Document:

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                                                                    EXHIBIT 10.6

                               GUARANTEE AGREEMENT

                        AMERICAN PHYSICIANS CAPITAL, INC.

                            Dated as of May 22, 2003

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                                TABLE OF CONTENTS

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                                                ARTICLE I

                                      DEFINITIONS AND INTERPRETATION

SECTION 1.1          Definitions and Interpretation...............................................................1

                                                ARTICLE II

                            POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

SECTION 2.1          Powers and Duties of the Guarantee Trustee...................................................4
SECTION 2.2          Certain Rights of the Guarantee Trustee......................................................5
SECTION 2.3          Not Responsible for Recitals or Issuance of Guarantee........................................7
SECTION 2.4          Events of Default; Waiver....................................................................7
SECTION 2.5          Events of Default; Notice....................................................................8

                                               ARTICLE III

                                          THE GUARANTEE TRUSTEE

SECTION 3.1          The Guarantee Trustee; Eligibility...........................................................8
SECTION 3.2          Appointment, Removal and Resignation of the Guarantee Trustee................................9

                                                ARTICLE IV

                                                GUARANTEE

SECTION 4.1          Guarantee....................................................................................9
SECTION 4.2          Waiver of Notice and Demand.................................................................10
SECTION 4.3          Obligations Not Affected....................................................................10
SECTION 4.4          Rights of Holders...........................................................................11
SECTION 4.5          Guarantee of Payment........................................................................11
SECTION 4.6          Subrogation.................................................................................11
SECTION 4.7          Independent Obligations.....................................................................12
SECTION 4.8          Enforcement.................................................................................12

                                                ARTICLE V

                                LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 5.1          Limitation of Transactions..................................................................12
SECTION 5.2          Ranking.....................................................................................13

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                                                ARTICLE VI

                                               TERMINATION

SECTION 6.1          Termination.................................................................................13

                                               ARTICLE VII

                                             INDEMNIFICATION

SECTION 7.1          Exculpation.................................................................................13
SECTION 7.2          Indemnification.............................................................................14
SECTION 7.3          Compensation; Reimbursement of Expenses.....................................................15

                                               ARTICLE VIII

                                              MISCELLANEOUS

SECTION 8.1          Successors and Assigns......................................................................15
SECTION 8.2          Amendments..................................................................................16
SECTION 8.3          Notices.....................................................................................16
SECTION 8.4          Benefit.....................................................................................17
SECTION 8.5          Governing Law...............................................................................17
SECTION 8.6          Counterparts................................................................................17

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                               GUARANTEE AGREEMENT

                  This GUARANTEE AGREEMENT (the "Guarantee"), dated as of May
22, 2003, is executed and delivered by American Physicians Capital, Inc., an
insurance holding company incorporated in Michigan (the "Guarantor"), and
Wilmington Trust Company, a Delaware banking corporation, as trustee (the
"Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Capital Securities (as defined herein) of APCapital Trust
II, a Delaware statutory trust (the "Issuer").

                  WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of May 22, 2003,among the trustees named
therein of the Issuer, American Physicians Capital, Inc., as sponsor, and the
Holders from time to time of undivided beneficial interests in the assets of the
Issuer, the Issuer is issuing on the date hereof securities, having an aggregate
liquidation amount of $15,000,000, designated in the Declaration as InCapSSM
(the "Capital Securities"); and

                  WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee, to pay to the Holders of Capital
Securities the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.

                  NOW, THEREFORE, in consideration of the purchase by each
Holder of the Capital Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee
for the benefit of the Holders.

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

                  SECTION 1.1 Definitions and Interpretation.

                  In this Guarantee, unless the context otherwise requires:

                  (a) capitalized terms used in this Guarantee but not defined
in the preamble above have the respective meanings assigned to them in this
Section 1.1;

                  (b) a term defined anywhere in this Guarantee has the same
meaning throughout;

                  (c) all references to "the Guarantee" or "this Guarantee" are
to this Guarantee as modified, supplemented or amended from time to time;

                  (d) all references in this Guarantee to Articles and Sections
are to Articles and Sections of this Guarantee, unless otherwise specified;

                  (e) terms defined in the Declaration as of the date of
execution of this Guarantee have the same meanings when used in this Guarantee,
unless otherwise defined in this Guarantee or unless the context otherwise
requires; and

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                  (f) a reference to the singular includes the plural and vice
versa.

                  "Beneficiaries" means any Person to whom the Issuer is or
hereafter becomes indebted or liable.

                  "Common Securities" has the meaning specified in the
Declaration.

                  "Corporate Trust Office" means the office of the Guarantee
Trustee at which at any particular time its corporate trust business shall be
principally administered, which at all times shall be located within the United
States and at the time of the execution of this Guarantee shall be Rodney Square
North, 1100 North Market Street, Wilmington, DE 19890-0001.

                  "Covered Person" means any Holder of Capital Securities.

                  "Debenture Issuer" means American Physicians Capital, Inc. or
any successor entity resulting from any consolidation, amalgamation, merger or
other business combination, in its capacity as issuer of the Debentures.

                  "Debentures" means the junior subordinated debentures of the
Debenture Issuer that are designated in the Indenture as the "Floating Rate
Junior Subordinated Debt Securities due 2033" and held by the Institutional
Trustee (as defined in the Declaration) of the Issuer.

                  "Event of Default" has the meaning set forth in Section 2.4.

                  "Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Capital Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) which are required to be paid on
such Capital Securities to the extent the Issuer has funds available in the
Property Account (as defined in the Declaration) therefor at such time, (ii) the
price payable upon the redemption of any Capital Securities to the extent the
Issuer has funds available in the Property Account therefor at such time, with
respect to any Capital Securities that are (1) called for redemption by the
Issuer or (2) mandatorily redeemed by the Issuer, in each case, in accordance
with the terms of such Capital Securities, and (iii) upon a voluntary or
involuntary liquidation, dissolution, winding-up or termination of the Issuer
(other than in connection with the distribution of Debentures to the Holders of
the Capital Securities in exchange therefor as provided in the Declaration), the
lesser of (a) the aggregate of the liquidation amount of the Capital Securities
and all accrued and unpaid Distributions on the Capital Securities to the date
of payment, to the extent the Issuer has funds available in the Property Account
therefor at such time, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer after
satisfaction of liabilities to creditors of the Issuer as required by applicable
law (in either case, the "Liquidation Distribution").

                  "Guarantee Trustee" means Wilmington Trust Company, until a
Successor Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.

                  "Holder" means any Person in whose name any Capital Securities
are registered on the books and records of the Issuer; provided, however, that,
in determining whether the

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holders of the requisite percentage of Capital Securities have given any
request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.

                  "Indemnified Person" means the Guarantee Trustee (including in
its individual capacity), any Affiliate of the Guarantee Trustee, or any
officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Guarantee Trustee.

                  "Indenture" means the Indenture, dated as of May 22, 2003,
between the Debenture Issuer and Wilmington Trust Company, not in its individual
capacity but solely as trustee, and any indenture supplemental thereto pursuant
to which the Debentures are to be issued to the Institutional Trustee of the
Issuer.

                  "Liquidation Distribution" has the meaning set forth in the
definition of "Guarantee Payments" herein.

                  "Majority in liquidation amount of the Capital Securities"
means Holder(s) of outstanding Capital Securities, voting together as a class,
but separately from the holders of Common Securities, of more than 50% of the
aggregate liquidation amount (including the amount that would be paid upon the
redemption, liquidation or otherwise on the date upon which the voting
percentages are determined, plus unpaid Distributions accrued thereon to such
date) of all Capital Securities then outstanding.

                  "Obligations" means any costs, expenses or liabilities (but
not including liabilities related to taxes) of the Issuer, other than
obligations of the Issuer to pay to holders of any Trust Securities the amounts
due such holders pursuant to the terms of the Trust Securities.

                  "Officer's Certificate" means, with respect to any Person, a
certificate signed by one Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee shall include:

                  (a) a statement that such officer signing the Officer's
Certificate has read the covenant or condition and the definitions relating
thereto;

                  (b) a brief statement of the nature and scope of the
examination or investigation undertaken by such officer in rendering the
Officer's Certificate;

                  (c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and

                  (d) a statement as to whether, in the opinion of such officer,
such condition or covenant has been complied with.

                  "Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust,

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unincorporated association, or government or any agency or political subdivision
thereof, or any other entity of whatever nature.

