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Catherine Lake v. Vermont Mutual Insurance Company
Docket No. INS-06-2156, Decision Issued February 2, 2007.

A request for hearing was made on behalf of the insured following receipt of a notice of homeowners insurance nonrenewal citing the failure of the property to meet company criteria and the lack of owner occupancy as the reason for nonrenewal. At hearing, the company maintained that the home is not owner occupied and provided documentation regarding the occurrence of a loss.

Held: For the company. 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.” The failure of the risk to meet underwriting criteria alone is not an adequate reason for policy nonrenewal under § 3051. However, in this case, the company did not rely upon underwriting guidelines or other such standards to support the reason for nonrenewal but provided evidence of a loss resulting from the lack of owner occupancy. More losses of this nature could happen. The company has shown that its reason for nonrenewal is in good faith and related to the insurability of the property.