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This proceeding arose upon a request for hearing made by Dwight Grant of Etna, ME, to contest the pending cancellation of homeowners insurance coverage provided to him by Hanover Insurance Company. On November 13, 2002, the insurer mailed a notice of cancellation effective December 9, 2002 on policy number HNP 5227991, citing “canceling midterm due to changes in the exposure which directly effect the insurability due to the property is unoccupied” as the grounds for cancellation. Pursuant to 24-A M.R.S.A. §§ 3049 and 3054, Hanover 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 15, 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 cancellation. Staff representing Hanover Insurance Company submitted a sworn statement in lieu of appearance at the hearing. Dwight and Arlene Grant represented themselves at the hearing.

FINDINGS OF FACT

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

1. Hanover Insurance Company has insured the subject property at Camp Etna, Etna, ME, since October 1996. The current policy term runs from 10/03/02 to 10/03/03.
2. Mr. Grant, who is Native American, occasionally spends time on the reservation with his family.

ANALYSIS AND CONCLUSION OF LAW

Title 24-A, M.R.S.A. § 3049 permits an insurer to cancel a policy of this type for a number of specific reasons, including a physical change in the property that results in the property becoming uninsurable. Michele Pignataro, Personal Lines Underwriter for Hanover, cited this reason in her affidavit.

Ms. Pignataro also testified that the company’s action is based upon a good faith reason rationally related to the insurability of the property. She stated that an inspector found the home to be unoccupied on 9/6/02. She also cited the condition of the paint, rear clapboards, and roof, and the lack of steps at the rear door. The inspector had stated the property had not appeared to have occupants “for some time.” The inspection report was submitted as evidence.

Arlene Grant, who lives elsewhere but assists Dwight Grant with his affairs, testified that he was visiting the reservation at the time of the inspection. Just prior to that, he and his brother had been working on the house, as evidenced by the table saw and sawhorses on the porch, as well as the pieces of lumber, all of which are clearly visible in the photos provided by Hanover. She stated that the back clapboards have always looked the same, and that there have never been steps at the back door. She further testified that he has all the shingles to re-do the sides and rear of the house, and that Mr. Grant does plan to put steps at that door once the shingling has been done.

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

While it is debatable that a change in occupancy represents a “physical” change in the property, the company has not demonstrated that a change in occupancy or condition has occurred. The evidence on the record also does not support that any true physical change has occurred. Testimony indicated that this property is now and always has been Mr. Grant’s primary residence, and that he also spends some time on the reservation. It also indicates that the only physical change in the condition of the property has been to the good, as Mr. Grant has replaced the lower front porch, added a deck at the upper front door, installed insulation in the previously un-insulated dwelling, and improved the electrical and heating systems.

INDEX OF RECORD:
Exhibit 1 – Affidavit of Michele Pignataro
Exhibit 2 – Copy of Cancellation Notice
Exhibit 3 – Postal Proof of Mailing
Exhibit 4 – Copy of Policy (HO2 Broad Form)
Exhibit 5 – Inspection Report
Exhibit 6 – Photos from Agency

ORDER AND NOTICE OF APPEAL RIGHTS

The intended cancellation is not approved. Hanover Insurance Company is hereby directed to continue coverage under Policy #HPP 5227991 without lapse. 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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