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Alan & Valerie Fenderson v. Hingham Mutual Fire Insurance Company
Docket No. INS-06-2117, Decision Issued November 16, 2006.

The insureds requested a hearing following receipt of a notice of homeowners insurance cancellation citing an increase in hazard and the involvement of insureds’ dogs in an incident. At hearing, the company presented several witnesses and argued that the insureds’ dogs caused extensive damage and one dog attacked a person. The insureds disputed that their dogs caused any damage. They also maintained that the person who was attacked provoked the incident.

Held: For the company. Title 24-A M.R.S.A. § 3049(9) permits cancellation for a dog bite unless the insured removes the dog after notice of cancellation or nonrenewal is received. However, the evidence demonstrates that the language of § 3049(9) is not included in the policy and an insurer is precluded from relying on cancellation grounds that are not contained in the policy. See Bureau of Insurance Rule Chapter 355 § 7(C)(2).
For similar reasons, the company may not rely upon § 3049(4)(A), effective July 30, 2004, which permits cancellation upon the discovery of “negligent acts or omissions by the insured substantially increasing any of the hazards insured against.” The earlier version of § 3049(4), which corresponds to the language in the policy, required only that the acts or omissions substantially increasing any of the hazards insured against be “grossly negligent.” Therefore, in order to prevail, the company must demonstrate not only a substantial increase in hazard but also grossly negligent acts or omissions by the insureds.
The policy in question includes coverage for damages for which the insureds are legally liable. It also includes coverage for medical payments for bodily injury occurring to a person off the insured location if caused by an animal owned by or in the care of an insured. Accordingly, liability for personal injury caused by either of the insureds’ dogs, whether on or off the insured premises, is one of the hazards insured against.
The evidence indicates that one of the insureds’ dogs bit a person. The insureds’ knowledge of the dog’s behavior is relevant to both their strict liability and their liability for common law negligence. See Henry v. Brown, 495 A.2d 324, 326-327 (Me. 1985). Because the incident at issue establishes the insureds’ knowledge of the dog’s potential for dangerous behavior, the risk of civil liability in the event of a subsequent occurrence is increased. Because the risk of injury caused by the dog is within the scope of the policy, the heightened risk of liability in the event of a second incident represents a substantial increase in one of the hazards insured against.
The next question is whether the insureds are engaged in grossly negligent acts or omissions. Simply the fact that that the insureds continue to maintain the dog as their pet, by itself, does not rise to the level of gross negligence. However, with no measures to prevent the dog from becoming loose again, gross negligence exists. The company has demonstrated that the insureds are engaged in grossly negligent acts that substantially increase a hazard insured against. Policy cancellation is allowed.