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Pamela Elwell v. State Farm Fire and Casualty Company
Docket No. INS-05-2059, Decision Issued October 11, 2005.

The insured requested a hearing following receipt of a notice of homeowners insurance nonrenewal citing the insured’s loss frequency. At hearing, the company testified that the nonrenewal decision was based upon the trend of losses over several years. The insured argued that she only submitted one claim under her own policy and that her ex-husband made the other claims.

Held: For the insured. Title 24-A M.R.S.A. § 3051 specifically states that explanations such as “loss record” and similar insurance terms are not by themselves acceptable reasons for nonrenewal. A company must demonstrate a nexus or pattern to illustrate that the cause or nature of the past claims is such that similar or continued future claims are likely. The connection also must be clearly indicated in the notice of nonrenewal as the plain language of § 3051 requires an insurer to be “explicit” in stating its reason for nonrenewal.

The notice at issue informed the insured only that the reason for nonrenewal was her loss frequency. Such a reason alone is not sufficient to prevail in a nonrenewal action. Nothing in the notice indicates that the basis for the action was the insured’s failure to take measures to prevent or mitigate the losses as argued by the company in its testimony. Because the company failed to include this asserted reason in the notice, it cannot be relied upon to support this nonrenewal action. The notice does not meet the requirements of § 3051 to nonrenew the policy at issue.

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