                  "Responsible Officer" means, with respect to the Guarantee
Trustee, any officer within the Corporate Trust Office of the Guarantee Trustee
with direct responsibility for the administration of any matters relating to
this Guarantee, including any vice president, any assistant vice president, any
secretary, any assistant secretary, the treasurer, any assistant treasurer, any
trust officer or other officer of the Corporate Trust Office of the Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.

                  "Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under Section
3.1.

                  "Trust Securities" means the Common Securities and the Capital
Securities.

                                   ARTICLE II

               POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

                  SECTION 2.1 Powers and Duties of the Guarantee Trustee.

                  (a) This Guarantee shall be held by the Guarantee Trustee for
the benefit of the Holders of the Capital Securities, and the Guarantee Trustee
shall not transfer this Guarantee to any Person except a Holder of Capital
Securities exercising his or her rights pursuant to Section 4.4 (b) or to a
Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of
its appointment to act as Successor Guarantee Trustee. The right, title and
interest of the Guarantee Trustee shall automatically vest in any Successor
Guarantee Trustee, and such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to the appointment of such Successor Guarantee Trustee.

                  (b) If an Event of Default actually known to a Responsible
Officer of the Guarantee Trustee has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee for the benefit of the Holders of the
Capital Securities.

                  (c) The Guarantee Trustee, before the occurrence of any Event
of Default and after the curing or waiving of all Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Guarantee, and no implied covenants shall be read into this
Guarantee against the Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.4(b)) and is
actually known to a Responsible Officer of the Guarantee Trustee, the Guarantee
Trustee shall exercise such of the rights and powers vested in it by this
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.

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                  (d) No provision of this Guarantee shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct or bad faith, except
that:

                           (i) prior to the occurrence of any Event of Default
         and after the curing or waiving of all Events of Default that may have
         occurred:

                                    (A) the duties and obligations of the
                           Guarantee Trustee shall be determined solely by the
                           express provisions of this Guarantee, and the
                           Guarantee Trustee shall not be liable except for the
                           performance of such duties and obligations as are
                           specifically set forth in this Guarantee, and no
                           implied covenants or obligations shall be read into
                           this Guarantee against the Guarantee Trustee; and

                                    (B) in the absence of bad faith on the part
                           of the Guarantee Trustee, the Guarantee Trustee may
                           conclusively rely, as to the truth of the statements
                           and the correctness of the opinions expressed
                           therein, upon any certificates or opinions furnished
                           to the Guarantee Trustee and conforming to the
                           requirements of this Guarantee; but in the case of
                           any such certificates or opinions furnished to the
                           Guarantee Trustee, the Guarantee Trustee shall be
                           under a duty to examine the same to determine whether
                           or not on their face they conform to the requirements
                           of this Guarantee;

                           (ii) the Guarantee Trustee shall not be liable for
         any error of judgment made in good faith by a Responsible Officer of
         the Guarantee Trustee, unless it shall be proved that such Responsible
         Officer of the Guarantee Trustee or the Guarantee Trustee was negligent
         in ascertaining the pertinent facts upon which such judgment was made;

                           (iii) the Guarantee Trustee shall not be liable with
         respect to any action taken or omitted to be taken by it in good faith
         in accordance with the written direction of the Holders of a Majority
         in liquidation amount of the Capital Securities relating to the time,
         method and place of conducting any proceeding for any remedy available
         to the Guarantee Trustee, or exercising any trust or power conferred
         upon the Guarantee Trustee under this Guarantee; and

                           (iv) no provision of this Guarantee shall require the
         Guarantee Trustee to expend or risk its own funds or otherwise incur
         personal financial liability in the performance of any of its duties or
         in the exercise of any of its rights or powers, if the Guarantee
         Trustee shall have reasonable grounds for believing that the repayment
         of such funds is not reasonably assured to it under the terms of this
         Guarantee, or security and indemnity, reasonably satisfactory to the
         Guarantee Trustee, against such risk or liability is not reasonably
         assured to it.

                  SECTION 2.2 Certain Rights of the Guarantee Trustee.

                  (a) Subject to the provisions of Section 2.1:

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                           (i) The Guarantee Trustee may conclusively rely, and
         shall be fully protected in acting or refraining from acting upon, any
         resolution, certificate, statement, instrument, opinion, report,
         notice, request, direction, consent, order, bond, debenture, note,
         other evidence of indebtedness or other paper or document believed by
         it to be genuine and to have been signed, sent or presented by the
         proper party or parties.

                           (ii) Any direction or act of the Guarantor
         contemplated by this Guarantee shall be sufficiently evidenced by an
         Officer's Certificate.

                           (iii) Whenever, in the administration of this
         Guarantee, the Guarantee Trustee shall deem it desirable that a matter
         be proved or established before taking, suffering or omitting any
         action hereunder, the Guarantee Trustee (unless other evidence is
         herein specifically prescribed) may, in the absence of bad faith on its
         part, request and conclusively rely upon an Officer's Certificate of
         the Guarantor which, upon receipt of such request, shall be promptly
         delivered by the Guarantor.

                           (iv) The Guarantee Trustee shall have no duty to see
         to any recording, filing or registration of any instrument or other
         writing (or any rerecording, refiling or reregistration thereof).

                           (v) The Guarantee Trustee may consult with counsel of
         its selection, and the advice or opinion of such counsel with respect
         to legal matters shall be full and complete authorization and
         protection in respect of any action taken, suffered or omitted by it
         hereunder in good faith and in accordance with such advice or opinion.
         Such counsel may be counsel to the Guarantor or any of its Affiliates
         and may include any of its employees. The Guarantee Trustee shall have
         the right at any time to seek instructions concerning the
         administration of this Guarantee from any court of competent
         jurisdiction.

                           (vi) The Guarantee Trustee shall be under no
         obligation to exercise any of the rights or powers vested in it by this
         Guarantee at the request or direction of any Holder, unless such Holder
         shall have provided to the Guarantee Trustee such security and
         indemnity, reasonably satisfactory to the Guarantee Trustee, against
         the costs, expenses (including attorneys' fees and expenses and the
         expenses of the Guarantee Trustee's agents, nominees or custodians) and
         liabilities that might be incurred by it in complying with such request
         or direction, including such reasonable advances as may be requested by
         the Guarantee Trustee; provided, however, that nothing contained in
         this Section 2.2(a)(vi) shall be taken to relieve the Guarantee
         Trustee, upon the occurrence of an Event of Default, of its obligation
         to exercise the rights and powers vested in it by this Guarantee.

                           (vii) The Guarantee Trustee shall not be bound to
         make any investigation into the facts or matters stated in any
         resolution, certificate, statement, instrument, opinion, report,
         notice, request, direction, consent, order, bond, debenture, note,
         other evidence of indebtedness or other paper or document, but the
         Guarantee Trustee, in its discretion, may make such further inquiry or
         investigation into such facts or matters as it may see fit.

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                           (viii) The Guarantee Trustee may execute any of the
         trusts or powers hereunder or perform any duties hereunder either
         directly or by or through agents, nominees, custodians or attorneys,
         and the Guarantee Trustee shall not be responsible for any misconduct
         or negligence on the part of any agent or attorney appointed with due
         care by it hereunder.

                           (ix) Any action taken by the Guarantee Trustee or its
         agents hereunder shall bind the Holders of the Capital Securities, and
         the signature of the Guarantee Trustee or its agents alone shall be
         sufficient and effective to perform any such action. No third party
         shall be required to inquire as to the authority of the Guarantee
         Trustee to so act or as to its compliance with any of the terms and
         provisions of this Guarantee, both of which shall be conclusively
         evidenced by the Guarantee Trustee's or its agent's taking such action.

                           (x) Whenever in the administration of this Guarantee
         the Guarantee Trustee shall deem it desirable to receive instructions
         with respect to enforcing any remedy or right or taking any other
         action hereunder, the Guarantee Trustee (A) may request instructions
         from the Holders of a Majority in liquidation amount of the Capital
         Securities, (B) may refrain from enforcing such remedy or right or
         taking such other action until such instructions are received and (C)
         shall be protected in conclusively relying on or acting in accordance
         with such instructions.

                           (xi) The Guarantee Trustee shall not be liable for
         any action taken, suffered, or omitted to be taken by it in good faith
         and reasonably believed by it to be authorized or within the discretion
         or rights or powers conferred upon it by this Guarantee.

                  (b) No provision of this Guarantee shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law to perform
any such act or acts or to exercise any such right, power, duty or obligation.
No permissive power or authority available to the Guarantee Trustee shall be
construed to be a duty.

                  SECTION 2.3 Not Responsible for Recitals or Issuance of
Guarantee.

