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Dorothy Finnemore v. Patrons Oxford Insurance Company
Docket No. INS-07-2037, Decision Issued June 11, 2007.

The insured requested a hearing following receipt of a notice of homeowners insurance coverage nonrenewal citing a physical change in the property and the lack of occupancy as the reasons for nonrenewal. At hearing, the company maintained that the home was uninhabitable and uninsurable in its present state and that it presents a liability hazard. The insured’s daughter testified as a witness at the hearing and denied that any increased risk existed.

Held: For the company. An insurer may decline to renew 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.

The company’s notice articulated two reasons for nonrenewal: 1) a physical change in the insured property which results in the property becoming uninsurable, which relies upon § 3049(5); and 2) the increase in hazard due to the lack of occupancy, which relies upon the general standard of a good faith reason related to the insurability of the property.

There is no disagreement that a loss rendered the home uninhabitable and unoccupied. Thus, there is a physical change in the property. This home remains a total loss and it will not be replaced until additional money has been received from another party. It has no insurable value, and therefore, it is uninsurable. The company has demonstrated that one of its nonrenewal reasons complies with § 3049(5).

The dwelling also remains unoccupied. The company demonstrated that an unoccupied dwelling presents an increase in the hazards insured against. Accordingly, the company has demonstrated that its other nonrenewal reason is in good faith and related to the insurability of the property. Having met all other requirements, the company may decline to renew this policy.