Archives: 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008

This proceeding arose upon a request for hearing made by James Shaffer (the “Insured”) to contest the pending cancellation of automobile insurance coverage provided by North East Insurance Company (the “Company.”) On February 19, 2004, the Company mailed a notice of cancellation effective March 18, 2004, on policy number 02180087455, citing “Insured is no longer eligible for Maine auto policy – moved out of state” 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 pursuant to 24-A M.R.S.A. § 2920 on April 13, 2004, with Connie Mayette sitting as designated hearing officer. See 24-A M.R.S.A. § 210. The purpose of the hearing was limited to establishing the existence of proof or evidence given by the Company to support its reason for policy cancellation. Ethel Potvin, Personal Lines Manager for the Company, appeared on behalf of the Company at the hearing. The Insured did not appear or submit a sworn statement in lieu of appearance at the hearing, nor did he request a continuance.

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

1. Mr. Shaffer’s vehicle was first insured with the Company effective July 21, 2003.
2. On January 14, 2004, an installment bill issued to the address on the policy was returned to the Company by the Post Office as undeliverable. On February 2, 2004, a cancellation notice for nonpayment of premium was also returned.
3. A subsequent bill mailed February 5, 2004, was forwarded to the Insured’s new address, with a notification sent by the Post Office to the Company. The new address is in West Virginia.

ANALYSIS AND CONCLUSION OF LAW

Under the Automobile Insurance Cancellation Control Act, a policy may be cancelled for a reason based upon one or more of the grounds permitted by 24-A M.R.S.A. § 2914. Those grounds are as follows: (1) nonpayment of premium; (2) fraud or material misrepresentation affecting the policy or the presentation of a claim; (3) violation of terms or conditions of the policy; or (4) certain suspensions or revocations of a driver’s license.

Ms. Potvin testified that first a bill and then a cancellation notice mailed to the address originally on the policy was returned to the Company as undeliverable. She stated that both items were forwarded to the agent of record to attempt to obtain the current address. She noted that a subsequent bill issued to the original address was forwarded by the Post Office to the Insured at his new address in West Virginia. She stated that the forwarding order had apparently not been in place when the first two items were returned. She testified that the agent was advised that the policy would be cancelled, and that the Company allowed the agent a few days to clarify the situation. She stated that the agent was apparently unable to contact the Insured; therefore the cancellation notice was issued.

The Superintendent of Insurance has jurisdiction over this matter pursuant to 24-A M.R.S.A. § 2920. The 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 not established adequate grounds for policy cancellation.

The Company’s stated reason for cancellation and evidence presented at the hearing focused upon the Company’s theory that the Insured resides outside of Maine. However, the Company did not provide any evidence connecting the reason for the cancellation with any of the permitted grounds for cancellation in § 2914. While an insurer could conceivably have made continued residency in this State a condition of the policy and then argued at the hearing that the Insured’s move violated that condition, the Company neither made that argument nor submitted a copy of the policy. None of the other permissible grounds appear to apply.

INDEX OF RECORD:
Exhibit 1 – Underwriting Notes Screen
Exhibit 2 – Forwarding Information from Post Office
Exhibit 3 – Cancellation Notice & memo to agent
Exhibit 4 – Post Office certificate of mailing

ORDER AND NOTICE OF APPEAL RIGHTS
The intended cancellation is not approved. North East Insurance Company is directed to continue coverage under Policy #02180087455. 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.

Dated July 12, 2004                                                     Alessandro A. Iuppa
                                                                                    Superintendent of Insurance

                                                                                    ____________________________________
                                                                                    by Connie Mayette
                                                                                    Designated Hearing Officer

Return to Cancellation / Nonrenewal Hearing Decisions