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Kendall & Karen Hatch v. MMG Insurance Company
Docket No. INS-07-2077, Decision Issued October 9, 2007.

The insured requested a hearing following receipt of a notice of homeowners insurance policy cancellation citing the failure to comply with loss control recommendations as the reason for cancellation. At hearing, the company discussed the loss control recommendations. The company admitted that it did not definitively know the status of the repairs but emphasized that the insureds did not provide the requested documentation of compliance. The company argued that the insureds’ absence at the hearing in conjunction with the lack of evidence of repairs implies that that the insureds have not complied with the recommendations.

Held: For the insured. 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.

In order to sustain a cancellation action for the insured’s failure to comply with reasonable loss control recommendations, a company must successfully demonstrate that it issued clear and reasonable recommendations to the insured, that the requisite time period for compliance has elapsed, that the insured failed to comply, and finally, that it provided timely notice of the intent to cancel.

This policy does not mirror the statute, however. 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.” To comply with the wording in the policy, the company issued a notice of cancellation in conjunction with the loss control recommendations in order to provide the policy’s requisite 90 compliance days after receipt of the notice of intent to cancel. The cancellation effective date is after the 90-day compliance period.

The company demonstrated that the required recommendations were developed directly from a qualified source and thus, they are reasonable. However, the company did not offer affirmative testimony or evidence establishing that the loss control recommendations had not been addressed. Instead, the company relied upon the insureds’ failure to provide it with documentation of compliance and their lack of appearance at the hearing.

Maine law places the burden of proof upon the insurer in this proceeding. 24-A M.R.S.A. § 3054. Although the company has successfully demonstrated that the insureds had at least 90 days in which to comply with reasonable recommendations after receiving notification of intent to cancel, the Superintendent will not infer that the insureds have not addressed the recommendations simply because the insureds failed to appear at this proceeding or provide documentation of completion to the company. Instead, the company must have proof that the insureds failed to comply with the recommendations by inspecting or attempting to inspect the property or by otherwise obtaining timely information on the status of the repairs at the end of the 90-day period. Based on the evidence presented at the hearing, the Superintendent hereby concludes that the company has not established adequate grounds for policy cancellation.

 

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