DESCRIPTION OF OUR 2015 AGENCY STOCK PURCHASE PLAN

We describe the provisions of our plan below in question and answer form. Under our plan, the term “subsidiary and affiliated insurance companies” means subsidiary insurance companies we and Donegal Mutual control. Our board of directors approved our plan on April 28, 2015.

Purpose and Advantages of Our Plan

1. What is the purpose of our plan?

Our plan provides an eligible agency, as we describe in Question and Answer 6, an opportunity to acquire a long-term proprietary interest in us through the purchase of our Class A common stock at a discount from current market prices. In offering our plan, we seek to foster our interests and the interests of eligible agencies by helping us achieve long-term profitable growth. Accordingly, we adopted our plan for the purpose of facilitating an eligible agency’s purchase of and long-term investment in shares of our Class A common stock. Although an eligible agency is legally free to sell the shares of our Class A common stock it purchases pursuant to our plan, we expect that an eligible agency will hold those shares on a long-term basis. As we discuss in Question and Answer 6 below regarding eligibility, immediate resale of shares is a factor we consider in our determination whether an otherwise eligible agency should remain eligible for continued participation in our plan.

2. What are the advantages of our plan?

Under our plan, an eligible agency can utilize three convenient payment methods to purchase our Class A common stock at a 10% discount from the current market price. The eligible agency will not pay any brokerage commissions or service charges in connection with its purchase.

8

Table of Contents

Administration

3. Who administers our plan for participants?

A committee of three persons our board of directors appoints from time to time administers our plan. The committee may adopt rules and regulations for the administration of our plan. The committee’s interpretations or constructions of the provisions of our plan are final and conclusive unless our board of directors takes contrary action.

Our board of directors appointed Donald H. Nikolaus, Kevin G. Burke, Jeffrey D. Miller and Daniel J. Wagner to serve as members of the committee. We do not compensate members of the committee for administering our plan. Donald H. Nikolaus is our President and Chairman of our board of directors and is also the President of Donegal Mutual. Kevin G. Burke is our Executive Vice President, Chief Operating Officer and Acting Chief Executive Officer and holds the same positions with Donegal Mutual. Jeffrey D. Miller is our Executive Vice President and Chief Financial Officer and holds the same positions with Donegal Mutual. Daniel J. Wagner is our Senior Vice President and Treasurer and holds the same positions with Donegal Mutual. The address of each member of the committee is c/o Donegal Group Inc., 1195 River Road, P.O. Box 302, Marietta, PA 17547; the telephone for each member is (888) 877-0600.

4. Where may I obtain additional information about our plan and its administrators?

You may obtain additional information about our plan and its administrators by contacting Jeffrey D. Miller, our Executive Vice President and Chief Financial Officer, at (888) 877-0600.

5. What is the term of our plan?

Our plan will expire on March 31, 2018 unless our board of directors terminates our plan earlier. Our board of directors has the right to terminate our plan at any time without notice provided that the termination does not adversely affect any participant’s then existing rights. During the term of our plan, our plan will have six consecutive semi-annual subscription periods. Three subscription periods will extend from October 1 through March 31 and three subscription periods will extend from April 1 through September 30 of each year, with the exception of the first subscription period that will commence on May 1, 2015 (or if later, the effective date of the Form S-3 registration statement for our plan) and end on September 30, 2015.

9

Table of Contents

Participation

6. Which agencies may participate in our plan?

An eligible agency is an independent insurance agency that brings value to us, Donegal Mutual and our subsidiary and affiliated insurance companies, directly or indirectly, as we determine in our discretion, and with which we seek a long-term relationship. Only eligible agencies may participate in our plan. The eligibility criteria we consider include the agency’s volume of direct premiums written, the ability of the agency to increase sales and grow its volume of direct premiums written, the historic loss ratio of the agency’s direct premiums written and whether we have placed the agency on rehabilitation, meaning that we notified the agency of operational deficiencies, or we have revoked the agency’s binding authority. We may base eligibility on agency segmentation class or any other factors that indicate value to the companies, directly or indirectly, in our discretion.

