The Company determines fair value amounts for financial instruments using available third-party market information. When such information is not available, the Company determines the fair value amounts using appropriate valuation methodologies. Nonfinancial instruments such as real estate, property and equipment, deferred policy acquisition costs, deferred income taxes and loss and loss adjustment expense reserves are excluded from the fair value disclosure.

Cash and Cash Equivalents—The carrying amounts reported in the accompanying consolidated balance sheets for these financial instruments approximate their fair values.

Investments—The Company’s fixed maturity securities are priced by an independent pricing service. The prices provided by the independent pricing service are estimated based on observable market data in active markets utilizing pricing models and processes, which may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers, sector groupings, matrix pricing and reference data. The Company reviews the prices provided by pricing services for reasonableness and compares them to prices provided by the Company’s custodian which uses different pricing services.

Short Term Investments—The carrying amounts reported in the accompanying consolidated balance sheets for these financial instruments approximate their fair value.

The following table summarizes the carrying or reported values and corresponding fair values for financial instruments:

	December 31,
	2020				2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(in thousands)
Assets:
Fixed maturity securities—held to maturity	$	585,130	$	621,654	$	599,421	$	621,343
Fixed maturity securities—available-for-sale		414,279		414,279		441,146		441,146
Equity securities		43,437		43,437		27,903		27,903
Short-term investments		45,898		45,898		56,548		56,548
Cash and cash equivalents		61,757		61,757		43,813		43,813

The Company carries available-for-sale securities and equity securities at fair value in our consolidated financial statements and determines fair value measurements and disclosure in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures.

The Company determines the fair values of its financial instruments based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard defines fair value, describes three levels of inputs that may be used to measure fair value, and expands disclosures about fair value measurements.

Fair value is defined in ASC Topic 820 as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is the price to sell an asset or transfer a liability and, therefore, represents an exit price, not an entry price. Fair value is the exit price in the principal market (or, if lacking a principal market, the most advantageous market) in which the reporting entity would transact. Fair value is a market-based measurement, not an entity-specific measurement, and, as such, is determined based on the assumptions that market participants would use in pricing the asset or liability. The exit price objective of a fair value measurement applies regardless of the reporting entity’s intent and/or ability to sell the asset or transfer the liability at the measurement date.

ASC Topic 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present value amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset, also known as current replacement cost. Valuation techniques used to measure fair value are to be consistently applied.

In ASC Topic 820, inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value (such as a pricing model) and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable:

Valuation techniques used to measure fair value are intended to maximize the use of observable inputs and minimize the use of unobservable inputs. ASC Topic 820 establishes a fair value hierarchy that prioritizes the use of inputs used in valuation techniques into the following three levels:

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters.

The fair values of the Company’s investments are based upon prices provided by an independent pricing service. The Company has reviewed these prices for reasonableness and has not adjusted any prices received from the independent provider. Securities reported at fair value utilizing Level 1 inputs represent assets whose fair value is determined based upon observable unadjusted quoted market prices for identical assets in active markets. Level 2 securities represent assets whose fair value is determined using observable

market information such as previous day trade prices, quotes from less active markets or quoted prices of securities with similar characteristics. There were no transfers between Level 1 and Level 2 during the year ended December 31, 2020.

Assets measured at fair value on a recurring basis as of December 31, 2020 and 2019 are as follows:

	December 31, 2020
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(in thousands)
Financial instruments carried at fair value, classified as part of:
Securities available-for-sale—fixed maturity:
States and political subdivisions	$	—	$	276,542	$	—	$	276,542
Corporate bonds		—		88,899		—		88,899
U.S. agency-based mortgage-backed securities		—		19,052		—		19,052
U.S. Treasury securities		29,786		—		—		29,786
Total securities available-for-sale—fixed maturity		29,786		384,493		—		414,279
Equity securities:
Domestic common stock		43,437		—		—		43,437
Total	$	73,223	$	384,493	$	—	$	457,716

	December 31, 2019
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(in thousands)
Financial instruments carried at fair value, classified as part of:
Securities available-for-sale—fixed maturity:
States and political subdivisions	$	—	$	237,775	$	—	$	237,775
Corporate bonds		—		133,778		—		133,778
U.S. agency-based mortgage-backed securities		—		29,467		—		29,467
U.S. Treasury securities		40,126		—		—		40,126
Total securities available-for-sale—fixed maturity		40,126		401,020		—		441,146
Equity securities:
Domestic common stock		27,903		—		—		27,903
Total	$	68,029	$	401,020	$	—	$	469,049

Assets measured at amortized cost as of December 31, 2020 and 2019 are as follows:

	December 31, 2020
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(in thousands)
Securities held-to-maturity—fixed maturity:
States and political subdivisions	$	—	$	526,821	$	—	$	526,821
Corporate bonds		—		72,900		—		72,900
U.S. agency-based mortgage-backed securities		—		7,906		—		7,906
U.S. Treasury securities		13,865		—		—		13,865
Asset-backed securities		—		162		—		162
Total held-to-maturity	$	13,865	$	607,789	$	—	$	621,654

	December 31, 2019
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(in thousands)
Securities held-to-maturity—fixed maturity:
States and political subdivisions	$	—	$	485,647	$	—	$	485,647
Corporate bonds		—		110,925		—		110,925
U.S. agency-based mortgage-backed securities		—		11,511		—		11,511
U.S. Treasury securities		7,873		—		—		7,873
Obligations of U.S. government agencies		—		5,168		—		5,168
Asset-backed securities		—		219		—		219
Total held-to-maturity	$	7,873	$	613,470	$	—	$	621,343

At December 31, 2020 and 2019, the Company did not hold any securities measured at fair value on a nonrecurring basis due to impairment.