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Kimberlee Benson v. MMG Insurance Company

Docket No. INS-06-2100, Decision Issued October 11, 2006.

The insured requested a hearing following receipt of a notice of automobile insurance cancellation citing the failure of the risk to meet new business selection criteria as the reason for cancellation. At hearing, the company maintained that the cancellation was due to the license suspension of a co-owner of one of the insured vehicles. The insured argued that the vehicle co-owner does not drive any of the insured vehicles.

Held: For the insured. The Maine Automobile Cancellation Control Act, 24-A M.R.S.A. §§ 2911-2924, provides that except for a policy that has been in effect for less than 60 days at the time the notice of cancellation is received by the insured, the reason for cancellation must accompany the notice of cancellation. The cancellation notice at issue was deemed received on the fifth calendar day after mailing pursuant to 24-A M.R.S.A. § 2915, which was also the 60th day of the policy. Thus, this cancellation action falls within the confines of the Cancellation Control Act and the cancellation reasons are limited to those in section 2914. Section 2914(4) permits policy cancellation for certain drivers’ license suspensions that occur during the policy term or if the policy is a renewal, during its term or the 180 days immediately preceding the policy effective date.

The cancellation reason given in the notice of cancellation is not a permitted cancellation ground under § 2914, nor does it appear in the policy contract as one of the permitted cancellation grounds. There is no correlation between the reason given in the cancellation notice and the cancellation ground that the company testified is the basis for the action. Thus, the company did not give proper notice of its reason for cancellation.

Even if the company’s notice had articulated the license suspension as the reason for cancellation, the company’s action still fails. The license suspension occurred prior to the effective date of the policy. Only suspensions occurring during the policy term or, if the policy is a renewal, during its term or the 180 days immediately preceding its effective date may provide grounds for cancellation. 24-A M.R.S.A. § 2914(4). Therefore, the suspension cited by the company may not be used to cancel this policy.