be governed by and interpreted in accordance with the internal
laws of the state of Washington without regard to conflict of law principles.

16.      EFFECTIVE DATE

The effective date of this Plan is November 2, 1994.

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                                   Appendix A

                             MEASUREMENT FUNDS UNDER
         THE SAFECO CORPORATION DEFERRED COMPENSATION PLAN FOR DIRECTORS

The following Measurement Funds shall be available under the Plan:

         a.       Phantom Stock Fund (described in Section 9 of the Plan);

         b.       Interest-Accruing Fund (interest credited at an annual rate
                  equal to the applicable federal long-term rate for purposes of
                  Section 1274 of the Internal Revenue Code of 1986, as amended,
                  in effect at January 1 of each year);

         c.       SAFECO 401(k) Savings Plan Investment Options:

                  -        Diversified Common Stock Portfolio

                  -        Intermediate Term Bond Portfolio

                  -        Money Market Portfolio

                  -        SAFECO Equity Fund

                  -        SAFECO Growth Fund

                  -        SAFECO Income Fund

                  -        SAFECO International Stock Fund

                  -        SAFECO Small Company Stock Fund

                  -        Vanguard Total Bond Market Index Fund

                  -        Vanguard Total Stock Market Index Fund

                  -        Vanguard Growth Index Fund

                  -        Vanguard Balanced Index Fund

                  -        RS Emerging Growth Fund

                  -        SAFECO High-Yield Bond Fund

                  -        Fidelity Growth Company Fund

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