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Gary Goldsmith v. National Grange Mutual Insurance Company
Docket No. INS-05-2049, Decision Issued October 3, 2005.

The insured requested a hearing following receipt of a notice of cancellation of automobile insurance coverage citing nonpayment of premium as the reason for cancellation. At hearing, the company submitted a sworn statement as its testimony, but the author of the statement was unavailable for cross-examination. As no good cause was provided for the author’s unavailability, the statement was not admitted into the record. See 5 M.R.S.A. § 9057(5). The insured maintained that he was involved in an accident for which the company did not conduct a proper examination. He further argued that his premium was unjustly increased as a result of the accident, and the company paid the other party for damages that did not take place.

Held: For the company. The applicable statute permits cancellation for “nonpayment of premium” which is defined as the “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 premium…” See 24-A M.R.S.A. §§ 2914(1), 2912(3). Although the company’s sworn statement was not admitted as part of the record, the insured’s testimony demonstrated the reliability of the company’s other submissions. The evidence indicates that the insured did not pay any portion of the bill in question. Although a legitimate dispute may have existed about the appropriateness of the premium increase, the insured was not justified in disregarding the entire bill. Had he remitted the bill’s requested minimum payment or even the amount requested in the cancellation notice, both of which were below his prior annual premium, he could have preserved his insurance coverage while pursuing an inquiry into the accuracy of the premium increase. The company has demonstrated that the statutory requirements for cancellation based upon nonpayment of premium have been met.

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