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Lorraine Crandlemire v. Standard Fire Insurance Company

Docket No. INS-06-2058, Decision Issued June 27, 2006.

The insured requested a hearing following receipt of a notice of homeowners insurance policy nonrenewal citing unfavorable conditions of the property as the reason for nonrenewal. At hearing, the company alleged that a recommendation letter had been sent to the insured, and the insured had been allowed several extensions of time for the work to be completed. The company identified the conditions it believed were relevant. The insured’s son testified about his responses to the recommendations and the conditions cited.

Held: For the insured. The applicable statute, 24-A M.R.S.A. § 3051, provides that the “reason for nonrenewal must be a good faith reason and related to the insurability of the property or a ground for cancellation pursuant to section 3049.”
Section § 3051 also requires that the reason or reasons for nonrenewal accompany the nonrenewal notice and be explicitly stated. Accordingly, between the construction of the two paragraphs contained in the nonrenewal notice and the choice of words, the company informed the insured that the nonrenewal action was brought because of conditions in one area only. Therefore, only proof of the problems cited by the notice in that one area may provide the basis for nonrenewal of this policy.
One of the two cited conditions in the area at issue has been fixed. The other condition could not be discerned from the photographs presented, and the insured’s son testified as to his confusion about what the company meant. The company argued that other unfavorable conditions exist on the property but again, none of those issues were encompassed by the language in the nonrenewal notice. Based upon the evidence presented at hearing, the company has not supported its reason for nonrenewal.