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Larry & Candice Jipson v. MMG Insurance Company
Docket No. INS-06-2129, Decision Issued November 20, 2006.

The insured requested a hearing following receipt of a notice of homeowners insurance policy cancellation citing the failure to comply with loss control recommendations as the reason for cancellation. At hearing, the company maintained that a loss control recommendation letter had been issued that provided a deadline for compliance. The insured discussed the recommendations and the responses to them.

Held: For the insured. Although the Maine Property Insurance Cancellation Control Act, in 24-A M.R.S.A. § 3049(10), permits cancellation if the insured fails to comply with reasonable loss control recommendations within 90 days after notice from the insurer, this particular policy does not mirror the statute. Instead, the policy permits cancellation for “your failure to comply with reasonable loss control recommendations within 90 days after you receive from us our intent to cancel the policy.” Under the wording of the policy, the 90-day period to comply with the recommendations starts after the insured receives notice of the company’s intent to cancel the policy. An insurer is free to establish terms in its policy that are more favorable to the insured than what is provided in the statute. However, the insurer is then bound by such terms and unable to rely upon the actual statutory language in a cancellation action.
The loss control recommendation letter advised the insured of matters that needed to be completed by a certain date. It then stated in a separate sentence that photographs of the home must be received before that date to avoid cancellation of the policy. The letter did not state that failure to comply with the recommendations by the given date would, in fact, result in cancellation of the policy.
The company’s intent to cancel the policy was conveyed to the insured by the cancellation notice. Due to the policy language, compliance with the loss control recommendations cannot be assessed until the 90-day period allowed in the contract has passed. Therefore, this cancellation action is premature.