We periodically review an eligible agency’s continued eligibility. We will consider a pattern of immediate resale of shares the eligible agency has acquired under our plan as a factor in our determination whether that agency should remain eligible for continued participation in our plan. Immediate resales would tend to indicate that an agency is not interested in the long-term profitable growth of the companies. If we determine to discontinue an agency’s participation in our plan, we will notify the agency in writing that we have discontinued its eligibility to participate in our plan. We will send this notice to the agency as promptly as possible, but in no event later than two weeks after the end of the subscription period during which we made the decision. We will treat our decision, in our discretion, to discontinue the eligibility of an agency under our plan as an automatic withdrawal from our plan. See Questions and Answers 24 and 25 below.

7. How may an eligible agency participate in our plan?

An eligible agency may enroll in our plan by completing and filing a subscription agreement with us, as we describe in Question and Answer 8. We will send to each eligible agency a subscription agreement and a copy of this prospectus and any prospectus supplements prior to the beginning of the first enrollment period following the agency’s designation as an eligible agency.

8. What does a subscription agreement provide?

A subscription agreement allows each eligible agency to decide and identify the date on which the agency desires to enroll in our plan, the amounts of contribution and the payment method(s) it selects for purchases under our plan. Eligible agencies that participated in our former agency stock purchase plan may participate in our plan by checking the appropriate box on the subscription agreement. If the eligible agency

10

Table of Contents

participated in our former agency stock purchase plan using the direct bill commission payment method, we will automatically continue that agency’s participation in our plan. In either such event, we will continue that agency’s prior contribution amounts and payment method(s) from our former agency stock purchase plan unless the eligible agency provides new instructions in the subscription agreement.

9. When may an eligible agency enroll in our plan?

If an eligible agency chooses the direct bill commission payment method, as we explain in Question and Answer 15, enrollment in our plan may occur only during the enrollment period preceding each subscription period, which is from the 1st through the 31st day of March and from the 1st through the 30th day of September of each year. An eligible agency that desires to subscribe to purchase shares of our Class A common stock through withholding from direct bill commissions must duly execute and complete a subscription agreement and return it to us during the applicable enrollment period. Once it enrolls in the direct bill commission payment method, an eligible agency’s participation in our plan continues for each succeeding subscription period unless the agency ceases to be an eligible agency or withdraws from enrollment in our plan.

If an eligible agency chooses the lump-sum payment method, as we explain in Question and Answer 17, an eligible agency may enroll by submitting a supplemental subscription agreement to us and making a lump-sum payment by the last day of the applicable subscription period, September 30 or March 31 of each year.

If an eligible agency chooses the contingent commission payment method, as we explain in Question and Answer 18, an eligible agency may enroll by submitting a subscription agreement to us during the enrollment period immediately preceding each subscription period.

10. May an eligible agency transfer its subscription rights to another person or agency?

No. An eligible agency may not assign its subscription payments or rights to subscribe to any other person, and we will consider any attempt to do so as void, except for designations our plan permits as we describe in Question and Answer 23.

Costs and Expenses

11. Are participants responsible for any expenses in connection with purchases under our plan?

No. We will not charge an eligible agency any brokerage commissions or other charges in connection with its purchase of shares of our Class A common stock under our plan.

11

Table of Contents

P urchases

12. How many shares are available for purchase under our plan?

Our board of directors has reserved 350,000 shares of our Class A common stock for purchase by eligible agencies under our plan.

13. What is the purchase price of shares of our Class A common stock under our plan?

The subscription price for each share of our Class A common stock an eligible agency purchases under our plan is 90% of the average of the closing prices of our Class A common stock on the Nasdaq Global Select Market on the last ten trading days of the applicable subscription period.

14. How may an eligible agency pay for shares it purchases under our plan?

An eligible agency can pay for shares it purchases under our plan by means of three payment methods: direct bill commission deduction, lump-sum payment or contingent commission deduction.

