Docket No. INS 05-15746 Decision : Bureau of Insurance

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FINDINGS AND DECISION

IN RE:

Elizabeth Morrissey
vs.
Patrons Oxford Insurance Company

Hearing 2005-15746
Decision Issued February 17, 2005

This proceeding arose upon a request for hearing made by Elizabeth Morrissey (the “Insured”) to contest the pending cancellation of automobile insurance coverage provided by Patrons Oxford Insurance Company (the “Company”). On December 30, 2004, the Company mailed a notice of cancellation effective January 16, 2005, citing “nonpayment of premium” as the grounds for cancellation. Pursuant to 24-A M.R.S.A. § 2920, the Insured's hearing request was made within the statutory time period.

A hearing in this matter was held on February 8, 2005, pursuant to 24-A M.R.S.A. § 2920 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. Hope Perkins, Underwriting Supervisor, represented the Company at the hearing. The Insured represented herself at the hearing.

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

The Company has provided the subject policy to the Insured since December 23, 2003. Payment for the 12/23/03-12/23/04 term was received in full with the application.
The renewal premium was invoiced on December 2, 2004, with $706 due by the renewal date of December 23, 2004. No payment was received.
On December 22, 2004, the insured vehicle was involved in an accident, resulting in a total loss.
On December 30, 2004, a notice of intent to cancel the policy effective January 16, 2005, was mailed to the Insured. No payment was received.
The Insured purchased a replacement vehicle and attempted to make payment on the subject policy on January 20, 2005. The Company declined to accept the late payment after the cancellation date.

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 under section 2912 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..."

Ms. Perkins testified that the renewal of the policy was prepared in November, and the invoice was issued to the Insured on December 2, 2004, with the payment due by the expiration/renewal date. She stated that no payment was received by that date. She further testified that the Company mailed a notice of cancellation to the Insured advising that payment must be received by January 16, 2005, or the policy would be cancelled that date. She stated that no payment was received until after the cancellation date. She submitted copies of the transaction history, postal certificate of mailing, and a copy of the Insured’s check dated January 20, 2005. She stated that the Company policy as of January 1, 2005, is to refuse acceptance of auto insurance payments made after the cancellation date.

Ms. Morrissey argued that she had no reason to pay the renewal premium for the auto policy as she had nothing to insure as a result of the accident. She agreed that she did not attempt to make payment until she was purchasing a replacement vehicle and needed proof of insurance for that vehicle. She further testified that the agent advised her she needed to keep the coverage in place for the rental vehicle and to maintain continuity of coverage, but she argued that her credit card was providing insurance on the rental. She stated that she was never advised that the Company would not issue coverage on a new vehicle if she failed to pay the premium on the existing policy, or that other companies might refuse to insure her as a result. She also stated she had several conversations on the issue with the agent, but stated that she cannot understand why she should have to pay for insurance on a vehicle that no longer existed.

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.

The Company has demonstrated that premium was due by the renewal date of December 23, 2004, and that no payment was received. It further demonstrated that a cancellation notice was mailed in accordance with the requirements of section 2915, and that no payment was received by the cancellation date of January 16, 2005. It is noted that the law does not obligate the Company to provide an additional period of time past the due date for the Insured to make payment and avoid cancellation; it only requires that appropriate notice be given before the policy cancels. Although the Insured maintained that the agent did not adequately explain the consequences of her failure to pay the required premium, there is no evidence to suggest that the Insured acted in reliance upon a promise from either the agent or the Company that the policy would continue or be reinstated given the circumstances even if she failed to timely pay the premium. The Insured’s objection is not that the Company cancelled the policy, but that the Company subsequently refused to provide coverage for the replacement vehicle. The evidence shows that the Company’s cancellation of the policy was permitted by Maine law. Once a policy is legally cancelled, the Company is under no obligation to reinstate the policy or reissue a new policy for that Insured.

INDEX OF RECORD:
Company Exhibit 1 – Copy of Policy
Company Exhibit 2 – Cancellation Notice and Post Office Certificate of Mailing
Company Exhibit 3 – Policy Billing History
Company Exhibit 4 – Payment stub from original bill, copy of check and letter of refusal

Insured Exhibit 1 – Hearing Request
Insured Exhibit 2 – Phone bill
Insured Exhibit 3 – Auto and Homeowners bills and cancellation notices

ORDER AND NOTICE OF APPEAL RIGHTS
The intended cancellation is hereby approved. Patrons Oxford Insurance Company is directed to continue coverage until 12:01 a.m. on March 4, 2005, unless a subsequent valid notice of cancellation or nonrenewal has been effected in accordance with applicable law. If a subsequent cancellation or nonrenewal has taken effect, the policy terminates on the date stated in the subsequent cancellation or nonrenewal notice.

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 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.

Dated February 17, 2005 Alessandro A. Iuppa
Superintendent of Insurance

                                                                                    ____________________________________
                                                                                    by Connie Mayette
                                                                                    Designated Hearing Officer

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