Archives: 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008

This proceeding arose upon a request for hearing made by Timothy & Jennifer Herbold of Bangor, ME, to contest the pending nonrenewal of homeowners insurance coverage provided by York Insurance Company of Maine. On October 28, 2002, the insurer mailed a notice of nonrenewal effective January 8, 2003 on policy number YMSP52750, citing “conditions were discovered on the property that increase the likelihood of claims occurring. Those conditions include: The siding/trim on the home is water damaged and/or rotting. This represents additional exposure to moisture and additional rot. Left unmitigated, the damages will only worsen. There is an area connecting the house to the barn where wood is missing/falling/rotting out. This represents a severe liability hazard as well as open to damages. The siding in areas is missing paint which represents exposure to additional moisture/rotting problems” as the grounds for nonrenewal. A water damage loss of 9/3/99 due to a broken water pipe was also listed. Pursuant to 24-A M.R.S.A. §§ 3051 and 3054, York Insurance Company of Maine 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 proof or evidence given by the insurer to support its reason for policy nonrenewal. Staff representing York Insurance Company of Maine appeared at the hearing. Jennifer Herbold represented herself at the hearing.

FINDING OF FACT:

1. York Insurance Company of Maine currently insures the residence of Timothy and Jennifer Herbold. It was previously insured through the predecessor company York Mutual since 1991. The property is described in the insurer’s inspection report as an 1870 colonial.
2. An inspection conducted in August 2002 states “Exterior wall: siding/frame is missing, siding/frame is rotting, attached barn.” It also states “looks like some remodeling is in progress.”
3. A water pipe broke on 9/3/99, causing water damage to ceilings, and $675 was paid.

ANALYSIS AND CONCLUSION

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 the reason for nonrenewal.

Heather Rosewall, Personal Lines Senior Underwriter, testified that the dwelling covered by the subject property was inspected as part of the insurer’s re-underwriting process. She stated that the inspection [EX. 5] identified missing and/or damaged siding and peeling paint. She cited the increased exposure to weather-related losses and water damage, and also the increased liability exposure posed by the collapsing/falling boards at the house and barn connection.

Ms. Rosewall stated that the company had requested a photo in 2001 (along with information on updates to the plumbing, heating, electrical and roofing systems), but no photo was received. It was unclear from the testimony whether the other requested information had been received. She submitted a copy of the request sent to the agent [EX. 3] and the agent’s letter to the insured dated October 30, 2001 [EX. 4].

Ms. Rosewall argued that the condition of the siding and the peeling paint increased the water damage exposure, and the rotting siding on the barn connection also poses an increased liability exposure. She stated that the biggest exposure was the barn, with its peeling paint.

Mrs. Herbold testified that the interior of the home has been redone with all new sheetrock, wiring, plumbing, etc., room by room. The original wiring had been knob and tube with fuses. She further stated that the roof on the house was all new in 1999, including soffits and fascia, and that the plumbing and heat piping is all new, along with the chimneys and liners. She also stated that a rotting porch had been removed and replaced, and that there had not been any mention until now of problems with the exterior. She emphasized that they had focused on the safety issues first (the wiring, the chimneys, etc.)

Mrs. Herbold also indicated that the barn and house are not really connected; they have separate foundations and are separated by about two to three feet of space. At some point in time, siding had been put on over the space, and, at the time of the company’s inspection, was hanging by just one side, rotting and missing. Mrs. Herbold stated that she had taken a sledge hammer and knocked it down as far as she could reach from the ground, and the rest would be taken down. She argued that they planned to obtain a home equity loan in the spring to finance re-doing the kitchen, tearing down and rebuilding the barn, and attending to the rest of the exterior. She indicated that they had been scraping paint, but it was unclear which areas of the house or barn had been done.

The Superintendent of Insurance has jurisdiction over this matter pursuant to 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 Insurance Company of Maine has not established adequate grounds for policy nonrenewal.

The evidence provided by the company was limited, and none of the conditions specified were serious in nature. The policyholders have clearly made a good faith effort to update the property, corroborated by the inspector’s reference to remodeling in progress. Three specific reasons were cited by the insurer; one of which (the wood falling out in the area connecting house to barn) has been addressed, as the section was removed. The “missing paint” is partially due to the scraping that was done by the insureds in preparation for exterior work. The trim on the home could be water damaged and rotting, as stated in the notice, or it could be that the paint has been scraped off; the photographic evidence provided by the company does not establish that it is damaged and rotting. One photo is captioned “missing/damaged siding and trim,” but it is unclear if an approximately one-foot section of siding board is missing, or if it was replaced with a board that is a different color.

INDEX OF RECORD:
Exhibit 1 - Copy of Policy
Exhibit 2 - Proof of Mailing
Exhibit 3 - Inquiry to Agent
Exhibit 4 - Agent letter to insured 10/30/01
Exhibit 5 - MSB Inspection

Order and Notice of Appeal Rights

The intended nonrenewal is not approved. York Insurance Company of Maine is directed to renew policy # YMSP52750 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.

Return to Cancellation / Nonrenewal Hearing Decisions