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> Cancellation / Nonrenewal Docket No. INS 04-15420 Decision
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This proceeding arose upon a request for hearing made by Richard W. Bingaman (the “Insured”) to contest the pending cancellation of automobile insurance provided by American Home Assurance Company (the “Company.”) On September 24, 2004, the Company mailed a notice of cancellation effective October 20, 2004, on policy number 2880309, citing as the grounds for cancellation: “nonpayment of premium.” 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 November 17, 2004, with Pamela Stutch 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 the proof or evidence given by the Company to support its reason for policy cancellation. Donald Procopio, Senior Vice President of Actuarial Mass Marketing for the Company, submitted an unsworn statement on the Company’s behalf in lieu of appearance at the hearing. The day prior to the hearing, the Insured requested a continuance which was denied, and he also submitted an unsworn statement in lieu of appearance at the hearing. FINDINGS OF FACT
Title 24-A M.R.S.A. § 2914 permits cancellation for nonpayment of premium. Section 2912(3) defines “nonpayment of premium” 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." Section 2914(1) provides that no notice of cancellation for nonpayment of premium is effective unless deemed received under section 2915 after the premium due date. In its unsworn statement, the Company explained the billing and payment history regarding the policy at issue. The Company further provided copies of various bills showing the amounts due and the dates by which the amounts were due. Although the Insured drew attention to the fact that the Company’s statement was unsworn, his own statement was also unsworn. In addition, much of the language contained in Insured’s statement was unintelligible. Accordingly, I find that the Insured did not articulate a good faith belief that the assertions contained in the Company’s unsworn statement were incorrect or that the documents presented were false. See Maddocks v. Unemployment Insurance Commission, 2001 ME 60, ¶18, 768 A.2d 1023, 1028. I further find that the Company’s unsworn statement and the accompanying documentation are sufficiently reliable to meet the evidentiary threshold provided by 5 M.R.S.A. § 9057(2)1. In the Company’s statement, Mr. Procopio explained that the policy at issue was a new business policy effective April 20, 2004, insuring the Insured’s 1995 Jeep Cherokee SE for a premium of $373. He noted that a down payment of $123.09 was received to begin the policy. He indicated that a bill was sent to the Insured on April 19, 2004, reflecting a balance of $254.91, which included an installment fee, and a minimum payment of $67.47 due on May 20, 2004. He noted that on April 30, 2004, the Insured added a 2004 Jeep Cherokee and thus, the 6 month premium increased to $816. He noted that the Insured requested removal of his 1995 Jeep effective May 3, 2004, thus decreasing the premium by $198 for a total of $602. He stated that the Company subsequently received information that the Insured was driving a 2004 Chevrolet Colorado effective May 4, 2004, and thus, the Company removed the 2004 Jeep and added the 2004 Chevrolet. Mr. Procopio stated that as a result, the policy decreased by $71 for a 6 month premium of $527. Mr. Procopio went on to summarize the bills sent to the Insured in connection with the policy. He indicated that the Company received no payment for the bill due May 20, 2004, and thus, a revised bill was sent to the Insured for a balance of $404.91 with a minimum of $140.11 due by June 20, 2004. He stated the Company again received no payment from the Insured and thus, it issued a notice of cancellation effective July 10, 2004. He noted that the earned premium for coverage effective April 20, 2004 through July 10, 2004, was $245 to which the Company applied the Insured’s initial down payment of $123.09, leaving a balance of $121. He noted that a bill for $121 was sent to the Insured and in return on July 22, 2004, the Company received payment of $60. Mr. Procopio explained that the coverage was reinstated and that the Company sent a bill to the Insured for $369.91 due immediately. He noted that on August 21, 2004, the Company issued a renewal policy for the Insured for the period of October 20, 2004 through April 20, 2005, reflecting a policy of $527, and the Company issued a bill to the Insured reflecting the new policy term premium of $527, the outstanding balance of $369.91, and a minimum payment of $457.76 due by September 20, 2004. Mr. Procopio noted that the Company received payment of only $102 in response. Mr. Procopio then went on to explain the error detected in the rating of the Insured’s vehicles. He noted that at the inception of the policy, the Company had correctly rated the Insured’s vehicle using the Insured’s resident zip code but when the Insured made vehicle changes to the policy, the new vehicles erroneously were rated using the Insured’s post office box zip code. He noted that following the correction, the premium decreased from $527 to $483 thus, generating a decrease of $44 for the renewal policy and a decrease of $42 for the policy term of April 20, 2004 through October 20, 2004. Mr. Procopio concluded by noting that the outstanding balance currently is $357.59, and the Company has received no payment from the Insured. By the documents submitted, the Insured asserts that he owes nothing more than what he has already paid. The evidence indicates that after the Insured made the initial down payment of $123.09, the Company received no payment from the Insured until July 22, 2004, when it received $60 of the $121.91 earned premium stated to be due. Accordingly, the Insured did not timely pay the bill due on May 20, 2004, for $67.47, or the bill due on June 20, 2004 for $140.11. In his submissions, the Insured appears to argue that he has paid the premium amount in full for the period of April 20, 2004 through October 20, 2004 and he points to a billing statement from the Company dated September 30, 2004. The billing statement includes a notation titled “Payment Received” on July 13, 2004, and indicates a credit of $293. However, the billing statement also contains a notation on August 4, 2004, titled “Policy Reinstatement” and a corresponding charge for the same $293, and I conclude that the original $293 was not paid by the Insured but credited to his account when the Company believed that the policy cancelled effective July 10, 2004. Moreover, the “payment” date of July 13, 2004, is long after various unpaid bills were due. Lastly, although the Insured appears to argue that he made a payment of $198 in the form of a Post Office money order to the Company for the term of April 20, 2004 through October 20, 2004, the evidence is insufficient to demonstrate that the payment ever reached the Company. Although the Company reinstated the Insured’s policy and issued a renewal policy for the term of October 20, 2004 though April 20, 2005, the Insured timely paid only $102 of the amount stated as due by September 20, 2004. Even with the amounts credited due to the rating error, the amount timely paid by the Insured was clearly insufficient, and a slight error in the policy calculation does not serve to invalidate the Company’s bill. The Insured appears to argue that the obligation owed from the period of April 20, 2004 through October 20, 2004, cannot be transferred to the balance owed for the period of October 20, 2004 through April 20, 2005. However, I find no basis for this theory. Because the law permits an insurer to cancel a policy for nonpayment of premium, an insured’s safest course of action when involved in a billing dispute is not to ignore company invoices but to pay the stated amount due and then proceed against the company for a refund. The evidence indicates that the Insured either did not pay any or only paid a portion of the premium installment amounts when due. See § 2912(3). 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 the Company has established adequate grounds for policy cancellation. INDEX OF RECORD: Insured Exhibit 1 – Hearing Request. ORDER AND NOTICE OF APPEAL RIGHTS 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 aggrieved nonparty whose interests are substantially and directly affected may initiate an appeal within 40 days of the date of this Decision and Order. There is no automatic stay pending appeal; application for stay may be made in the manner provided in 5 M.R.S.A. § 11004. 1 5 M.R.S.A. § 9057(2) provides that “[e]vidence shall be admitted if it is the kind of evidence upon which reasonable persons are accustomed to rely in the conduct of serious affairs.”
Dated December 28, 2004 Alessandro A. Iuppa By his Designated Hearing Officer, ____________________________________ Last Updated: July 16, 2008 |
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