15. What is the direct bill commission payment method?

Under the direct bill commission payment method, an eligible agency may elect to purchase shares of our Class A common stock under our plan through deductions from its monthly direct bill commission payments by designating that we withhold a minimum of 1% and up to a maximum of 10% of the eligible agency’s monthly direct bill commission payments from the eligible agency’s direct bill commission payments. The total subscription limit under all payment methods, including the direct bill commission payment method, is $12,000 per subscription period. “Direct bill commission payments” means those commissions that an eligible agency earns and that actually are available for payment in a monthly period to an eligible agency for personal and commercial direct bill policies after the application of all offsetting debits and credits.

16. May an eligible agency that chooses the direct bill commission payment method change the method or amount of contribution under our plan?

Yes. An eligible agency choosing the direct bill commission payment method may change the method or the rate of contribution by filing a new subscription agreement with us during the enrollment period for the next subscription period. This change will become effective during the next subscription period.

12

Table of Contents

17. What is the lump-sum payment method?

Under the lump-sum payment method, an eligible agency may, by September 30 and March 31 of each subscription period, elect to make lump-sum cash payments for the purchase of shares of our Class A common stock under our plan. The minimum lump-sum cash payment is $1,000 per subscription period with a total subscription limit under all payment methods, including the lump-sum payment method, of $12,000 per subscription period.

18. What is the contingent commission payment method?

An eligible agency may designate that we withhold a percentage of the contingent commission payable to it under the terms of the applicable agency profit-sharing plan, or its equivalent, for the purchase of shares of our Class A common stock under our plan during the enrollment period immediately preceding a subscription period. The total subscription limit under all payment methods, including the contingent commission payment method, is $12,000 per subscription period.

19. Are there limitations on the amount of contributions or purchases that an eligible agency can make?

Yes. Each eligible agency’s total contributions for purchases under all payment methods, which we describe in Questions and Answers 15, 17 and 18 above, may not exceed $12,000 during each subscription period. At the close of each subscription period, we will total each agency’s contributions from all payment methods. If at any time throughout a subscription period, an eligible agency’s total payments exceed the $12,000 maximum amount and the agency so requests, we will return the excess amount without interest to the agency within a reasonable period after its request. We will apply through our plan any amount we do not return to the purchase of shares of our Class A common stock during the next subscription period without increasing the $12,000 limitation applicable to that subscription period.

20. How does an eligible agency make purchases under our plan?

We maintain a plan account for each enrolled eligible agency. We will hold all contributions an eligible agency makes through deductions from an eligible agency’s direct bill commission and contingent commission payments and lump-sum payments during a subscription period, up to $12,000, in a separate bank account we maintain until we issue the shares to the eligible agency that has purchased the shares under our plan.

At the end of each subscription period, we will divide the amount we have credited to each eligible agency’s plan account by the subscription price for the subscription period, and we will credit the eligible agency’s plan account with the number of whole shares that results.

13

Table of Contents

We will carry forward any amount remaining in that plan account to the next subscription period without increasing the $12,000 limitation applicable to that subscription period or, if the eligible agency requests, we will return any remaining amount to the eligible agency. If the number of shares the eligible agency subscribes for during any subscription period exceeds the number of shares available for sale under our plan, we will allocate the remaining available shares among the participating eligible agencies in proportion to their total plan account balances, without regard to any amount we carried forward from a previous subscription period.

Shares; Cer tificates for Shares

21. May an eligible agency transfer, pledge, hypothecate or assign shares credited to the agency’s plan account?

An eligible agency may not transfer, pledge, hypothecate or assign its subscription rights under our plan or shares that we credit to its plan account, except for designations we permit under our plan as we describe in Question and Answer 23.

22. Will we issue stock certificates for shares of our Class A common stock an eligible agency purchases?

We will not issue stock certificates for shares of our Class A common stock an eligible agency purchases. We will issue the shares that each eligible agency purchases under our plan in electronic “book-entry” form through the Direct Registration System and deposit such shares directly into an account with Computershare Trust Company N.A. (“Computershare”), our transfer agent, within a reasonable time after purchase, but in no event later than three weeks after the end of the subscription period during which the eligible agency has purchased the shares.

