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In RE:

This proceeding arose upon a request for hearing made by Diane McLellan of Freeport, ME, to contest the pending nonrenewal of homeowners insurance coverage provided to her by Teachers Insurance Company, a member of the Horace Mann Companies. On November 4, 2002, the insurer mailed a notice of nonrenewal effective January 15, 2003 on policy number 18 001276832, citing as the reason for nonrenewal:“unable to continue this risk paint chipping and peeling on trim rear eaves and trim boards rotting sills on shed open porch decking rotting and chimney needs repointing. Large trees with overhanging branches which also are resting on the attached shed.” Pursuant to 24-A M.R.S.A. §§ 3051 and 3054, Teachers Insurance Company provided the insured with proper notice and the insured's hearing request was timely. 

A hearing in this matter was held on January 8, 2003 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 Teachers Insurance Company submitted a sworn statement in lieu of appearance at the hearing. Diane McLellan represented herself at the hearing.

FINDINGS OF FACT

The following facts have been proven by a preponderance of evidence submitted:

1. Teachers Insurance Company has insured the subject property since January 15, 2002.
2. An inspection conducted in April 2002 turned up property conditions requiring attention.
3. The insurer issued a notice of cancellation to be effective June 15, 2002, for maintenance issues that were undeclared on the application. The agent representing the insurer had been made aware of the referenced maintenance issues but had neglected to note them on the application; therefore the cancellation action was not permitted by the Bureau.
4. The nonrenewal action is based upon the property condition determined by the April 2002 inspection. The notice of nonrenewal was mailed November 4, 2002.
5. A letter specifically addressing loss control recommendations was mailed December 4, 2002, adding several additional items that were not included in the reason for nonrenewal.
6. The rotting trim board, porch decking and sill on the addition have been replaced.
7. The overhanging branches have been removed, along with any pine needle buildup that existed.
8. A second floor addition is scheduled to begin construction in May 2003; the chimney in question will be removed then.

ANALYSIS AND CONCLUSION OF LAW

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 its reason for nonrenewal.

W. Reid McClintock, Assistant Vice President of the Horace Mann Companies, stated in his affidavit that no proof was received from the policyholders that the issues raised in the earlier hearing had been resolved, therefore the nonrenewal notice was issued.  He provided a copy of the written inspection from April 2002, arguing that, unless all the items cited in his recommendation letter of December 4, 2002, are resolved, the condition of the property presents serious hazards making the property uninsurable on the voluntary market. It is noted that three of the issues listed in that letter are not included in the reason given for nonrenewal, and therefore will not be considered.

Mr. McClintock testified that the rotting porch and entry way are a liability hazard, as well as the personal possessions and debris in the yard.  He also stated that the overall poor condition of the home with its lack of siding on the back of the shed addition and rotting roof area increases the likelihood of water or wind related damage. He further testified that the large trees with branches resting on the roof are an invitation to damage the roof.

Mrs. McClellan provided photos showing that the damaged porch flooring had been repaired, as well as a section of eaves that had been rotted.  Another photo showed that the overhanging branches had been removed. She also testified that the rotted sill board in the doorway to the shed had also been replaced. The December recommendation letter indicated that the chimney in question is to be removed based upon a telephone discussion between the parties at that time, therefore that issue is considered moot.

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

The argument provided by the company indicated a number of issues not mentioned in the reason given for nonrenewal on the notice mailed November 4.  24-A M.R.S.A. § 3051 states that the reason for nonrenewal must be explicit, therefore any additional items not indicated therein will not be considered.  In the reason for nonrenewal, the company referenced rotting sills on shed, porch decking, rear eaves and trim boards; large trees with overhanging branches; chimney needs pointing; and paint chipping and peeling on trim. The evidence on the record shows that these issues have been addressed by the policyholder, with the exception of the peeling paint on the trim. That remaining issue does not provide sufficient grounds for nonrenewal.

INDEX OF RECORD:

                COMPANY:                                                                      INSURED:
Exhibit  1 – Affidavit of W. Reid McClintock                Exhibit 1 – Diagram/3D sketch
Exhibit  2 – Copy of Policy                                        Exhibit 2 - Photos
Exhibit  3 – Prior Hearing Notice                                Exhibit 3 – Letter from Contractor
Exhibit  4 – May 2002 Hearing Request
Exhibit  5 – June 2002 Affidavit
Exhibit  6 – September 2002 Hearing Decision
Exhibit  7 – Letter from Company
Exhibit  8 – November 2002 Nonrenewal Notice
Exhibit  9 – Postal Proof of Mailing
Exhibit 10 – December 2002 Recommendation letter
Exhibit 11 – 4/15/02 Inspection

ORDER AND NOTICE OF APPEALS RIGHTS

The intended nonrenewal is not approved.  Teachers Insurance Company is directed to renew policy #18-001276832 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.

Dated May 23, 2003                                                    Alessandro A. Iuppa
                                                                                    Superintendent of Insurance

                                                                                    ____________________________________
                                                                                    by Connie Mayette
                                                                                    Designated Hearing Officer

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