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Joseph Reynolds v. Employers Fire Insurance Company
Docket No. INS-06-2016, Decision Issued April 4, 2006.

The insured requested a hearing following receipt of a notice of cancellation of commercial package insurance coverage citing misrepresentation of the risk as the reason for cancellation. At hearing, the company maintained that the insured never informed the agent that a portion of the building at issue had been condemned. The insured maintained that the building has not been condemned and that he clearly described the condition of the building to the agent.

Held: For the insured. Title 24-A M.R.S.A. §§ 2908(2)(B), 3007(2)(B) permit cancellation of the subject policy for “fraud or material misrepresentation made by or with the knowledge of the named insured in obtaining the policy, continuing the policy or in presenting a claim under the policy.” In order to establish that material misrepresentation occurred, the company must demonstrate what representations the insured made about the property. However, the company did not provide a signed copy of the application nor an affidavit from the agent attesting to the information conveyed during the application process or subsequent to the assumption of the risk. The insured further testified that he clearly and accurately described the condition of the building to the agent.

The company must also establish that the condition exists. In the present case, the company did not provide a copy of the inspection report or other credible evidence to demonstrate the alleged condition. The insured further denied under oath that any portion of the building has been condemned. Accordingly, the company has failed to demonstrate that the requirements of §§ 2908(2)(B), 3007(2)(B) have been met.

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