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Maine.gov > PFR Home > Insurance Regulation >Administrative & Enforcement Actions > Cancellation Hearing Index > Cancellation / Nonrenewal Docket No. INS 05-158692005-15870 Decision
Harbor Club, Inc., v. Massachusetts Bay Insurance Company/Hanover
The insured requested a hearing following receipt of a notice of cancellation of a commercial package insurance policy issued by Massachusetts Bay Insurance Company and a notice of cancellation of a commercial umbrella/excess policy issued by Hanover Insurance Company, each citing the failure to comply with loss control recommendations. At hearing, the companies maintained that multiple recommendations were made to the insured and the insured indicated either that it would not comply with them or that it intended compliance in several years. The insured argued that there is no current risk because the club is closed and will not open until June. The insured further maintained that the companies failed to demonstrate that repairs had not been made. However, the insured’s witness stated that the insured was unwilling to follow one of the recommendations because the changes would alter the character of the club.
Held: For the companies. Title 24-A M.R.S.A.
§§ 3007(2)(D) and 2908(2)(D) permit an insurer to cancel a
policy for failure to comply with reasonable loss control recommendations.
Although the insured argued that the exposures are not new and have
existed since at least the time of policy inception, there is no requirement
that loss control recommendations involve new hazards only. It is permissible
to require an insured to minimize the hazards that increase exposure
to injury when liability exposure is covered under a policy. The commercial
package policy insures against liability claims. One of the recommendations
is a reasonable attempt to minimize that exposure, and both the insured’s
witness and attorney have stated that the insured is unwilling to comply.
This is enough in itself to establish a failure to comply with reasonable
loss control recommendations. Therefore, cancellation of the commercial
package policy is permitted under § 3007(2)(D).
Last Updated: January 16, 2014
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