                  The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee.

                  SECTION 2.4 Events of Default; Waiver.

                  (a) An "Event of Default" under this Guarantee will occur upon
the failure of the Guarantor to perform any of its payment or other obligations
hereunder.

                  (b) The Holders of a Majority in liquidation amount of the
Capital Securities may, voting or consenting as a class, on behalf of the
Holders of all of the Capital Securities,

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waive any past Event of Default and its consequences. Upon such waiver, any such
Event of Default shall cease to exist, and shall be deemed to have been cured,
for every purpose of this Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.

                  SECTION 2.5 Events of Default; Notice.

                  (a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Capital Securities, notices of all Events of
Default actually known to a Responsible Officer of the Guarantee Trustee, unless
such defaults have been cured before the giving of such notice, provided,
however, that the Guarantee Trustee shall be protected in withholding such
notice if and so long as a Responsible Officer of the Guarantee Trustee in good
faith determines that the withholding of such notice is in the interests of the
Holders of the Capital Securities.

                  (b) The Guarantee Trustee shall not be charged with knowledge
of any Event of Default unless the Guarantee Trustee shall have received written
notice thereof from the Guarantor or a Holder of the Capital Securities, or a
Responsible Officer of the Guarantee Trustee charged with the administration of
this Guarantee shall have actual knowledge thereof.

                                   ARTICLE III

                              THE GUARANTEE TRUSTEE

                  SECTION 3.1 The Guarantee Trustee; Eligibility.

                  (a) There shall at all times be a Guarantee Trustee which
shall:

                           (i) not be an Affiliate of the Guarantor; and

                           (ii) be a corporation or national association
         organized and doing business under the laws of the United States of
         America or any state thereof or of the District of Columbia, or Person
         authorized under such laws to exercise corporate trust powers, having a
         combined capital and surplus of at least 50 million U.S. dollars
         ($50,000,000), and subject to supervision or examination by federal,
         state or District of Columbia authority. If such corporation or
         national association publishes reports of condition at least annually,
         pursuant to law or to the requirements of the supervising or examining
         authority referred to above, then, for the purposes of this Section
         3.1(a)(ii), the combined capital and surplus of such corporation or
         national association shall be deemed to be its combined capital and
         surplus as set forth in its most recent report of condition so
         published.

                  (b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 3.1(a), the Guarantee Trustee shall immediately
resign in the manner and with the effect set forth in Section 3.2(c).

                  (c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Guarantee Trustee shall

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either eliminate such interest or resign to the extent and in the manner
provided by, and subject to, this Guarantee.

                  SECTION 3.2 Appointment, Removal and Resignation of the
Guarantee Trustee.

                  (a) Subject to Section 3.2(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor except during an
Event of Default.

                  (b) The Guarantee Trustee shall not be removed in accordance
with Section 3.2(a) until a Successor Guarantee Trustee has been appointed and
has accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.

                  (c) The Guarantee Trustee appointed to office shall hold
office until a Successor Guarantee Trustee shall have been appointed or until
its removal or resignation. The Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
executed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Guarantee Trustee has been
appointed and has accepted such appointment by an instrument in writing executed
by such Successor Guarantee Trustee and delivered to the Guarantor and the
resigning Guarantee Trustee.

                  (d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 3.2 within 60
days after delivery of an instrument of removal or resignation, the Guarantee
Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Guarantee Trustee.

                  (e) No Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Guarantee Trustee.

                  (f) Upon termination of this Guarantee or removal or
resignation of the Guarantee Trustee pursuant to this Section 3.2, the Guarantor
shall pay to the Guarantee Trustee all amounts owing to the Guarantee Trustee
under Sections 7.2 and 7.3 accrued to the date of such termination, removal or
resignation.

                                   ARTICLE IV

                                    GUARANTEE

                  SECTION 4.1 Guarantee.

                  (a) The Guarantor irrevocably and unconditionally agrees to
pay in full to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by the Issuer), as and when due, regardless of any
defense (except defense of payment by the Issuer), right of set-off or
counterclaim that the Issuer may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.

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                  (b) The Guarantor hereby also agrees to assume any and all
Obligations of the Issuer and in the event any such Obligation is not so
assumed, subject to the terms and conditions hereof, the Guarantor hereby
irrevocably and unconditionally guarantees to each Beneficiary the full payment,
when and as due, of any and all Obligations to such Beneficiaries. This
Guarantee is intended to be for the Beneficiaries who have received notice
hereof.

                  SECTION 4.2 Waiver of Notice and Demand.

                  The Guarantor hereby waives notice of acceptance of this
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.

                  SECTION 4.3 Obligations Not Affected.

                  The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:

                  (a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Capital Securities to be
performed or observed by the Issuer;

                  (b) the extension of time for the payment by the Issuer of all
or any portion of the Distributions, the price payable upon the redemption of
the Capital Securities, the Liquidation Distribution or any other sums payable
under the terms of the Capital Securities or the extension of time for the
performance of any other obligation under, arising out of, or in connection
with, the Capital Securities (other than an extension of time for the payment of
the Distributions, the price payable upon the redemption of the Capital
Securities, the Liquidation Distribution or other sums payable that results from
the extension of any interest payment period on the Debentures);

                  (c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;

                  (d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;

                  (e) any invalidity of, or defect or deficiency in, the Capital
Securities;

                  (f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or

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                  (g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 4.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.

                  There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.

                  SECTION 4.4 Rights of Holders.

                  (a) The Holders of a Majority in liquidation amount of the
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of this Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under this Guarantee; provided, however,
that (subject to Sections 2.1 and 2.2) the Guarantee Trustee shall have the
right to decline to follow any such direction if the Guarantee Trustee shall
determine that the actions so directed would be unjustly prejudicial to the
Holders not taking part in such direction or if the Guarantee Trustee being
advised by legal counsel determines that the action or proceeding so directed
may not lawfully be taken or if the Guarantee Trustee in good faith by its board
of directors or trustees, executive committee or a trust committee of directors
or trustees and/or Responsible Officers shall determine that the action or
proceeding so directed would involve the Guarantee Trustee in personal
liability.

                  (b) Any Holder of Capital Securities may institute a legal
proceeding directly against the Guarantor to enforce the Guarantee Trustee's
rights under this Guarantee, without first instituting a legal proceeding
against the Issuer, the Guarantee Trustee or any other Person. The Guarantor
waives any right or remedy to require that any such action be brought first
against the Issuer, the Guarantee Trustee or any other Person before so
proceeding directly against the Guarantor.

                  SECTION 4.5 Guarantee of Payment.

                  This Guarantee creates a guarantee of payment and not of
collection.

                  SECTION 4.6 Subrogation.

                  The Guarantor shall be subrogated to all (if any) rights of
the Holders of Capital Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Guarantee; provided, however,
that the Guarantor shall not (except to the extent required by applicable
provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee, if, after
giving effect to any such payment, any amounts are due and unpaid under this
Guarantee. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.

                                       11
<PAGE>

                  SECTION 4.7 Independent Obligations.

                  The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 4.3 hereof.

                  SECTION 4.8 Enforcement.

                  A Beneficiary may enforce the Obligations of the Guarantor
contained in Section 4.1(b) directly against the Guarantor, and the Guarantor
waives any right or remedy to require that any action be brought against the
Issuer or any other person or entity before proceeding against the Guarantor.

                  The Guarantor shall be subrogated to all rights (if any) of
any Beneficiary against the Issuer in respect of any amounts paid to the
Beneficiaries by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by applicable provisions of
law) be entitled to enforce or exercise any rights that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee, if, after giving effect to such
payment, any amounts are due and unpaid under this Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Beneficiaries and to pay
over such amount to the Beneficiaries.

                                    ARTICLE V

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

                  SECTION 5.1 Limitation of Transactions.

