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This proceeding arose upon a request for hearing made by Harry & Irene Dostie to contest the pending nonrenewal of homeowners insurance coverage provided to them by State Mutual Insurance Company, a member of the Concord Group. On October 29, 2002, the insurer mailed a notice of nonrenewal effective January 4, 2003 on policy number SO16425, citing “excessive claims: water damage in 1993 & 1997; electrical in 1998 & 1999; awning fell off home 1999; theft in 2000; pool damaged by ice 2001” as the grounds for termination. Pursuant to 24-A M.R.S.A. §§ 3051 and 3054, State Mutual Insurance Company provided the insured with proper notice and the insured's hearing request was timely.

A hearing in this matter was held on December 5, 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 nonrenewal. Staff representing State Mutual Insurance Company submitted a sworn statement in lieu of appearance at the hearing. Irene Dostie represented the policyholders at the hearing.

FINDINGS OF FACT

The following facts were determined from a preponderance of evidence in the record:

1. The Concord Group has insured the subject mobile home since 1988. The policy has a $100 deductible.
2. On 3/1/93 and 4/18/97, the property incurred water damage from ice dams. State Mutual paid $785 and $379.75, respectively. The insureds had the roof reshingled in 1998, and have had no further roof related losses.
3. As a result of the Ice Storm of 1998, the Dosties had downed tree limbs and also lost all the food in their refrigerator and freezer. State Mutual paid $1953.82.
4. On 3/12/99, an awning fell off the mobile home due to ice buildup. The company paid $1260.13. The awnings have been removed from the home.
5. On 10/15/99, lights in the home were flickering and the electrical meter was arcing. A short in the Central Maine Power box was discovered, which caused damage to the box as well as some electrical appliances. The company paid $626.85.
6. On 1/11/00, the Dosties’ daughter had compact discs stolen from a public place. State Mutual paid $276.64.
7. On 5/9/00, the insureds’ well pump suffered a lightning strike, for which the company paid $557.50. The contractor working on the well damaged the lawn by driving across it. Concord is considering this a second claim for the same day; however, there was no payment made. These losses were not listed in the reason for nonrenewal given in the notice, however, and therefore will not be considered.
8. On 3/23/01, the insureds discovered their above-ground pool damaged by ice. There was no coverage under the policy for this damage.

ANALYSIS AND CONCLUSION OF LAW

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 its reason for nonrenewal.

Toni Spiegel, Personal Lines Underwriter for the Concord Group, stated in her affidavit that the frequency of claims has been excessive with several similar claims reported since 1988, and two instances of more than one claim during a single policy year.

She testified that losses in 1993, 1997, 1998, March 1999 and 2001 are all related to ice causing either direct damage to property or causing an ice dam resulting in water damage. She also stated that losses of 1998 and October 1999 were electrical in nature. Ms. Spiegel argued that the losses demonstrate the propensity of the insureds to have losses and file claims, and stated there is a causal relationship between the lack of appropriate maintenance (ice and snow removal) and resulting losses, as well as the insureds’ failure to successfully mitigate subsequent losses. She concluded with her belief that “excessive claims” is therefore an explicit, good faith reason rationally related to the insurability of the property.

Mrs. Dostie corroborated that the stated losses occurred, but pointed out that the company did not cover all of the losses. State Mutual has cited two separate losses for 5/9/00 – one was a lightning strike to the well pump, and the other was caused by the well driller damaging the lawn when he drove across it during soft conditions in the spring. Neither loss could have been prevented by the insured, nor was there any coverage for the damage to the lawn. These losses are not being considered, as they were not referenced in the reason given for nonrenewal on the notice. In 2001, the insureds’ above-ground pool collapsed from the weight of ice and snow, for which there was no coverage under the policy.

She also testified that they had water damage from an ice dam for the first time in 1993. The dwelling is a 1987 Pinegrove doublewide mobile home, so the roof was only six years old. She stated they thought the first loss was just a fluke. It was four years before there was another problem with ice dams causing water damage in 1997. They had the roof reshingled after that loss, and have had no additional problems. The problem they had with ice build-up on the awning (3/12/99 loss) was addressed by removing the awning.

Referencing the 1/8/98 loss, Mrs. Dostie stated that everybody suffered from the ice storm, and that Concord had called them to ask if they had damages. It is noted that this loss was caused by the Ice Storm of 1998, which devastated much of Northern New England under several inches of ice and widespread power outages. While that one loss contained both electrical and ice-related elements as indicated by the company, it has no bearing on maintenance or failure by the insured to mitigate losses.

Mrs. Dostie testified that an electrical box cannot be installed directly on a doublewide, it has to be on a pole. When the lights began flickering, Mr. Dostie shut off the power and called CMP. She stated there was a short in the CMP box, which could have caused a fire if they had not addressed it immediately.

The Superintendent of Insurance has jurisdiction over this matter pursuant to 24-A M.R.S.A. § 3054. State Mutual 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 State Mutual Insurance Company has not established adequate grounds for policy termination.

Title 24-A M.R.S.A. § 3051 specifically states that "loss record" by itself is not an acceptable reason for nonrenewal. The company must demonstrate a nexus or pattern to illustrate that the cause or nature of the past claims is such that similar or continued future claims are likely. Simply the fact that claims have occurred does not by itself meet this standard. While the insurer attempted to demonstrate that the losses are a result of the insureds’ lack of appropriate maintenance and failure to successfully mitigate subsequent losses, the record demonstrates that the insureds have in fact addressed their loss exposures and prevented subsequent losses.

There were four years between the two roof-related losses; and the roof was reshingled after the second loss. No further ice dam losses have occurred. The awning has been removed to prevent ice build-up from causing additional damage. No indication of how ice could have been removed from the pool to prevent it from being damaged was offered, and the Bureau notes that this type of loss was common and widespread in the spring of 2001. This also was not covered by the policy. While on occasion uncovered losses may be of a nature that affects the insurability of the property, this loss does not. Finally, there was no indication that the short in the electrical box was somehow caused by the insured or could have been prevented. The insured’s immediate response may in fact have prevented a serious fire loss. The only clearly preventable loss was the theft, and there have been no recurrences of that nature.

The Bureau also notes that the base deductible for most homeowners policies is $250 or even $500, while the deductible on this particular policy is only $100. The low deductible, along with the policy condition requiring the insured to promptly notify the company of any loss to the property, encourages policyholders to file small losses.

INDEX OF RECORD:
Exhibit 1 - Summary of Claims
Exhibit 2 - Loss notices of all claims
Exhibit 3 - Postal Proof of Mailing
Exhibit 4 - Copy of Policy
Exhibit 5 - Affidavit of Toni Spiegel

ORDER AND NOTICE OF APPEAL RIGHTS

The intended nonrenewal is not approved. State Mutual Insurance Company is directed to renew policy # S016425 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 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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