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Mark & Tammy Rutland v. Providence Mutual Fire Insurance
Docket No. INS-05-2031, Decision Issued August 10, 2005.
The insureds requested a hearing following receipt of a notice of homeowners
insurance coverage cancellation citing lack of compliance with underwriting
guidelines due to the presence of foster care on the premises as well
as certain conditions. At hearing, the company alleged that photographs
taken by the agent revealed hazards not disclosed on the insureds’
insurance application. The company further alleged that the insureds
had not disclosed the provision of foster care on the premises. The
insured argued that certain of the cited conditions have existed for
Held: For the insured. The company has continuously
provided homeowners coverage to the insureds for several years. The
company terminated its business relationship with its agent and the
insureds were then required to obtain renewal coverage through a different
agent. The change in broker does not impact the insureds’ status
with the company as continuing customers in the same property. Therefore,
in order to cancel the policy, the company must demonstrate that it
has complied with the requirements of §§ 3049, 3050.
The company did not identify which of the permitted cancellation ground
it is relying upon in this action, but several of those grounds clearly
do not apply. As the company referenced issues that were not disclosed
on the application and also a “serious and material change,”
this decision will focus on the requirements of 24-A M.R.S.A. §§
Section § 3049(4) concerns a “failure to disclose a material
fact in relation to the application for insurance that would, if coverage
is effectuated without knowledge by the insurer, substantially alter
the terms of the policy.” The company alleged that the insureds
failed to disclose the premises hazards in addition to the fact that
they were providing foster care. By highlighting the question in the
application regarding a business on the premises, the company is implying
that the insureds’ status as foster parents should be considered
a business. I disagree that foster parenting should be considered a
business. Moreover, since the coverage is merely a continuation of the
previous policy, the representations made on the 2005 application are
irrelevant for the purposes of § 3049(4)(B). In addition, neither
application contains any item that would prompt a description of the
cited conditions or disclosure of the foster parenting. Therefore, the
elements of § 3049(4)(B) have not been met.
Section 3049(5) permits cancellation for physical changes in the property
that render the property uninsurable. Although the Company has demonstrated
a number of factors that arguably increase the hazards insured against,
it has not proven that these conditions represent a change in the property.
In addition, the insureds’ status as foster parents does not constitute
a physical change in the property. Accordingly, I decline to address
whether the property is uninsurable because of these issues. Finally,
one minor property condition is easily solvable, and Mr. Rutland has
indicated his willingness to attend to it.
The notice of cancellation also did not contain a notification of the
right to request a hearing as required by 24-A M.R.S.A. § 3050.
Accordingly, it is not a valid cancellation notice.
Return to Cancellation / Nonrenewal Hearing