                  So long as any Capital Securities remain outstanding, if (a)
there shall have occurred and be continuing an Event of Default or (b) Debenture
Issuer shall have selected an Extension Period as provided in the Indenture and
such period, or any extension thereof, shall have commenced and be continuing,
then the Guarantor may not (x) declare or pay any dividends or distributions on,
or redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Guarantor's capital stock, (y) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Guarantor that rank in all respects pari passu with or junior
in interest to the Debentures or (z) make any payment under any guarantees of
the Guarantor that rank in all respects pari passu with or junior in interest to
this Guarantee (other than (i) repurchases, redemptions or other acquisitions of
shares of capital stock of the Guarantor (A) in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
one or more employees, officers, directors, or consultants, (B) in connection
with a dividend reinvestment or stockholder stock purchase plan or (C) in
connection with the issuance of capital stock of the Guarantor (or securities
convertible into or exercisable for such capital stock), as consideration in an
acquisition transaction entered into prior to the occurrence of the Event of
Default or the

                                       12
<PAGE>

applicable Extension Period, (ii) as a result of any exchange or conversion of
any class or series of the Guarantor's capital stock (or any capital stock of a
subsidiary of the Guarantor) for any class or series of the Guarantor's capital
stock or of any class or series of the Guarantor's indebtedness for any class or
series of the Guarantor's capital stock, (iii) the purchase of fractional
interests in shares of the Guarantor's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted or
exchanged, (iv) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, or (v) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior in interest to such
stock).

                  SECTION 5.2 Ranking.

                  This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all
present and future Senior Indebtedness (as defined in the Indenture) of the
Guarantor. By their acceptance thereof, each Holder of Capital Securities agrees
to the foregoing provisions of this Guarantee and the other terms set forth
herein.

                                   ARTICLE VI

                                   TERMINATION

                  SECTION 6.1 Termination.

                  This Guarantee shall terminate as to the Capital Securities
(i) upon full payment of the price payable upon redemption of all Capital
Securities then outstanding, (ii) upon the distribution of all of the Debentures
to the Holders of all of the Capital Securities or (iii) upon full payment of
the amounts payable in accordance with the Declaration upon dissolution of the
Issuer. This Guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any Holder of Capital Securities must restore
payment of any sums paid under the Capital Securities or under this Guarantee.

                                   ARTICLE VII

                                 INDEMNIFICATION

                  SECTION 7.1 Exculpation.

                  (a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission of such
Indemnified Person in good faith in accordance with this Guarantee and in a
manner that such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Guarantee or by
law, except that an Indemnified Person shall be liable for any such loss, damage
or claim

                                       13
<PAGE>

incurred by reason of such Indemnified Person's negligence, willful misconduct
or bad faith with respect to such acts or omissions.

                  (b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Issuer or the Guarantor and upon such
information, opinions, reports or statements presented to the Issuer or the
Guarantor by any Person as to matters the Indemnified Person reasonably believes
are within such other Person's professional or expert competence and who, if
selected by such Indemnified Person, has been selected with reasonable care by
such Indemnified Person, including information, opinions, reports or statements
as to the value and amount of the assets, liabilities, profits, losses, or any
other facts pertinent to the existence and amount of assets from which
Distributions to Holders of Capital Securities might properly be paid.

                  SECTION 7.2 Indemnification.

                  (a) The Guarantor agrees to indemnify each Indemnified Person
for, and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence, willful
misconduct or bad faith on the part of the Indemnified Person, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including but not limited to the costs and expenses (including
reasonable legal fees and expenses) of the Indemnified Person defending itself
against, or investigating, any claim or liability in connection with the
exercise or performance of any of the Indemnified Person's powers or duties
hereunder. The obligation to indemnify as set forth in this Section 7.2 shall
survive the resignation or removal of the Guarantee Trustee and the termination
of this Guarantee.

                  (b) Promptly after receipt by an Indemnified Person under this
Section 7.2 of notice of the commencement of any action, such Indemnified Person
will, if a claim in respect thereof is to be made against the Guarantor under
this Section 7.2, notify the Guarantor in writing of the commencement thereof;
but the failure so to notify the Guarantor (i) will not relieve the Guarantor
from liability under paragraph (a) above unless and to the extent that the
Guarantor did not otherwise learn of such action and such failure results in the
forfeiture by the Guarantor of substantial rights and defenses and (ii) will
not, in any event, relieve the Guarantor from any obligations to any Indemnified
Person other than the indemnification obligation provided in paragraph (a)
above. The Guarantor shall be entitled to appoint counsel of the Guarantor's
choice at the Guarantor's expense to represent the Indemnified Person in any
action for which indemnification is sought (in which case the Guarantor shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the Indemnified Person or Persons except as set forth below);
provided, however, that such counsel shall be satisfactory to the Indemnified
Person. Notwithstanding the Guarantor's election to appoint counsel to represent
the Indemnified Person in any action, the Indemnified Person shall have the
right to employ separate counsel (including local counsel), and the Guarantor
shall bear the reasonable fees, costs and expenses of such separate counsel, if
(i) the use of counsel chosen by the Guarantor to represent the Indemnified
Person would present such counsel with a conflict of interest, (ii) the actual
or potential defendants in, or targets of, any such action include both the
Indemnified Person and the Guarantor and the Indemnified Person shall have
reasonably concluded that there may be legal defenses available to it and/or
other Indemnified Persons

                                       14
<PAGE>

which are different from or additional to those available to the Guarantor,
(iii) the Guarantor shall not have employed counsel satisfactory to the
Indemnified Person to represent the Indemnified Person within a reasonable time
after notice of the institution of such action or (iv) the Guarantor shall
authorize the Indemnified Person to employ separate counsel at the expense of
the Guarantor. The Guarantor will not, without the prior written consent of the
Indemnified Persons, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the Indemnified Persons are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each Indemnified Person from all liability
arising out of such claim, action, suit or proceeding.

                  SECTION 7.3 Compensation; Reimbursement of Expenses.

                  The Guarantor agrees:

                  (a) to pay to the Guarantee Trustee from time to time such
compensation for all services rendered by it hereunder as the parties shall
agree to from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust); and

                  (b) except as otherwise expressly provided herein, to
reimburse the Guarantee Trustee upon request for all reasonable expenses,
disbursements and advances incurred or made by it in accordance with any
provision of this Guarantee (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to the negligence, willful
misconduct or bad faith of the Guarantee Trustee.

                  The provisions of this Section 7.3 shall survive the
resignation or removal of the Guarantee Trustee and the termination of this
Guarantee.

                                  ARTICLE VIII

                                  MISCELLANEOUS

                  SECTION 8.1 Successors and Assigns.

                  All guarantees and agreements contained in this Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with any merger or
consolidation of the Guarantor with or into another entity or any sale, transfer
or lease of the Guarantor's assets to another entity, in each case to the extent
permitted under the Indenture, the Guarantor may not assign its rights or
delegate its obligations under this Guarantee without the prior approval of the
Holders of a Majority in liquidation amount of the Capital Securities.

                                       15
<PAGE>

                  SECTION 8.2 Amendments.

                  Except with respect to any changes that do not adversely
affect the powers, preferences, rights or interests of Holders of the Capital
Securities in any material respect (in which case no approval of Holders will be
required), this Guarantee may be amended only with the prior approval of the
Holders of a Majority in liquidation amount of the Capital Securities. The
provisions of the Declaration with respect to amendments thereof shall apply
equally with respect to amendments of the Guarantee.

                  SECTION 8.3 Notices.

                  All notices provided for in this Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:

                  (a) If given to the Guarantee Trustee, at the Guarantee
Trustee's mailing address set forth below (or such other address as the
Guarantee Trustee may give notice of to the Holders of the Capital Securities):

                           Wilmington Trust Company
                           Rodney Square North
                           1100 North Market Street
                           Wilmington, Delaware 19890-0001
                           Attention: Corporate Trust Administration
                           Telecopy:  302-651-8882
                           Telephone: 302-651-1000

                  (b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Capital Securities and to the Guarantee Trustee):

                           American Physicians Capital, Inc.
                           1301 N. Hagadorn Road
                           East Lansing, Michigan 48823
                           Attention: Frank H. Freund
                           Telecopy:  517-351-7866
                           Telephone: 517-324-6737

                  (c) If given to any Holder of the Capital Securities, at the
address set forth on the books and records of the Issuer.

                  All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.

                                       16
<PAGE>

                  SECTION 8.4 Benefit.

                  This Guarantee is solely for the benefit of the Holders of the
Capital Securities and, subject to Section 2.1(a), is not separately
transferable from the Capital Securities.

                  SECTION 8.5 Governing Law.

                  THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT
OF LAW PRINCIPLES OF SAID STATE OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW.

                  SECTION 8.6 Counterparts.

                  This Guarantee may contain more than one counterpart of the
signature page and this Guarantee may be executed by the affixing of the
signature of the Guarantor and the Guarantee Trustee to any of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.

                  SECTION 8.7 Severability.

                  In case one or more of the provisions contained in this
Guarantee shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Guarantee, but this Guarantee shall be construed as
if such invalid or illegal or unenforceable proision had never been contained
herein.

                                       17
<PAGE>

                  THIS GUARANTEE is executed as of the day and year first above
written.

