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This proceeding arose upon a request for hearing made by Christopher & Penny-Ellen Novak of Lincoln University, PA, to contest the pending cancellation of homeowners insurance coverage provided by to them Citizens Insurance Company of America. On October 25, 2002, the insurer mailed a notice of cancellation effective November 20, 2002 on policy number HPP5806694, citing "Policy being cancelled midterm in accordance with Maine Statute (24-A 3049) for substantial change in the risk which increases the risk of loss after insurance coverage has been issued or renewed. Specifically because the dwelling is vacant and unoccupied" as the grounds for cancellation. Pursuant to 24-A M.R.S.A. §§ 3051 and 3054, Citizens Insurance Company of America provided the insured with proper notice and the insured's hearing request was timely.

A hearing in this matter was held on December 17, 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 the proof or evidence given by the insurer to support its reason for policy termination. Staff representing Citizens Insurance Company of America submitted a sworn statement in lieu of appearance at the hearing. Christopher & Penny-Ellen Novak did not appear, nor did they submit a sworn statement in lieu of appearance at the hearing.

Title 24-A, M.R.S.A. § 3049 permits an insurer to cancel a policy of this type for a number of specific reasons:

1. Nonpayment of premium;
2. Conviction of the named insured of a crime whose elements increase any hazard insured against;
3. Fraud or material misrepresentation in obtaining the insurance or pursuing a claim;
4. Discovery of grossly negligent acts or omissions substantially increasing any hazard insured against; or
5. Physical changes in the insured property that result in the property becoming uninsurable.

Although § 3049 was cited by number by Citizens in its reason for cancellation, the specific wording used is a reason under §3007, which is not applicable to this policy or action. Kate Anderson, Personal Lines Underwriter, states in her sworn statement that the company was made aware the home was vacant and unoccupied. She submitted a copy of the Profile Inspection [EXHIBIT 2] dated October 18, 2002 as evidence. It states “Dwelling looks vacant. Other exterior condition: a “For Sale” sign is posted outside. The driveway is dirt. There was no sign of cars.” The inspection request [EXHIBIT 3] indicates that the company was unable to give the inspector a street address, and specifically asked “Vacant or occupied? Any cars in driveway?” Ms. Anderson stated this report made it clear that the covered property is not occupied. She argued that the home is vacant and the insureds cannot prove whether Maine or Pennsylvania is their legal address. It is noted that the burden of proof in this proceeding is upon the insurer, not the insured.

Ms. Anderson also attached a copy of the insured’s hearing request [EXHIBIT 12] and also a letter the insured had sent to the producer [EXHIBIT 11] prior to requesting a hearing. In both letters Mr. and Mrs. Novak assert that the wrong property was inspected. In the letter to the Strong Agency, they stated that they spend a good part of the year at the property in Maine, and that the house is fully furnished and stocked with food and belongings. They also stated that there are two vehicles in the garage, along with tools, gardening equipment, bicycles and their barbeque, as well as rocking chairs and wicker furniture on the porch. They had made an offer to provide a key to the agent for her to inspect the interior of the house, but Ms. Anderson did not indicate in her testimony if the company had verified that the correct house had been inspected. It is also noted that the inspection request indicates the property is covered for $409,000, but the calculation by the inspector shown on the report is only for $170,141, further supporting an argument that the wrong property was inspected.

The Superintendent of Insurance has jurisdiction over this matter pursuant to 24-A M.R.S.A. § 3054. Citizens Insurance Company of America bears the burden of proof for establishing that the statutory grounds for policy cancellation exist. Based on the evidence presented at the hearing, the Superintendent hereby concludes that Citizens Insurance Company of America has not established adequate grounds for policy termination.

Included with the submitted documentary evidence was a copy of a renewal application for the related Umbrella policy, with an approval by Kate Anderson dated October 18, 2001, over a year prior to the mailing of this cancellation notice. It clearly shows a mailing address for that policy in Pennsylvania, and lists real property in Lincolnville, ME, as well as Downington, PA. It also lists three vehicles, with two specified as being garaged in Maine, and one in Pennsylvania. Aside from the appearance that the wrong property was inspected, there is no evidence that any of the described circumstances constitute a change or meet any of the grounds allowed for cancellation under § 3049.

INDEX OF RECORD:
Exhibit 1 - Affidavit of Kate Anderson
Exhibit 2 - Profile Inspection Report
Exhibit 3 - Inspection Request
Exhibit 4 - HO Cancellation Notice
Exhibit 5 - State Farm Renter's Binder
Exhibit 6 - Auto Loss Information
Exhibit 7 - Auto Cancellation Notice
Exhibit 8 - UL Cancellation Notice
Exhibit 9 - Address Change Requests
Exhibit 10 - 2001 UL Renewal Questionnaire
Exhibit 11 - Novak Letter to Producer
Exhibit 12 - Novak Hearing Request

Order and Notice of Appeal Rights

This cancellation is hereby disapproved. Citizens Insurance Company is hereby directed to continue coverage under Policy #HPP 5806694 without interruption. Coverage shall continue unless and until a subsequent valid notice of cancellation or nonrenewal is effected in accordance with applicable law.

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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