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Jeanne Bradley v. State Farm Fire & Casualty Company
Docket No. INS-06-2151, Decision Issued January 23, 2007.

The insured requested a hearing following receipt of a notice of homeowners insurance coverage nonrenewal citing as the reasons for nonrenewal the insured’s loss history and the company’s inability to confirm that measures were taken to prevent past loss or have been subsequently taken to prevent future loss. At hearing, the company discussed the losses and maintained that they are a consequence of the insured’s negligence. The insured discussed the losses and disputed the company’s allegations.

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 states that “loss record” by itself is not an acceptable reason for nonrenewal. A company must demonstrate a nexus or pattern to illustrate that the cause or nature of past claims is such that similar or continued future claims are likely.
Contrary to the company’s testimony, the notice did not articulate the insured’s failure to take loss prevention measures as the reason for nonrenewal but the company’s inability to confirm that measures were taken. Thus, the company must demonstrate that its inability to confirm the implementation of preventative measures is a good faith reason related to the insurability of the property. However, the company did not present evidence on how its inability to confirm the implementation of measures impacts the insurability of the property.
Even if the notice were construed to give the insured’s actual failure to take preventative measures as a reason for nonrenewal, the company’s action still fails. For the losses mentioned in the notice, the company either did not articulate how the loss could have been prevented or it did not substantiate its allegations of the insured’s negligence in causing the loss. The company further did not identify what measures the insured could take to prevent to the loss from occurring again.
Although the company alleged the lack of repairs from one loss, it is unclear how repairing the items noted in the testimony would prevent a similar loss from occurring in the future. If the company is alleging a condition resulting from inadequate cleanup of one loss, the notice did not mention that resulting condition. The Company further was unable to show that the losses were causally related and that future such claims are likely. The company has failed to demonstrate that either of its two reasons for nonrenewal was in good faith and related to the insurability of the property.