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Richard & Mary Fernald v. MMG Insurance Company
Docket No. INS-07-2008, Decision Issued March 7, 2007.

The insureds requested a hearing following receipt of a notice of homeowners insurance coverage nonrenewal citing certain conditions of the property, including the presence of a trampoline, as the reasons for nonrenewal. At hearing, the company submitted into evidence an inspection report of the property and accompanying photographs demonstrating certain of the conditions cited in the nonrenewal notice. The insureds presented more recent photographs of the property and argued that most of the conditions have been rectified.

Held: For the insureds. An insurer may nonrenew a policy for a good faith reason related to the insurability of the property or a cancellation ground pursuant to section 3049. 24-A M.R.S.A. § 3051. Section 3049(7) permits cancellation for the presence of a trampoline on the insured premises if the insured is notified that the policy will be cancelled if the trampoline is not removed and the trampoline, after notice, remains on the property 30 or more days after the date of the notice.
The only applicable cancellation ground, § 3049(7), fails to provide grounds for nonrenewal of this policy because the insureds denied having a trampoline and the company presented no photograph depicting a trampoline or testimony from the inspector that one was observed. The company’s evidence is insufficient to contradict the insureds’ sworn testimony that no trampoline exists. Since the company has not proven the existence of a trampoline and no other cancellation ground is applicable, the company must demonstrate that at least one of the reasons given for nonrenewal is a good faith reason and related to the insurability of the property to prevail in this action.
The company linked certain conditions cited in the notice to the insurability of the property but the insureds demonstrated that these issues have been fixed and thus, they no longer provide grounds for nonrenewal of this policy.
The two remaining conditions cited are problematic. With respect to one issue, the notice of nonrenewal was vague in violation of the explicitness requirement in § 3051. In addition, in light of the insureds’ testimony, there is nothing to correspond to the company’s definition of the objectionable condition on the insured property. With respect to the last issue, although photographs depict the condition, the company did not explain the relationship of that condition to the insurability of the property. The insureds testified that the condition does not present a risk of loss and the company did not dispute that contention. The company has not demonstrated that it may nonrenew this policy.