                                        AMERICAN PHYSICIANS CAPITAL, INC.,
                                        as Guarantor

                                        By:   /s/ Frank H. Freund
                                             ------------------------------
                                             Name: Frank H. Freund
                                             Title: Chief Financial Officer

                                        WILMINGTON TRUST COMPANY,
                                        as Guarantee Trustee

                                        By:   /s/ Donald F. MacKelcan
                                             ------------------------------
                                             Name: Donald F. MacKelcan
                                             Title: Vice President

                                       18<PAGE>
                                                                    EXHIBIT 10.7

                         EXECUTIVE EMPLOYMENT AGREEMENT

THIS AGREEMENT, dated June 2, 2003 by and between American Physicians Assurance
Corporation, a Michigan corporation having a principal place of business in East
Lansing, Michigan, its successors, assigns, affiliates, and related companies
(the "Company") and Thomas Chase (the "Executive").

WHEREAS, the Executive currently serves as the Chief Information Officer of
APCapital;

WHEREAS, the Company desires to obtain the Executive's agreement to continue to
serve as Chief Information Officer of the Company, and to obtain certain
restrictions on the Executive's potential competition with the Company during
the term of the Executive's employment and when and if Executive's employment
with the Company terminates; and

WHEREAS, the Company desires to employ the Executive in accordance with the
terms and conditions of this Agreement and Executive desires to be so employed
by the Company.

NOW, THEREFORE, in consideration of the mutual covenants and promises and other
valuable consideration, contained herein, the parties hereto hereby agree as
follows:

1.   EMPLOYMENT.
     The Company employs the Executive to render services as Chief Information
     Officer of APCapital, the Executive accepts such employment, in accordance
     with the terms, and conditions hereinafter set forth. This Agreement
     supersedes and replaces in its entirety any prior or contemporaneous
     employment agreements or understandings between the Company, its present or
     former affiliates or subsidiaries, and the Executive.

2.   PLACE OF EMPLOYMENT.
     The Executive shall be located, and shall render such services (subject to
     necessary and appropriate business related travel), at the Company's office
     in East Lansing, Michigan. The Company may relocate Executive, subject to
     Executive's rights under Sections 6(d) involuntary termination and Section
     6(e) following a Change in Control.

3.   TERM.
     The term of the Executive's employment with the Company shall be for a
     period commencing on date signed and continue, unless terminated sooner
     under Section 6, for a period of one (1) year. Thereafter, the term shall
     automatically be extended for one (1) additional day for each successive
     day of the Executive's employment with the Company unless replaced, or
     unless terminated in accordance with Section 6, below.

4.   DUTIES AND RESPONSIBILITIES.
     (a) At the commencement of this Agreement, the Executive is employed by
         the Company in the position of Chief Information Officer of APCapital.
         As such, the Executive shall have duties and such authorities as are
         consistent with such position subject to the direction of the President
         and Chief Executive Officer (CEO) and the Board of Directors of
         American Physicians Capital, Inc. ("ACAP"), the parent company of
         American Physicians Assurance Corporation. The Company may change or
         amend the duties of the Executive from time to time to other duties or
         positions at a

                                       1
<PAGE>

     (b) comparable level.  References in this Agreement to the "Board" shall be
         understood as references to the ACAP Board.

     (c) The Executive will devote exclusively his or her best efforts and full
         working time to the performance of the duties of the Executive's?
         position and will not engage in any other employment during the term of
         this agreement except that with the prior approval of the Board the
         Executive may serve as a compensated member of the board of directors
         of other, "for profit" unaffiliated corporations.

5.   COMPENSATION, INCENTIVE COMPENSATION & BENEFITS.
     In consideration for the services of the Executive to be performed
     hereunder, the Company shall compensate the Executive as follows:

     (a) ANNUAL BASE SALARY. The Company shall pay to the Executive a minimum
         annual base salary of $185,000, payable (less applicable taxes) in
         accordance with Company normal payroll practices. Under no
         circumstances shall the Executive's base salary be reduced during the
         term of this Agreement. The Executive's base salary shall be
         periodically reviewed by the Compensation Committee of the ACAP Board
         and may be increased as deemed warranted by the Compensation Committee.

     (b) INCENTIVE COMPENSATION. The Executive will be eligible to participate
         in any short-term incentive plan adopted for senior executive staff.
         The Executive will also be eligible to participate in long-term
         incentive plans available to other senior executive employees.

     (c) DISABILITY INSURANCE. During employment, the Company shall maintain, at
         its expense, an individual long-term disability insurance policy
         ("Policy") for the Executive providing the Executive with benefits in
         the event of a disability as such term is defined in the Policy (a
         "Disability"), provided the Executive satisfies the eligibility
         requirements for coverage under the disability insurance Policy which
         the Company has chosen for its executive staff.

     (d) PAID TIME OFF. The Executive shall be entitled to not less than 4 weeks
         of vacation and 10 days of occasional sick days during each calendar
         year.

     (e) OTHER EMPLOYMENT BENEFITS. During employment, the Executive shall have
         the opportunity to participate in and shall be entitled to receive
         benefits in accordance with, the provisions of any health, life
         insurance, disability, deferred compensation, profit sharing or other
         employee benefit plan or plans adopted, or to be adopted, by the
         Company and which are generally applicable to other similarly situated
         senior executive employees of the Company.

     (f) BUSINESS EXPENSES. The Company shall pay or reimburse the Executive
         promptly, upon presentation of appropriate vouchers, for all necessary
         business travel and entertainment expenses reasonably incurred by the
         Executive in connection with Company? business in accordance with
         Company policy.

6.   TERMINATION.
     Subject to the terms and conditions of this Agreement, the Company or the
     Executive may terminate the Executive's ?employment as provided below, and
     such termination shall not be deemed a breach of this Agreement.

     (a) DEATH OR DISABILITY. The Executive? employment shall terminate upon the
         Executives' death or Disability. Disability is defined as meeting the
         requirements for benefits under the long-term

                                       2
<PAGE>

         Disability Insurance Policy provided by the Company for the Executive.
         If the Executive qualifies or may qualify for disability benefits under
         the Policy, Executive agrees to apply for such benefits in a timely
         basis and submit any necessary medical and other information. If the
         Executive is not covered by the Policy or is not entitled to disability
         benefits under the Policy, the Company may determine that the Executive
         is disabled and terminate the Executive's employment by treating it as
         an Involuntary Termination under Section 6(d) of this Agreement.

     (b) CAUSE. The Company may terminate the Executive's employment under this
         Agreement for Cause. The Executive shall be given written notice of
         termination, specifying with particularity the basis for termination;
         and the Executive shall not in such case have to be given an
         opportunity to cure the basis for such Cause. For the purposes of this
         Agreement, the Company shall have Cause upon: (A) the commission by the
         Executive of dishonesty, or for intentional commission of a wrongful or
         illegal act, (B) or for the willful and continued breach of this
         Agreement, or failure to perform the duties of the Executive's position
         in a competent and conscientious manner (other than as a result of
         incapacity due to physical or mental injury or illness). (C) The
         failure of the Executive to comply with the policies or procedures of
         the Company.

     (c) VOLUNTARY RESIGNATION. The Executive may terminate his or her
         employment for any reason whatsoever.

     (d) INVOLUNTARY TERMINATION. The Company may terminate the Executive's
         employment at any time for any reason or no reason. A termination under
         Section 6(a), (b) or (e) will not be considered an Involuntary
         Termination. For the purpose of this Agreement, Involuntary Termination
         includes, but is not limited to, , the termination of this agreement by
         the Company, a permanent relocation of the Executive's duties that
         would require the Executive to commute a distance of more than 90 miles
         further from the Executive's principal place of employment (the
         Executive shall have 60 days from the notification date of relocation
         to accept or decline continued employment), the resignation of
         Executive within 60 days after an act by the Company which materially
         reduces the Executive's duties and responsibilities. The Executive's
         duties and responsibilities shall not be deemed materially reduced
         solely by virtue of a change in reporting relationship between the
         Executive and the Company.

     (e) CHANGE IN CONTROL. At anytime within one (1) year following the date in
         which a Change in Control shall have occurred, the Board may terminate
         the Executive's employment for any reason whatsoever, or the Executive
         may terminate his Term of employment for Qualifying Reasons as set
         forth below.

