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Clayton & Pauline Sargent v. Patrons Oxford Insurance Company
Docket No. INS-07-2078, Decision Issued August 31, 2007.

The insureds requested a hearing following receipt of a notice of homeowners insurance nonrenewal citing an increase in hazard due to ongoing legal disputes between the insureds and their neighbors. At hearing, the company presented evidence of a conflict between the insureds and their neighbors that escalated into a series of legal actions. The company representative argued that the policy at issue requires the company to defend the insureds from lawsuits regardless of the validity of the allegations. She testified that neither party has made any attempt to mitigate its behavior. The insureds maintained their innocence in the disputes.

Held: For the company. Title 24-A M.R.S.A. § 3051 permits policy nonrenewal for a reason that is a “good faith reason and related to the insurability of the property or a cancellation ground pursuant to section 3049.” Section 3051 further states that “loss record” by itself is not an acceptable reason for nonrenewal. A company must demonstrate that the loss is such that similar or continued future claims are likely and the connection must be clearly articulated in the notice of nonrenewal. Simply the fact that claims have occurred is insufficient to meet this standard.

In the present case, in the nonrenewal notice, the company not only identified the existence of two claims, but the insureds’ actions and the ongoing nature of the situation as the reason for nonrenewal. Thus, at least on its face, the notice is not deficient.

The evidence presented demonstrates the nature of the hostilities between the insureds and their neighbors. The company’s assertions that the allegations of harassment and related actions are likely to continue – and result in additional defense costs incurred by the company – are reasonable. The insureds have not demonstrated that they have taken any measures to ensure that claims against them from their neighbors will cease.

The company has demonstrated that its reason for nonrenewal is a good faith reason related to the insurability of the property. As the company has demonstrated compliance with all requirements of §§ 3051, 3054, this nonrenewal action is permitted.