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John Stone v. Electric Insurance Company
Docket No. INS-07-2072, Decision Issued September 7, 2007.

The insured requested a hearing following receipt of a notice of homeowners insurance nonrenewal citing the insured’s loss history as the reason for nonrenewal. At hearing, the company testified that the home no longer meets the company’s underwriting guidelines. The insured argued that he has rectified the problem causing the losses.

Held: For the insured. Title 24-A M.R.S.A. § 3051 states 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 requires the stated reason to be explicit and provides that “loss record” by itself is not a sufficient reason for nonrenewal. In the present case, the stated reason for nonrenewal simply informed the insured that the company declined to renew his policy because he had losses, not that he had similar losses due to a condition of the property. Therefore, the reason given to the insured was insufficient.

To support its action, a company must demonstrate a nexus or pattern to illustrate that the cause or nature of the past claims is such that similar or continued future claims are likely. Although the company articulated a condition indicative of continuing losses, the insured demonstrated that he has addressed the condition.

In addition, the company’s argument was that, as a result of the losses, the home no longer meets the company’s underwriting guidelines. Section 3054 states that the insurer’s statement that the risk does not meet the insurer’s underwriting guidelines is not sufficient proof or evidence to sustain a nonrenewal action.

Finally, section 3051 requires an insurer to provide a minimum of 30 days notice of the nonrenewal action to the insured before the expiration of the policy. A post office certificate of mailing is conclusive proof of receipt of the notice. § 3051. The company did not produce the post office certificate of mailing at the hearing nor within the additional time period allowed by the hearing officer. Without the post office certificate of mailing, compliance with the notice requirements of § 3051 cannot be determined. The Superintendent hereby concludes that the company has not established that it may decline to renew this policy.