         For purposes of this Agreement, a Change in Control means any one of
         the following events:

          (1)    The sale by American Physicians Capital, Inc. ("ACAP") of all
                 or substantially all of its assets to a single purchaser or
                 group of associated purchasers;

          (2)    The sale, exchange or other disposition of ACAP, in one
                 transaction to any entity or entities not affiliated with ACAP,
                 of more than fifty percent (50%) of the outstanding common
                 stock of ACAP other than by a sale, exchange, or disposition of
                 the common stock of ACAP resulting from a public or private
                 offering of common stock of which offering is sponsored or
                 initiated by ACAP and approved by its Board;

          (3)    The merger or consolidation of ACAP in a transaction in which
                 the stockholders of ACAP receive less than fifty percent (50%)
                 of the outstanding voting stock of the new or continuing
                 entity;

                                       3
<PAGE>

          (4)    A change of more than 50% of the directors of the ACAP Board
                 within any 24-month period; except that, a new director elected
                 pursuant to nomination by a majority of the Continuing
                 Directors (as defined below) will not be considered a change of
                 a director for this purpose.

         At any time within one (1) year following the date on which a Change in
         Control shall have occurred, the Executive shall have the right to
         terminate the Executive's employment upon written notice to the Company
         within sixty (60) days following the occurrence of one or more of the
         following Qualifying Reasons. For the purposes of this Agreement
         Qualifying Reason shall mean:

          (1)    The position or responsibilities of the Executive are
                 significantly reduced (including, without limitation, the
                 elimination of such position, a substantial reduction in the
                 size of the Company or other substantial change in the
                 character or scope of the Company's operations), or the
                 Executive is assigned without his or her written consent to any
                 duties which in scope are not comparable with his or her
                 position with the Company immediately prior to such assignment,
                 or the status and stature of those with whom the Executive is
                 asked to work is significantly reduced from the Executive's
                 position immediately preceding the Change in Control;

          (2)    The Company reduces the Executive's then current annual base
                 salary, contrary to Section 5(a), above;

          (3)    The annual incentive compensation opportunity provided to the
                 Executive is eliminated or significantly reduced, the
                 Executive's participation level is reduced or the manner of
                 assessing actual performance is changed in a manner that
                 results in the Executive earning significantly less annual
                 incentive compensation for a given period than he or she would
                 have for the same period absent such change, except if such
                 reduction occurs prior to a Change in Control and is part of an
                 across-the-board reduction in such benefits applicable to all
                 senior level executives of the Company;

          (4)    The Executive's aggregate level of benefits under the Company's
                 benefit plans is significantly reduced, except if such
                 reduction occurs prior to a Change in Control and is part of an
                 across-the-board reduction in such benefits applicable to all
                 senior level executives of the Company;

          (5)    The Company fails to provide the Executive with benefits and
                 perquisites which are substantially equivalent in the aggregate
                 to those to which the Executive is entitled under the Company's
                 benefit plans in which the Executive was participating
                 immediately prior to the Change in Control, or fails to provide
                 the Executive with directors' or officers' insurance, as
                 applicable, at least at the level maintained immediately prior
                 to the Change in Control;

          (6)    The Company permanently changes the geographic location of the
                 performance of the Executive duties that requires the Executive
                 to commute a distance more than 40 miles further from the
                 Executive's principal place of employment existing at the time
                 of the Change in Control;

          (7)    The Company fails to pay the Executive any amount otherwise
                 vested and due hereunder or under any plan or policy of the
                 Company, or fails to comply with any other provision of or
                 perform any of its other obligations under this Agreement.

                                       4
<PAGE>

     (f) NOTICE OF TERMINATION. Any termination by the Company of the
         Executive's employment pursuant to Section 6(b), (d) or (e) must, in
         order to be effective, be preceded by a written notice to the Executive
         ("Notice of Termination") indicating the specific provision of this
         Agreement relied upon, and for any termination under Section 6(b)
         setting forth in reasonable detail the facts and circumstances
         supporting the termination under the provision so indicated, and the
         Date of Termination. Any termination by the Executive of his active
         employment pursuant to Section 6(e) must, in order to be effective, be
         preceded by a written notice to the Company indicating the specific
         provision of Section 6(e) relied upon and setting forth in reasonable
         detail the facts and circumstances supporting the termination under the
         provision so indicated and the Date of Termination. After receipt of
         such notice, the Company shall have ten (10) business days to
         reasonably remedy the event described therein, upon which such event
         shall no longer constitute "Qualifying Reason" for purposes of this
         Agreement.

     (g) DATE OF TERMINATION. "Date of Termination" shall mean (A) if the
         Executive's employment is terminated by the Executive's death, the date
         of the Executive's death, or by reason of the Executive's Disability,
         the date the conditions to constitute a Disability have occurred, or if
         upon expiration of the Term, the last day of the Term, (B) if the
         Executive's employment is terminated by the Company pursuant to Section
         6(b), 6(d) or 6(e), the date specified in the Notice of Termination,
         and (C) if the Executive's employment is terminated by Executive
         pursuant to Section 6(c) or 6(e) the date which is ten (10) business
         days after the date of receipt of the Executive's notice of intention
         to terminate or such other date as may be agreed by the Executive and
         the Board.

7.   COMPENSATION AND BENEFITS UPON TERMINATION.
     (a) DEATH OR DISABILITY. In the event of the Executive's termination due to
         the Executive's death or Disability while actively employed, the
         Company shall pay or provide to the Executive ??or the Executive's
         named beneficiary (in the event of the Executive's death):

          i     Annual Base Salary -  The Executive's earned but unpaid base
                salary through the Date of Termination;

          ii    Bonus -- A prorated portion of the Executive's annual bonus, if
                any, as determined by the Board based on the actual performance
                by the Company during its fiscal year of the Executive's death
                or Disability. Such determination and payment will be made at
                the same time that bonus consideration and payments, if any, for
                other senior executives for the same performance period are
                made; and

          iii   Benefits -- The Executive shall be paid or be provided such
                other benefits for which the Executive is entitled under the
                terms of any employee benefit plan or program of the Company in
                which the Executive may be, or may have been, a participant
                including any earned but unpaid Paid Time Off through the Date
                of Termination.

     (b)  CAUSE. In the event the Executive is terminated for Cause, the
          Executive shall receive only such benefits, if any, as may be provided
          to him under the terms of any employee benefit, incentive, option,
          stock award and other plans or programs of the Company in which he may
          be, or may have been, a participant and shall be paid any balance of
          the Executive's earned but unpaid Annual Base Salary and any Paid Time
          Off for the period through the Date of Termination.

     (c) VOLUNTARY RESIGNATION. In the event the Executive voluntarily
         terminates his employment while actively employed, or breaches this
         agreement following termination, the Company shall pay or provide to
         the Executive only such benefits, if any, as may be provided to him
         under the terms of

                                       5
<PAGE>

          any employee benefit plans or programs of the Company in which the
          Executive may be, or may have been, a participant, and shall be paid
          any balance of the Executive's earned but unpaid Annual Base Salary
          and accrued but unpaid Paid Time Off through the Date of Termination.

     (d)  INVOLUNTARY TERMINATION. In the event the Executive's employment is
          involuntarily terminated by the Company under Section 6(d), the
          Company shall pay or provide to the Executive, subject to the
          Executive signing and delivering to the Company a release and
          separation agreement reasonably acceptable to the Company:

          i.    Severance Pay -- The Executive shall receive severance pay equal
                to 24 months of Executive's then current base salary, payable in
                regular installments on the Company's normal payroll dates over
                a 12 month period;

          ii.   Bonus -- The Executive shall receive one (1) times the greater
                of: the full year annual bonus at 100% target for the calendar
                year in which severance occurs, or the average of last 2 annual
                bonuses paid to the Executive. Such payment will be made at the
                same time that bonus consideration and payments for other senior
                executives for the same performance period are made;

          iii.  Medical & Dental - The Executive shall upon finalization of the
                agreement and release, receive a lump-sum payment in the amount
                of eighteen (18) times the then current monthly premiums for the
                Executive's medical and dental insurance coverage. All other
                welfare and insurance benefits shall cease as of the Date of
                Termination; and

          iv.   Benefit Payment -- The Executive shall upon finalization of the
                agreement and release, receive a $4,000 payment to be applied
                toward the purchase of individual disability, life or any other
                insurances or coverages that terminated upon the Executive's
                Date of Termination; and

          v.    Long-Term Incentive -- The Executive shall continue to have
                rights associated with any vested benefits as of the Date of
                Termination. Following the Date of Termination, all non-vested
                stock or stock options or other long-term incentives are
                forfeited pursuant to and subject to the terms set forth in the
                incentive plans.

          vi.   401(k), Pension and Supplemental Benefits -- The Executive shall
                be paid or be provided such other benefits for which the
                Executive is entitled under the terms of any employee benefit
                plan or program of the Company in which the Executive may be, or
                may have been, a participant including any earned but unpaid
                Paid Time Off through the Date of Termination.

