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Larry & Belinda Samson v. State Farm Fire & Casualty Company
Docket No. INS-07-2031, Decision Issued May 7, 2007.

The insureds requested a hearing following receipt of a notice of homeowners insurance coverage nonrenewal citing the insureds’ loss history with respect to two losses and the company’s inability to confirm that preventative measures have been taken to prevent future loss. At hearing, the company discussed the losses. The insureds maintained that the two cited losses were different, the problem causing the first loss has been corrected, and the other loss could not have been anticipated.

Held: For the insureds. 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.

As the company’s nonrenewal notice specifically referenced only two losses, only those two losses will be considered in the evaluation of this nonrenewal action. The company asserts that it has been unable to confirm that the insureds have taken any steps to prevent or mitigate future loss. However, it did not indicate what attempts were made to obtain this information. The insureds testified that the problem leading to the first loss has been fixed and the second issue was unrelated to the first. Although the two losses resulted from the same type of cause, the losses occurred at different times and in different places. The claim file indicates that the most recent loss happened while the insureds were away on vacation, which was likely a contributing factor. The insureds are in the process of improving the area. As the first problem has been fixed and the insureds are taking appropriate steps to address the cause of the latest loss, there is no reason to believe that future similar claims are likely.