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This proceeding arose upon a request for hearing made by Duayne Dennison to request the pending cancellation of motorcycle insurance coverage provided by State Farm Mutual Automobile Insurance Company. On May 30, 2003, the insurer mailed a notice of cancellation effective June 28, 2003 on policy number 032 8479-B29-19A citing “driving record of Darrel Dennison 11/7/02 license suspension to 3/18/03 criminal violation, 7/17/02 operating under the influence of liquor” as the grounds for cancellation.

A hearing in this matter was held on June 26, 2003 with Connie Mayette sitting as designated hearing officer, pursuant to Title 24-A M.R.S.A. §§ 210 and 2908. 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 cancellation. Staff representing State Farm Mutual Automobile Insurance Company appeared at the hearing. Duayne Dennison appeared or was represented by counsel at the hearing.

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

1. State Farm Mutual Automobile Insurance Company provides vehicle coverage under five separate policies for Mr. Dennison. The motorcycle is covered under policy 32 8479-B29-19A, effective 8/29/02 to 8/29/03.
2. Darrel Dennison, son of Duayne Dennison, is a resident of the household. Darrel’s drivers license was suspended effective 11/7/02.
3. Duayne Dennison is the only driver in the household licensed to operate a motorcycle.

ANALYSIS AND CONCLUSION OF LAW
Although State Farm’s testimony for all five cancellations was predicated upon the Automobile Cancellation Control Act, the Act does not apply to the policy covering the motorcycle. 24-A M.R.S.A. § 2912 defines policies within the scope of the Act as those insuring motor vehicles of the private passenger or station wagon type, and any other 4-wheel motor vehicles with a load capacity of 1500 pounds or less and which are not used in the business or profession of the insured. A motorcycle does not fall within those definitions. 24-A M.R.S.A. § 2908 is the cancellation statute covering all other contracts of casualty insurance delivered or issued for delivery in this State, which would include a policy providing coverage on a motorcycle.

Title 24-A M.R.S.A. § 2908(2) provides statutory grounds for mid-term cancellation, including substantial change in the risk which increases the risk of loss after insurance coverage has been issued or renewed.

Al Miller, Underwriting Supervisor for State Farm Insurance Companies, stated in his affidavit that State Farm obtained a motor vehicle report on Darrel Dennison on May 19, 2003. He submitted a copy of that report, which shows a license suspension taking effect on November 7, 2002. He stated that this suspension occurred within 180 days immediately preceding the policies’ effective dates.

Duayne Dennison testified that his son is a resident of his household, and conceded that his license had been suspended. He argued, however, that Darrel’s record shouldn’t affect the parents’ insurance simply because he lives in the household. Mr. Dennison testified that Darrel does not have a motorcycle license, and has never operated his motorcycle. He stated that he is the only driver in the household with a motorcycle license.

The Superintendent of Insurance has jurisdiction over this matter pursuant to Title 24-A M.R.S.A. § 2908. State Farm Mutual Automobile 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 State Farm Mutual Automobile Insurance Company has not established adequate grounds for policy cancellation.

This policy is not governed by the Maine Automobile Cancellation Control Act, which permits cancellation specifically for the suspension of a driver’s license. The applicable statute permits cancellation when a substantial change in the risk has occurred which increases the risk of loss after insurance coverage has been issued or renewed.

To meet the standard under this statute, the insurer must demonstrate three distinct components:

• That a substantial change in the risk has occurred;
• That the stated change increases the risk of loss; and
• That the change has occurred since the policy was issued or renewed.

While Darrel Dennison’s license suspension did occur after the motorcycle policy renewed, the company has presented no explanation as to how that occurrence either represents a substantial change in the risk or increases the risk of loss. No evidence was presented to indicate that Darrel Dennison has ever operated a motorcycle or is able to operate a motorcycle.

INDEX OF RECORD:
Exhibit 1 – Affidavit of Al Miller
Exhibit 2 – Postal Proof of Mailing
Exhibit 3 – Motor Vehicle Record of Darrel Dennison
Exhibit 4 – Copy of Policy

Order and Notice of Appeal Rights

The intended cancellation is not approved. State Farm Mutual Automobile Insurance Company is directed to continue policy # 032 8479-B29-19A. 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 Title 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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