     (e)  CHANGE IN CONTROL. If, at anytime within one (1) year following the
          date in which a Change in Control shall have occurred, the Company
          terminates the Executive's employment for any reason whatsoever
          (except in the case of commission of a felonious act); or the
          Executive terminates his Term of employment for Qualifying Reasons as
          set forth above, the Company shall pay or provide the following to the
          Executive, subject to the Executive signing a release and separation
          agreement reasonably acceptable to the Company:

          i.    Severance Pay -- The Executive shall receive a lump-sum
                severance payment equal to 24 months the Executive's then
                current base salary. Within 7 days of the Date of Termination,
                the Company shall submit to the Executive a release and
                separation agreement which is consistent

                                       6
<PAGE>

                with the terms of this Agreement. The severance payment under
                this subsection will be paid to Executive within 7 days after
                the release and separation agreement become final and binding;
                and

          ii.   Bonus -- The Executive shall receive one (1) times the greater
                of: the full year annual performance bonus at 100% target for
                the calendar year in which severance occurs, or the average of
                last 2 performance bonuses paid to the Executive. Such payment
                will be made within 7 days after the release and separation
                agreement become final and binding; and

          iii.  Medical & Dental -- The Executive shall, upon finalization of
                the agreement and release, receive a lump-sum payment in the
                amount of eighteen (18) times the then current monthly premiums
                for the Executive's medical and dental insurance. All other
                welfare and insurance benefits shall cease as of the Date of
                Termination; and

          iv.   Benefit Payment --The Executive shall, upon finalization of the
                agreement and release, receive a lump-sum payment of $4,000 to
                be applied toward the purchase of individual disability, life or
                any other insurances or coverages that terminated upon the
                Executive's Date of Termination; and

          v.    Long-Term Incentive -- The Executive shall receive all awards
                made to the Executive under long-term incentive plans or
                programs, pursuant to and subject to the terms set forth in the
                incentive plans; and

          vi.   401(k) Pension and Supplemental Benefits -- The Executive shall
                be paid or be provided such other benefits for which the
                Executive is entitled under the terms of any employee benefit
                plan or program of the Company in which the Executive may be, or
                may have been, a participant including any earned but unpaid
                Paid Time Off through the Date of Termination; and

          vii.  The Company shall reimburse the Executive for reasonable
                attorney fees incurred by the Executive in connection with the
                enforcement of this Section 7(e).

8.   REDUCTION OF PAYMENTS.
     Notwithstanding any other provision of this Agreement or of any other
     agreement, understanding or compensation plan, the Company shall not pay,
     and the Executive shall not receive, any payment which, taking into account
     all payments, rights, and benefits whether or not under this Agreement,
     would be deemed to be an "excess parachute payment" under Section 280G of
     the Internal Revenue Code of 1986, as amended, and the amount of payment
     hereunder shall be reduced to the extent necessary to ensure that the
     Executive receives no "parachute payment" in connection with such Change in
     Control if, as determined by the Company, the reduction would be beneficial
     to the Executive.

9.   SUCCESSORS AND ASSIGNS.
     This Agreement shall not be terminated by voluntary or involuntary
     dissolution of the Company or by the merger or consolidation where the
     Company is not the surviving or resulting corporation. This Agreement is
     binding upon and will be enforceable by the Company and by its successors
     and by the assignees of all or substantially all of its business, and by
     any other corporation into which the Company may be merged or consolidated.
     Upon assignment of this Agreement by Company, the provisions of this
     Agreement, including but not limited to the provisions of Section 12, will
     be enforceable by the company receiving the assignment.

                                       7
<PAGE>

10.  NON-ASSIGNABILITY BY EXECUTIVE.
     The obligations of the Executive hereunder may not be assigned or
     transferred by the Executive in any manner whatsoever, nor are such
     obligations subject to involuntary alienation, assignment or transfer.

11.  RELATED COMPANIES.
     Notwithstanding Section 9, above, the Company may assign the Executive to
     perform services for other companies that are under common ownership or
     control with the Company, and may assign this Agreement to other companies
     that are under common ownership or control with the Company. Such
     assignment may be made without the Executive's consent.

12.  PROTECTION OF CONFIDENTIAL INFORMATION AND TRADE SECRETS; COMPANY BUSINESS
     ASSETS; NON COMPETE AND NON-SOLICITATION.

     (a) CONFIDENTIAL INFORMATION AND TRADE SECRETS. The Executive acknowledges
         that he or she will be working with or exposed to confidential
         information and trade secrets, which are the property of the Company
         and/or its affiliates. Such information includes, but is not limited
         to: client lists and information; medical data; financial data; sales
         data; marketing data; policyholder data; claims data; personnel
         information; business files; contracts; documents; business strategies;
         business opportunities; any and all information pertaining to potential
         or actual corporate acquisitions, mergers, consolidations, conversions,
         joint ventures, or other similar agreements; computer software,
         software codes, and software documentation, and other documents or
         information deemed confidential by the Company and so designated to the
         Executive. During and after employment with the Company, the Executive
         agrees not to share such information with any person outside of the
         Company, except upon prior written authorization from the Company
         following notice to and approval by its Board.

     (b) COMPANY BUSINESS ASSETS. The Parties agree that the business assets of
         the Company include information regarding Company clients, and
         relationships with Company clients, and confidential information and
         trade secrets of the Company, including those items listed in Section
         12 (a) above. The Executive also agrees that the work product of the
         Executive produced in the course of employment with Company will be the
         property of Company and/or its affiliates. The Executive agrees that
         the Company and/or its affiliates shall own the copyright, patent, and
         other property rights in such work product, and that this work product
         will be work made for hire for copyright purposes. Upon termination of
         employment, the Executive shall deliver to the Company all work
         product, and all confidential information and trade secrets, including
         but not limited to the items listed in Section 12 (a), and the
         Executive shall not retain any copies. If there is any breach or
         threatened breach by the Executive of the provisions of this Section or
         Section 12 (a), the Company shall be entitled to injunctive relief
         against the Executive or those persons or entities with whom the
         Executive is then affiliated, and to reasonable damages, including
         reasonable attorneys' fees. Such reasonable damages shall include at a
         minimum but not exclusively the amount of any benefit that the
         Executive would receive from disclosing or using the information.

     (c) NON-SOLICITATION. The Executive agrees that for a period of one (1)
         year after termination of employment with the Company, the Executive
         will not directly or indirectly solicit business from or sell any
         service or product to any clients of the Company or clients of any
         subsidiary or affiliate of the Company for any types of insurance or
         other services or products which are offered by or through the Company
         or its affiliates. Clients include current insureds and any persons or
         entity insured or serviced for a fee by the Company or its affiliates
         during the one-year period preceding

                                       8
<PAGE>

         termination of the Executive's employment. The Executive also expressly
         agrees that for a period of two (2) years after termination of
         employment with the Company, the Executive will not directly or
         indirectly induce, attempt to induce, or enable or support the
         inducement of any employee to depart from or cease employment with the
         Company or its affiliates, nor will the Executive interfere with or
         disrupt the Company's or its affiliates' relationships with other
         employees. If there is any breach or threatened breach of this Section,
         the Company and its affiliates shall be entitled to injunctive relief
         against the Executive or those persons or entities with whom the
         Executives is then affiliated, and reasonable damages, including
         reasonable attorneys' fees.

     (d) NON-COMPETE. Executive agrees that for a period of one (1) year after
         termination of employment, Executive will not directly or indirectly
         accept a position with or provide any managerial or executive services
         to any business entity which competes with Company or Company's
         affiliates in their core lines of business, including but not limited
         to professional liability insurance and worker's compensation
         insurance, in any states where Company or its affiliates are doing
         business in the United States at the time of termination. This
         non-compete provision applies to providing services to a competitor in
         any capacity, directly or indirectly, including as an employee,
         consultant, owner, partner, shareholder (other than a minority
         shareholder in a publicly traded corporation), and also applies to
         aiding or assisting any other person or entity in providing such
         services. Provided that, the Board or CEO of ACAP may give prior
         written consent to the Executive accepting a position which would
         otherwise be in violation of this non-compete provision. If there is
         any breach or threatened breach of this section, the Company and its
         affiliates shall be entitled to injunctive relief against the Executive
         and those entities with whom Executive is then affiliated, and
         reasonable damages, including reasonable attorneys' fees.

