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Charlotte Tyler v. State Farm Fire & Casualty Company
Docket No. INS-05-2046; Decision Issued September 12, 2005

The insured requested a hearing following receipt of a notice of homeowners insurance coverage nonrenewal claiming that the company only provides coverage for child care operations with a maximum of 3 children on the type of policy at issue. At hearing, the company testified that it was informed at policy inception that the insured cared for one child and that the company recently discovered that the insured now cares for 6 children. The company argued that this is a substantial change in the risk which increases the liability exposure. The insured testified that her license was for 6 children when the insurance was first obtained.
Held: For the insured. Nothing in the company’s evidence establishes that the coverage for child care operations provides for a maximum of 3 children. The policy documents submitted indicate that the insured pays an additional premium on the policy for liability coverage to extend to the day care operation, but neither the amount of the additional premium nor its derivation were provided. There is no evidence that the premium is predicated upon the number of children or that it contemplates a maximum of three. Although the company alleged that the insured cared for one child at policy inception and now cares for 6, the company did not provide a sufficient basis for the accuracy of either number, and the insured’s affidavit neither confirms nor denies the company’s allegations. The company has not demonstrated that its stated reason for nonrenewal is a good faith reason related to the insurability of the property, see 24-A M.R.S.A. §§ 3051, 3054, or that it otherwise satisfies any of the cancellation grounds contained in 24-A M.R.S.A. § 3049.

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