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This proceeding arose upon a request for hearing made by John Gilday of Acton, Maine, to contest the nonrenewal of homeowners insurance coverage issued to him by Concord General Mutual Insurance Company (hereinafter "Concord"). The proceeding was conducted pursuant to the Maine Property Insurance Cancellation Control Act, 24-A M.R.S.A. §§ 3048-3056. A hearing in this matter was held on January 15, 2003. Mr. Gilday was present at and participated in the hearing.1

1 Connie Mayette, who was originally designated as Hearing Officer for this proceeding, by Superintendent of Insurance Alessandro Iuppa, became unavailable on the day of the hearing. Accordingly, Thomas M. Record, Senior Staff Attorney at the Bureau, was designated as a substitute Hearing Officer.

A representative of Concord did not personally appear at the hearing. In lieu of appearance, Concord submitted sworn affidavits of James Gardner, Personal Lines Underwriter, and Denise E. Downing, Supervisor - Home Office Files. Title 5 M.R.S.A. §9057(2) provides that "n(o) sworn written evidence shall be admitted unless the author is available for cross-examination or subject to subpoena, except for good cause shown". The Maine Bureau of Insurance practice procedure is to accept sworn affidavits of witnesses only if the affiant is available for cross-examination by adverse parties and for questioning by the hearing officer either in person or by telephone. Mr. Gardner was contacted by telephone during the hearing and questioned by the Hearing Officer and by Mr. Gilday. The affidavits are considered as admitted on the record of this proceeding.

The reason provided by Concord in its Notice of Nonrenewal is "insured's failure to cooperate in the settlement of 1/16/2000 loss". Both Concord and Mr. Gilday presented substantial information regarding that claim. Concord's position, as expressed in Mr. Gardner's affidavit, is that Mr. Gilday initiated unnecessary delays that caused an excessively long settlement period and increased costs, all of which resulted in unfair betterment to the insured. When asked by the Hearing Officer for examples of where Mr. Gilday had received unfair betterment, Mr. Gardner noted two examples. He cited an October 15, 2000 entry by Laurie A. Dumont, AIC, in the Concord's claim log which reads:

"Spoke with Paul Davis Systems. The work will take another 6 weeks as he has just been able to get the building permit and code enforcement for the changes Mr. Gilday is making to the structure. He says the Gilday's delayed the repair process by 4 to 6 weeks with the changes they have requested and the requirements to hold off because of the changes. Called Bureau of Insurance and advised of status."

Mr. Gardner also cited a January 3, 2001 claims log entry from David A. Robbins, AIC, which reads:

"Spoke to Tony of Paul Davis Systems. Is having a problem with Mr. Gilday. Mr. Gilday had asked PDS to do some extra work over and above the water damage. He had asked for ventilation to prevent further molding. Now Mr. Gilday says he can't pay for the work done. I told Tony we can't help him if it's over and above the water damage."

Having reviewed the evidence in this office, it is abundantly clear that very little, if anything, regarding any aspect of this claim went smoothly from the perspective of anyone involved with it. The original claim occurred on January 16, 2000 when a pipe burst. Mr. and Mrs. Gilday had just recently purchased the home and had not moved in at that time. Subsequent to that there occurred a tragic series of misadventures and "comedy of errors". The home is an earthen home in the sense that 3 sides of it are below ground. Apparently, the roof extends above ground. Not only were repairs to the pipe necessary, but a mold and mildew problem also had to be corrected. There was identified a need to improve ventilation to the crawl space between the ceiling and the roof. There were problems with slow performing and inadequate performing contractors, there were problems with engineering inspections, there were delays in obtaining permits, and there were delays which Mr. Gilday noted were caused by the multiple adjusters assigned to his claim familiarizing themselves with what was going on.2 As noted by both parties, the entire process took over 12 months. It is most difficult to find any aspect of the events that progressed smoothly in either the accounts of events provided by the Concord or Mr. Gilday. During this time, Mr. Gilday, his wife and their 4 children stayed in alternative housing paid for by the Concord as part of the claim. It is clear from the record that the Gildays had as little satisfaction with these living arrangements as Concord had in paying for them.

2 Mr. and Mrs. Gilday also had an ongoing series of complaints to the Bureau of Insurance regarding Concord's handling of the claim and the Bureau's complaint handling staff had ongoing involvement over a period of several months.

Nevertheless, when looked at in perspective, it appears that the action steps attempted by Mr. and Mrs. Gilday were all intended to assure that their home would be habitable and safe for their children. While it is true that efforts such as those to improve ventilation in the crawl space may not truly be in the nature of repairs causally connected to the original claim, Mr. Gardner conceded during the hearing that work of that nature was neither unusual, unreasonable or imprudent at a time and in a context wherein a home had to be otherwise essentially "gutted" to address moisture problems caused by the source of the claim. It would seem reasonable to assume that the ventilation work, if anything, would improve ongoing insurability of the home, not detract from it. One might argue about whether or not the costs associated with that work, including additional living expenses for the Gildays, were compensable under the terms of the policy, but such an argument would be in the nature of a claims dispute and is an issue beyond the scope of this proceeding.

With respect to the incident noted in the Concord's claim log by Mr. Robbins on January 3, 2001, Mr. Gilday explained that he refused to pay for unsatisfactory work done by the contractor and further noted that he recommended to the Concord that it not pay for similarly unsatisfactory work done (or not done) by the contractor with respect to matters subject to the claim. This office fails to understand what relation that incident bears to either the question of unfair betterment or with the insurability of the property.

In summary, while Concord may have demonstrated (and Mr. Gilday would undoubtedly concur) that nothing went smoothly with regard to the claim, it has failed to meet its burden of proof that a lack of cooperation by Mr. Gilday results in a situation that bears a rational relation to the insurability of the property.

ORDER

The intended nonrenewal is not approved. Concord General Mutual Insurance Company is hereby directed to renew Policy #N414094 18 5 on the same basis as the expiring policy. Mr. Gilday is responsible for premium for any period for which coverage is provided.

NOTICE OF APPEAL RIGHTS

This Decision and Order is a final agency action of the Superintendent of Insurance within the meaning of the Maine Administrative Procedure Act. It may be appealed 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 thirty days after receiving this notice. Any aggrieved non-party whose interests are substantially and directly affected by this Decision and Order may initiate an appeal on or before 40 days after the date appearing below.

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