The opinion of the court was delivered by: JOYNER
This diversity case was tried before this Court in a non-jury trial on April 27, 1995. The plaintiff is the Travelers Insurance Company (the "Travelers"), a Connecticut corporation seeking to recover a judgment of over $ 500,000 in unpaid premiums and interest from the defendants, Paolino Paving & Supply, Inc. and Joseph Paolino & Sons, Inc. (collectively, the "Paolinos"), two related Pennsylvania companies engaged in the construction business. For their part, the Paolinos have brought a counterclaim sounding in contract. The parties have submitted their proposed findings of fact and conclusions of law and the matter is now ripe for decision. Accordingly, we now issue the following factual findings and conclusions of law, pursuant to Fed. R. Civ. P. 52.
1. The Paolinos are engaged in the business of building and resurfacing roads and bridges. (Stip. Facts, p. 1-2).
2. The Paolinos are required by law to maintain worker's compensation insurance. (Stip. Facts, p. 2).
3. In the three years prior to the years relevant to this lawsuit, the Paolinos had paid annual premiums ranging from $ 235,359 to $ 458,553 for worker's compensation insurance. (Tr., pp. 118-19).
4. After a number of unsuccessful attempts to secure worker's compensation insurance in the voluntary market, the Paolinos applied to the Pennsylvania Compensation Rating Bureau (the "PCRB") for involuntary worker's compensation insurance on October 9, 1990. (Stip. Facts, p. 2).
5. In their application, the Paolinos estimated that their premium would be $ 198,665, using an experience modification factor ("EMF") of 1.687. (Defendants' Ex. 2).
6. The EMF is an underwriting, actuarial figure computed by the PCRB that considers the insured's claims history and affects the amount of the premium. (Stip. Facts, p. 3).
7. In the three years prior to the years relevant to this lawsuit, the worker's compensation policies the Paolinos held contained EMFs ranging from 1.017 to 2.186. (Tr., pp. 113-15).
8. The Paolinos used an EMF of 1.687 because they knew that the new EMF, to become effective on October 15, 1990, had yet to be promulgated. The Paolinos were also aware that their premium would be adjusted once the actual EMF was published. (Defendants' Ex. 3).
10. The term of the policy ran from October 15, 1990 to October 15, 1991. The policy was renewed for a one-year term on October 15, 1991. (Stip. Facts, p. 3; Tr., p. 4-6).
11. The second policy provided coverage until it was canceled on January 16, 1992. (Tr., p. 20).
12. The policies contained the following ...