23. In whose name are accounts maintained and shares registered when issued?

We will maintain accounts in our plan in the name of the eligible agency. Consequently, we will issue shares in the same name. An eligible agency may, upon written request to us, designate that we issue shares to a shareholder, partner, member, other principal or other licensed employee of that eligible agency or designate that any retirement plan that the eligible agency maintains for the benefit of the eligible agency or any of its shareholders, partners, members, other principals or other licensed employees of the eligible agency may purchase shares instead of the eligible agency through lump-sum payments the designee makes. These permitted designations are subject to the maximum amount limitation of $12,000, compliance with all laws that apply, including the Employee Retirement Income Security Act of 1974, payment by the eligible agency or its designee of any necessary transfer taxes and satisfaction of our usual requirements for recognition of a transfer of shares of our Class A common stock.

14

Table of Contents

Withdra wals from Our Plan

24. How and when may an eligible agency withdraw from our plan?

An eligible agency that has enrolled in our plan may withdraw from our plan at any time if an authorized representative of the eligible agency notifies us of the withdrawal in writing. We will treat a termination of agency status for any reason as an automatic withdrawal. If an agency withdraws from our plan, that agency may not resubscribe until after the next full subscription period has elapsed, and then only if we have redesignated the agency as an eligible agency.

25. What happens to any shares and cash we have credited to an eligible agency’s plan account at the time of withdrawal?

Promptly after the withdrawal or termination of an agency’s eligibility, but in no event later than three weeks after the end of the subscription period during which the withdrawal or termination occurs, we will refund in cash any amount we have credited to an eligible agency’s plan account at the time of withdrawal to that eligible agency without interest.

Other Information

26. What happens if we declare a stock split or stock dividend or change or exchange our Class A common stock for shares of stock or other securities of our own or another corporation?

Our committee will make appropriate adjustments in the total number and kind of our shares that we have reserved for sale under our plan if we increase or decrease or change the outstanding shares of our Class A common stock into or exchange them for a different number or kind of our shares or other securities or stock or securities of another corporation, by reason of reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, stock dividend, spin-off or combination of shares.

27. What are the federal income tax consequences of an eligible agency’s participation in our plan?

At the time of purchase, and where an eligible agency purchases shares of our Class A common stock in its own name, federal tax laws will treat the eligible agency as having received ordinary income in an amount equal to the difference between the subscription price it has paid and the fair market value of our Class A common stock on the date it purchased the shares. At the end of each calendar year, we will mail to each participating agency a Form 1099 reflecting the amount of ordinary income the eligible agency has received under our plan. We will have a tax deduction at the same time in a corresponding

15

Table of Contents

amount. The participating agency will have a basis in the shares of our Class A common stock it purchases under our plan equal to the purchase price plus the amount of ordinary income it recognizes.

When an agency disposes of shares of our Class A common stock it has purchased under our plan, it will recognize a long-term or short-term capital gain, depending upon the holding period of the shares, on any amount it receives in excess of its basis in the shares of our Class A common stock. If the amount the eligible agency receives is less than its basis, it will recognize the loss as a long-term or short-term capital loss, depending upon the holding period of the shares, which begins on the day after it acquires each share.

We also advise you to consult with a tax advisor to determine the tax consequences of a given transaction, particularly if you designate a taxpayer other than you to become a participant in our plan.

28. May we change or discontinue our plan?

Yes. Our board of directors may amend, modify or terminate our plan at any time without notice if the amendment, modification or termination does not adversely affect your existing rights under our plan.

29. How may eligible agencies sell shares of our Class A common stock they purchase under our plan?

As we discuss in Question and Answer 22, we will issue to each participating agency the shares it has purchased under our plan in electronic “book-entry” form after the end of the subscription period during which it purchased the shares and deposit such shares directly into an account with Computershare, our transfer agent. Participants will have the sole discretion as to whether or when to sell their shares and may transfer or dispose of them at any time without restriction after receipt of their shares. An eligible agency may choose to sell shares through Computershare or to transfer and sell shares through the broker of its choice.