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This proceeding arose upon a request for hearing made by Wallene Ross to contest the pending cancellation of automobile insurance coverage provided by North East Insurance Company. On January 14, 2004, the insurer mailed a notice of cancellation effective February 2, 2004 on policy number 02180075642, citing nonpayment of premium as the grounds for cancellation. Pursuant to 24-A M.R.S.A. § 2920, the insured's hearing request was timely.

A hearing in this matter was held on February 26, 2004 with Connie Mayette sitting as designated hearing officer pursuant to 24-A M.R.S.A. §§ 210 and 2920. 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 North East Insurance Company appeared at the hearing. Wallene Ross represented herself at the hearing.

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

1. North East has provided automobile insurance to Wallene Ross since September 11, 2002. The current policy term is September 11, 2003 to September 11, 2004.
2. An installment bill was issued on December 30, 2003, with the payment due January 13, 2004. No payment was received.
3. A cancellation notice was mailed January 14, 2004, as evidenced by the post office Certificate of Mailing. An amount of $77.78 was due before February 2, 2004 (which was a Monday) to reinstate the policy.
4. The policyholder mailed a payment on Saturday, January 31, 2004. The payment was received by North East on February 3.

ANALYSIS AND CONCLUSION OF LAW

Title 24-A M.R.S.A. § 2914(1) permits an insurer to cancel a policy for nonpayment of premium, which is defined as "failure of the named insured to discharge when due any of his obligations in connection with the payment of premium on the policy, or any installment of a premium…"

Ethel Potvin, Personal Lines Manager for North East, testified that an installment payment was due January 13, 2004, but no payment was received. A cancellation notice was then sent, requiring payment before February 2 to avoid cancellation of the policy. Payment was received on February 3. She submitted an envelope postmarked February 2 to demonstrate that the insured had not attempted to make payment until it was already too late, but Ms. Ross argued that the company had the wrong envelope. The envelope had no name, and a return address different from her mailing address.

Ms. Potvin also submitted a copy of the billing history on the policy, showing 11 cancellation notices issued since the original inception in September 2002, four of them since the renewal in September 2003. She testified that on one of those occasions, the payment was received after the cancellation date, but the postmark demonstrated it was mailed before the cancellation date, so the company gave her the benefit of the doubt and accepted the payment, continuing the policy.

Wallene Ross testified that she mailed her payment from the Augusta Post Office on Saturday, January 31, 2004, and that the clerk assured her it would be postmarked that day. She submitted receipts showing purchase of stamps and a money order on that date to demonstrate her presence in the post office. She argued that North East must have lost her envelope and if they had the correct one, it would show she mailed her payment in time. It is noted that the company’s installment bill states “Please allow 5 days mail time for payments to reach us by the due date.” She also stated the company is changing its policy from the way it has handled payments in the past, simply because of her payment history. She also argued that either the company or the agency should have advised that making late payments could result in cancellation of her policy.

The Superintendent of Insurance has jurisdiction over this matter pursuant to 24-A M.R.S.A. § 2920. North East 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 North East Insurance Company has established adequate grounds for policy cancellation.

Although North East may have accepted a payment after the cancellation date on one occasion based on the postmark, it is not required by law to do so. (At the time the company made that exception, the policyholder had only one previous late payment in her billing history.) Maine law states that an insurer may cancel a policy, by giving 10 days notice prior to the cancellation date, when an insured has failed to discharge when due any of his or her obligations in payment of the premium. The company is not required to provide a second attempt to make payment after a due date has passed, although the majority of insurers do so. The notice period is intended to give the policyholder an opportunity to obtain other coverage before the coverage ends. There is no way to reasonably conclude that the insurer should receive before Monday a payment which was mailed on the immediately preceding Saturday. As the payment due on January 13 was not made, the cancellation notice issued on January was appropriate. North East extended another opportunity to make payment before the cancellation date and reinstate the policy, but the payment was not received prior to the cancellation date.

INDEX OF RECORD:
Exhibit 1 – 12/30/03 bill, due 1/13/04
Exhibit 2 – Cancellation Notice & Post office certificate of mailing
Exhibit 3 – Copy of check dated 1/30/04, stamped received 02/03/04
Exhibit 4 – Envelope postmarked 02/02/03
Exhibit 5 – Letter to insured returning her check
Exhibit 6 – Billing history

Policyholder Exhibit 1 – Post office receipts

ORDER AND NOTICE OF APPEAL RIGHTS

The intended termination is hereby approved. North East Insurance Company is directed to continue coverage pursuant to 24-A M.R.S.A. § 2920 until 12:01 a.m. on March 25, 2004, to provide an opportunity for the policyholder to obtain other coverage.

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 March 10, 2004                                                 Alessandro A. Iuppa
                                                                                    Superintendent of Insurance

                                                                                    ____________________________________
                                                                                    by Connie Mayette
                                                                                    Designated Hearing Officer

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