     (e) RETURN OF COMPANY PROPERTY. Immediately upon the termination of the
         Executive's employment with the Company and at any time upon the
         Company's request, the Executive shall deliver to the Company all the
         Company property in the Executive's possession, custody or control
         including notebooks, reports, manuals, programming data, listings and
         materials, engineering or patent drawings, patent applications, any
         other documents, files or materials which contain, mention or relate to
         Confidential Information, and all copies and summaries of such
         materials whether in written, mechanical, electromagnetic, analog,
         digital or any other format or medium.

     (f) CONSENT TO MODIFICATION BY THE COURTS. It is the express intention of
         the parties to this Agreement that, if it should appear that any of the
         terms or covenants of this section are in conflict with any rule of law
         or statutory provision of the State of Michigan or any other
         jurisdiction where this Agreement is being enforced, which conflict
         would ordinarily render such terms or covenants inoperative or null and
         void, the parties request that the Courts of such state modify any such
         term or covenant so that the intention of the parties hereto is carried
         out to as great a degree and extent as the Court deems reasonable in
         order to conform with any rule of law or statutory provision regarding
         restrictive covenants of the State of Michigan or of such other
         jurisdiction.

13.  ARBITRATION OF DISPUTES.
     The Executive and the Company agree that any controversy or claim arising
     out of or relating to this Agreement, the breach thereof, or the coverage
     of this arbitration provision shall be settled by arbitration, rather than
     by litigation, administered by the American Arbitration Association in
     accordance with the National Rules for the Resolution of Employment
     Disputes in effect on the date of delivery of demand for arbitration. The
     Executive waives the right to submit any discrimination claims or other
     employment-related claims in a court proceeding, and elects instead to
     submit any such claims

                                       9
<PAGE>

     to arbitration. This Agreement to resolve disputes through arbitration is
     not a waiver of any of the Executive's substantive rights or remedies under
     law, and the arbitrator shall have the authority to grant any remedy or
     relief that could be granted in a court proceeding. The arbitration of such
     issues, including the determination of the amount of any damages suffered
     by either party hereto by reason of the acts or omissions of the other,
     shall be to the exclusion of any court. The decision of the arbitrators
     shall be final and binding on the parties and their respective heirs,
     executors, administrators, successors and assignees. Judgment upon the
     award rendered by the arbitrators may be entered in any court having
     jurisdiction. There shall be three arbitrators, one to be chosen directly
     by each party and the third arbitrator to be selected by the two
     arbitrators so chosen. The arbitration shall be conducted in Michigan or at
     such other location as agreed by the parties. All decisions and awards
     shall be made by a majority of the arbitrators. Each party shall pay the
     fees and expenses of that party's arbitrator and any representatives,
     witnesses and all other expenses related to the presentation of that
     party's case. The cost of the third arbitrator, the record or any
     transcripts, any administrative fees, and all other fees and costs shall be
     borne equally by the parties. The arbitrators shall have the authority to
     award reimbursement of reasonable attorneys' fees and other fees and
     expenses as part of the remedy, in accordance with applicable law.

     By agreeing to arbitration under this Section, the Company and the
     Executive understand that they are each waiving any right to a trial by
     jury and each party makes that waiver knowingly and voluntarily with full
     consideration of the ramifications of such waiver.

     Nothing contained herein shall be construed or interpreted to preclude the
     Company prior to, or pending the resolution of, any matter subject to
     arbitration from seeking injunctive relief in any court for any breach or
     threatened breach of any of the Executive's obligations in Section 12
     hereof.

14.  RESOLUTION OF DISPUTES.
     The parties agree that this Agreement will be governed by and interpreted
     in accordance with the laws of the State of Michigan, without application
     of choice of law rules.

15.  RIGHT TO INJUNCTIVE AND OTHER RELIEF; CONSENT TO JURISDICTION.
     (a) The Executive acknowledges that the Company will suffer irreparable
         harm, not readily susceptible of valuation in monetary damages, if the
         Executive breaches any of his obligations in Section 12 of this
         Agreement. Accordingly, the Executive agrees that the Company shall be
         entitled to injunctive relief against any breach or prospective breach
         by the Executive of his obligations in Section 12 in any federal or
         state court of competent jurisdiction, and the Executive hereby submits
         to the jurisdiction of any such federal or state court in the State of
         Michigan for the purposes of any actions or proceedings instituted by
         the Company to obtain such injunctive relief. Nothing herein shall be
         construed as prohibiting the Company from pursuing any other remedies
         available to the Company for such breach or threatened breach,
         including the recovery of damages from the Executive,

     (b) In addition to the rights set forth in subsection (a), above, if
         Executive breaches any of his obligations under Section 12 the Company
         shall be entitled to cease making further payments to the Executive
         pursuant to clauses (i) through (iv) of Section 7 (d) or (e), as the
         case may be, as well as pursuant to clause (v) of Section 7 (d); and to
         terminate Executive's rights of participation under clause (v) of
         Section 7 (d) or (e), as the case may be,

                                       10
<PAGE>

     (c)  This section shall survive the termination of the Executive's
          Employment

16.  ENTIRE AGREEMENT.
     This written Agreement sets forth the entire Employment Agreement between
     the parties, and it supersedes all prior negotiations, employment
     interviews, communications, and understandings between the Parties whether
     written or oral. There are no other Employment Agreements between the
     Parties.

17.  AMENDMENT. This Agreement may not be changed orally but only by a written
     agreement that expressly references this Agreement, signed by the Executive
     and the Company's Chief Executive Officer, and approved by its Board of
     Directors.

18.  SEVERABILITY.
     The various Sections of this Agreement are severable. If any Section
     or an identifiable part thereof is held to be invalid or unenforceable by
     any court of competent jurisdiction, then such invalidity or
     unenforceability shall not affect the validity or enforceability of the
     remaining Sections or identifiable parts thereof in this Agreement. The
     parties hereto agree that the portion so held invalid, unenforceable or
     void shall, if possible, be deemed amended or reduced in scope, or
     otherwise be stricken from this Agreement, to the extent required for the
     purposes of the validity and enforcement hereof.

19.  BENEFICIARIES.
     The Executive may select (and change, to the extent permitted under any
     applicable law) a beneficiary or beneficiaries to receive any compensation
     or benefit payable under this Agreement following the Executive's death or
     disability, and may change such election by giving the Company written
     notice thereof. In the event of the Executive's death, Disability or a
     judicial determination of the Executive's incompetence, all references in
     this Agreement to the Executive shall be deemed, where appropriate, to
     refer to the Executive's named beneficiary, estate or other legal
     representative.

20.  NOTICES.
     All notices which a party is required or may desire to give to the other
     party under or in connection with this Agreement shall be sufficient if
     given by hand delivery or by addressing same to the other party as follows:
     (a) if to the Executive, to: the last known address of record with the
     Company, or (b) if to the Company, to: Attn: Secretary, American Physicians
     Assurance Corporation, 1301 North Hagadorn Road, East Lansing, MI
     48826-1471; or at such other place as may be designated in writing by like
     notice. Any notice shall be deemed to have been delivered when addressed as
     required herein and deposited postage prepaid, in the United States Mail.

21.  ACTION OF THE BOARD
     Any reference in this Agreement to the Board shall include the Board, the
     Compensation Committee thereof and any officers of the Company to which the
     Board or the Compensation Committee thereof has by resolution delegated any
     explicit authority or responsibilities with respect of this Agreement.

22.  TAX WITHHOLDINGS
     All payments to the Executive hereunder shall be subject to such
     withholding of federal, state and local income and excise taxes and to such
     employment taxes as may be reasonably determined by the Company to be
     required.

                                       11
<PAGE>

23.  SURVIVAL AND CONTINUATION OF AGREEMENT PROVISIONS.
     The termination of the Executive's employment for any reason whatsoever
     shall not operate to terminate this Agreement or otherwise adversely affect
     the respective continuing rights and obligations of the parties, including
     but not limited to, those under Sections 5(b), 7, 8, 9, 12, 13, 15 and 20
     of this Agreement, all of which shall survive the effective date of such
     termination of employment in accordance with their respective terms.

EXECUTIVE
                                           AMERICAN PHYSICIANS ASSURANCE
                                           CORPORATION

/s/ Thomas Chase                           /s/ William B. Cheeseman
------------------                         -------------------------------------
                                           President and Chief Executive Officer

                                       12

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