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Milton & Judith Baird v. State Farm Fire and Casualty Company
Docket No. INS-06-2130, Decision Issued November 28, 2006.

The insured requested a hearing following receipt of a notice of homeowners insurance nonrenewal citing a change in the property that has resulted in the property becoming uninsurable as the reason for nonrenewal. At hearing, the company discussed the change and the insured discussed the company’s allegations.

Held: For the insured. Under 24-A M.R.S.A. § 3051, “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 3049(5) allows cancellation for a physical change in the property that renders the property uninsurable. The company’s reason for nonrenewal mirrored the language of section 3049(5), and accordingly, that is the nonrenewal standard applicable to this case. In order to prevail, the company must demonstrate the occurrence of a physical change that has rendered the property uninsurable. The company did not present any argument that the property is now uninsurable, and thus, it did not prove one required element of section 3049(5).
Even if the standard of “a good faith reason and related to the insurability of the property” applied, the company’s action still lacks. The company did not disclose which risks were impacted by the condition nor did it explain the relationship to insurability. Thus, the company did not demonstrate how its reason for nonrenewal is related to the insurability of the property.