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In RE:

This proceeding arose upon a request for hearing made by Edward Hanson of South Portland, Maine, to contest the pending nonrenewal of homeowners insurance coverage provided to him by York Insurance Company of Maine. On September 25, 2002, the insurer mailed a notice of nonrenewal effective December 3, 2002, on policy number YMSQ87752, citing “Discovery of questionable construction quality of this dwelling built in 1999. A recent claim of 07/08/02 has revealed that in addition to the poor deck construction resulting in the loss, the insured was previously in dispute with the contractor/builder of this property. The questionable construction of this dwelling increases the exposure to loss and should a covered loss occur due to this our policy would have to respond” as the grounds for nonrenewal. The notice also referenced “The loss history: 07/08/02 Deck collapse – liability claim open under cross-reference policy that is extending the liability coverage to this property; 02/05/01 Ice dam $deferred- damage under the deductible.” Pursuant to 24-A M.R.S.A. §§ 3051 and 3054, York provided the insured with proper notice and the insured's hearing request was timely.

A hearing in this matter was held on November 19, 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 the insurer appeared at the hearing. Edward Hanson represented himself 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 § 3054 requires the insurer to establish the proof or evidence of their reason for nonrenewal.

John Paris, Personal Lines Specialist in Risk Control, testified that the claims notes show the deck was not properly attached to the house, leading to the loss on July 8, 2002. He stated that there were no lag bolts installed, and the 4x4’s did not extend far enough to defray the load. The top surface of the deck was more than 10 feet above the ground level.

Mr. Paris submitted an engineer’s report to demonstrate the defective construction of the deck and argued that it brings the overall workmanship of the home into question as the same builder constructed the home. He stated that the insured is in an ongoing dispute against the builder relating to the construction, and that the company could end up covering losses if they are unable to prove the workmanship issue. It was unclear if he was referring to proving the issue in this proceeding or in unrelated future proceedings before another authority.

Mr. Hanson testified that he agrees with the company about the deck construction, but feels it was a quantum leap for them to cancel his coverage. He stated that the company is trying to use his legal situation with the builder as justification for their action, but that they didn’t look into what those issues were. He stated none of his legal issues with the builder relate to structural or insurable issues. He cited the builder’s failure to use primer, when the contract called for one coat of primer and two finish coats of paint, exterior light fixtures that don’t match, a leftover pile of construction debris, and failure to install electrical covers.

Mr. Hanson argued that the company could easily have had their engineer assess the house, but instead they only commissioned him to examine the deck. He stated that he hired Criterium Mooney Engineers to assess the house, and their report indicates no structural problems. He submitted an invoice demonstrating they had evaluated the house at 49 Marcelle Street at a cost of $1301.32, but would not submit their report. He stated that York could obtain their own or reimburse him for the cost of his report if they were concerned. He concluded that it is not reasonable to assume that a 4x8 deck is representative of the entire 24x24-foot structure, and that the company has no evidence that there is a problem with the house. Mr. Paris disagreed, stating that they made their case with the report on the deck, that the issue may be indicative of the overall construction methods used.

The Superintendent of Insurance has jurisdiction over this matter pursuant to Title 24-A M.R.S.A. § 3054. York Insurance Company of Maine 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 York has not established adequate grounds for policy nonrenewal.

Although there does not appear to be a dispute that the deck which collapsed was incorrectly constructed, the company has provided no evidence that there is a problem with the construction of the house. Based on the evidence on the record, the company has made no attempt to evaluate the house, and has instead acted upon supposition.

INDEX OF RECORD:
Exhibit A– Copy of Policy
Exhibit B– Proof of Mailing
Exhibit C – Claims notes on deck loss
Exhibit D – Company Engineer’s Report
Exhibit E – Insured’s photos
Exhibit F – Insured’s Invoice for engineer

Order and Notice of Appeal Rights

The intended nonrenewal is not approved. York Insurance Company of Maine is directed to renew policy # YMSQ87752 on the same terms as the expiring policy.

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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