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Harold & Bertha Walker v. Vermont Mutual Insurance Company
Docket No. INS-07-2039, Decision Issued June 11, 2007.

The insured requested a hearing following receipt of a notice of dwelling fire insurance policy cancellation citing the failure to comply with loss control recommendations as the reason for cancellation. At hearing, the company discussed its loss control recommendations. The insureds discussed their responses to the recommendations.

Held: For the insured. Although the Maine Property Insurance Cancellation Control Act, in 24-A M.R.S.A. § 3049(10), permits cancellation if the insured fails to comply with reasonable loss control recommendations within 90 days after notice from the insurer, this policy does not mirror the statute. Instead, the policy permits cancellation for “your failure to comply with reasonable loss control recommendations within 90 days after you receive from us our intent to cancel the policy.” Under the wording of the policy, the 90 day period in which the insured must comply with the recommendations starts after the insured receives the company’s intent to cancel the policy. An insurer is free to establish terms in its policy that are more favorable to the insured than the statute. However, the insurer is then bound by such terms and unable to rely upon the actual statutory language in a cancellation action.

The company’s intent to cancel the policy was conveyed by the cancellation notice. The policy gives the insured 90 days to comply with the recommendations after receiving notice of the company’s intent to cancel the policy, but the full 90 days has not yet passed. Therefore, this cancellation action is premature.

In addition, the company did not explain why its recommendations were reasonable. It simply stated that certain issues were of “concern” and maintained that other issues were a liability problem. The policy, however, does not provide liability coverage.