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This proceeding arose upon a request for hearing made by Elden & Brenda Stitham of Glenburn, ME, to contest the pending nonrenewal of homeowners insurance coverage provided to them by MMG Insurance Company. On September 26, 2002, the insurer mailed a notice of nonrenewal effective November 1, 2002 on policy number HO 0113903, citing “failure to comply with required loss prevention recommendations originally requested on 10-16-2001 and evidenced by a recent inspection of the residence premises conducted on 9-25-2002” as the grounds for nonrenewal. Pursuant to 24-A M.R.S.A. §§ 3051 and 3054, MMG Insurance Company provided the insured with proper notice and the insured's hearing request was timely.

A hearing in this matter was held on October 29, 2002 with Connie Mayette sitting as designated hearing officer pursuant to 24-A M.R.S.A. §§ 210 and 3054. The purpose of the hearing was limited to establishing the existence of proof or evidence given by the insurer to support its reason for policy nonrenewal. Staff representing MMG Insurance Company appeared at the hearing. Elden & Brenda Stitham represented themselves at the hearing.

Title 24-A, M.R.S.A. § 3051 states that the reason for nonrenewal must be a good faith reason rationally related to the insurability of the property, and 24-A M.R.S.A. § 3054 requires the insurer to establish the proof or evidence of its reason for nonrenewal.

Jim Stout, Marketing Representative of MMG, testified that a recommendation letter was sent to the agency on 10/16/01, and he submitted copies of all referenced correspondence as evidence. The recommendations were for the front entrance steps to be replaced and well-constructed rails built, a hole in the floor of the addition must be fixed, back steps need well-constructed rails in place, and premises needs to be cleaned up and free of debris. After a second request was sent to the agent on 12/17/01, the company received a response from the agent indicating that the insured was aware of the recommendations. A third request was sent 04/01/02 and a final request for confirmation of compliance was sent 08/28/02. A letter from the agent dated 09/04/02 stated that the “insured has advised us that the recommendations requested were completed last year. Steps replaced with handrail. Debris removed and flooring replaced.”

Jim Stout testified that he was sent out to inspect the premises to verify the compliance, and found that only one of the four recommendations had been addressed. The e-mail he sent to the underwriter on 09/25/02 following his inspection stated that “insured told me their dog keeps pulling down the handrails they put up on the steps. Rear steps don’t appear to have had any type of handrail installed to begin with. Insured also indicates that front entry way is going to be removed and replaced with a deck…Floor in entry way still in rough condition with flooring deteriorating in many spots.”

Mr. Stout stated that his main concerns when he inspected the property were the steps and the railings, and that they are a life safety issue. He said that the back door represents a second means of egress if there is a problem and people need to get out of the house.

Mrs. Stitham testified that they do not have a dog; the dog belongs to her son, who is living with them. She stated that he was getting ready to move out. She submitted photos showing one handrail installed on each set of steps, but testified that the dog keeps pulling the rail off the back step with his chain. The photos show that the rails were each constructed using what appears to be three pieces of 2x4’s, with the top rail connecting only at one edge of both upright pieces, apparently toe-nailed together. One upright is nailed to the house, and the other nailed at the bottom end only, to one step. Based on the photographs, it appears that both rails would collapse sideways if someone leaned against them; therefore they would likely not qualify as the required “well-constructed rails.” Mr. Stitham testified that they do not use the back steps, only the dog does, so they do not understand why railings would be needed. Mrs. Stitham added that her son is a fireman, and he told them they did not need rails if the total rise is less than three feet.

The Superintendent of Insurance has jurisdiction over this matter pursuant to 24-A M.R.S.A. § 3054. MMG Insurance Company bears the burden of proof for establishing that the statutory grounds for policy nonrenewal exist. Based on the evidence presented at the hearing, the Superintendent hereby concludes that MMG Insurance Company has established adequate grounds for policy nonrenewal. The insurer has demonstrated the inadequate railings and deteriorated flooring in the entry way, both of which increase the liability exposure presented by the property.

INDEX OF RECORD:
Exhibit 1 - Proof of Mailing
Exhibit 2 - Notice of Nonrenewal
Exhibit 3 - 8/31/01 request to agent
Exhibit 4 - Photos 09/01
Exhibit 5 - Recommendation letter 10/16/01
Exhibit 6 - 11/8/01 letter on request to increase liability
Exhibit 7 - Second request on recommendations
Exhibit 8 - 12/27/01 e-mail from agent on recommendations
Exhibit 9 - 1/16/01 e-mail to agent on recommendations
Exhibit 10 - Third request on recommendations 4/1/02
Exhibit 11 - 8/28/01 request for photos or confirmation
Exhibit 12 - Agent letter 9/4/02
Exhibit 13 - E-mail and photos on 9/25/02 inspection
Exhibit 14 - Copy of Policy
Exhibit 15 - Insured’s photos of railings

Order and Notice of Appeal Rights

The intended termination is hereby approved. MMG Insurance Company is directed to continue coverage until March 21, 2003 at 12:01 a.m. to allow the policyholders to obtain other coverage.

This Decision and Order is a final agency action within the meaning of the Maine Administrative Procedure Act. It is appealable to the Superior Court in the manner provided in Title 24-A M.R.S.A. § 236 and M.R. Civ. P. 80C. Any party to the hearing may initiate an appeal within 30 days after receipt of this notice. Any nonparty whose interests are substantially and directly affected may initiate an appeal within 40 days of the effective date of this Decision and Order.

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