SPECIAL COMMITTEE INDEMNIFICATION AGREEMENT

SPECIAL COMMITTEE INDEMNIFICATION AGREEMENT

SPECIAL COMMITTEE INDEMNIFICATION AGREEMENT (this " Agreement ") dated as of December 4, 2006, by and between Direct General Corporation (the " Company "), a Tennessee corporation, and _______________________ (" Indemnitee "):

WHEREAS , the Indemnitee is provided indemnification pursuant to the Tennessee Business Corporation Act and the Charter and Bylaws of the Company;

WHEREAS , the Board of Directors of the Company (the " Board ") on June 5, 2006 authorized entering into an indemnification agreement with each of the members of the Special Committee first established by the Board on May 19, 2006 (the " Special Committee "), and Indemnitee has accepted appointment to the Special Committee in reliance upon the authorization by the Board; and

WHEREAS , it is reasonable and prudent for the Company contractually to obligate itself to indemnify each member of the Special Committee;

NOW, THEREFORE , in consideration of the premises, the mutual agreements herein set forth below and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

1.    Services by Indemnitee; Notice of Proceeding.

(a)    Services .   Indemnitee may at any time and for any reason resign from the Board or the Special Committee.

(b)    Notice of Proceeding .   Indemnitee shall promptly notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter that may be subject to indemnification or advancement of Expenses (as defined below) covered by this Agreement.

2.    Indemnification .

(a)    General .   The Company shall indemnify and advance Expenses to Indemnitee in connection with any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other actual, threatened or completed proceeding whether civil, criminal, administrative or investigative, direct or derivative, other than one initiated directly by Indemnitee, and which arises out of or is related to service by Indemnitee as a member of the Special Committee and to which Indemnitee is or is threatened to be made a party (a " Proceeding "). " Expenses " shall mean all reasonable attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, reasonable and necessary travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in a Proceeding, for which reasonable and appropriate documentation is presented to the Company in accordance with the Company's standard policies and procedures for submission and reimbursement of business expenses.

(b)    Proceedings .   Subject to the terms and conditions of this Agreement, the Company shall indemnify Indemnitee against Expenses, judgments, penalties, fines and amounts paid in settlements actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection with such Proceeding or any claim, issue or matter therein. The Company may through counsel of its choosing participate with Indemnitee in the defense in a claim in any Proceeding. If the Company elects to participate with Indemnitee in the defense a claim, the Company shall be responsible for the costs of its legal counsel. Indemnitee shall not agree to or enter into any settlement or consent decree with respect to any claim without providing the Company with prior written notice.

(c)    Indemnification for Expenses As a Witness .   To the extent that Indemnitee is a witness in any Proceeding, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection therewith.

3.    Advancement of Expenses .   The Company shall advance all reasonable Expenses which were incurred by or on behalf of Indemnitee in connection with any Proceeding within 30 days after the receipt by the Company of a statement from Indemnitee requesting such advance, provided the statement is accompanied by appropriate documentation of such Expenses in accordance with the Company's usual policies for reimbursement of business expenses. An advance may be requested at any time prior to, during or after final disposition of such Proceeding.

4.    Entitlement to Indemnification .

(a)    Request .   To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request for indemnification, including such information as is reasonably available to Indemnitee to demonstrate that Indemnitee is entitled to indemnification, and including invoices or other appropriate support for the amount claimed in accordance with the Company's standard policies for of reimbursement of business expenses.

(b)    Payment .   Unless the procedures set forth in Section 6 of this Agreement are invoked by the Company or unless Indemnitee shall permit the Company to defer payment, payment to Indemnitee shall be made within 30 days after receipt of such written request and invoices or other support as provided in Section 4(a), above.

5.    Presumptions and Effect of Certain Proceedings .

(a)    Burden of Proof .  In making a determination with respect to entitlement to Indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 4(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption.

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(b)    Effect of Other Proceedings .   The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement, the Tennessee Business Corporation Act, as such may be amended from time to time, or by the Charter or Bylaws of the Company in effect on the date of this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith or violated the duty of loyalty.

(c)    Reliance as Safe Harbor .  For purposes of any determination of good faith by the Company under the Tennessee Business Corporation Act, Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is based on the records or books of account of the Company, including financial statements, or on information supplied to Indemnitee by the officers of the Company in the course of their duties, or on the advice of legal counsel for the Company, the Board or any permanent or temporary committee thereof (including, without limitation, the Special Committee) or on information or records given or reports made to the Company, the Board or any permanent or temporary committee thereof (including, without limitation, the Special Committee) by an independent certified public accountant, investment banker or other expert selected with reasonable care by the Company, the Board or any permanent or temporary committee thereof (including, without limitation, the Special Committee). The provisions of this Section 5(c) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth under applicable law.

(d) Actions of Others . The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

6.    Remedies of Indemnitee .

(a)    Method of Determination. If the Company determines not to honor a written request for indemnification, it shall notify Indemnitee within 30 days of receipt of such request (a "Denial Notice"). Within 30 days of delivery of a Denial Notice to Indemnitee, Indemnitee may appeal the denial of indemnity by delivery of written notice (a "Denial Appeal") to the Company invoking its right to have an Independent Counsel consider its right to the indemnification requested. "Independent Counsel" shall mean a law firm, or a member of a law firm, that is experienced in matters of Tennessee corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of inte