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Daniel & Linda Hill v. Countryway Insurance Company
Docket No. INS-07-2080, Decision Issued August 31, 2007.

The insured requested a hearing following receipt of a notice of farmowner’s insurance policy cancellation citing the failure to comply with loss control recommendations and an increase in hazard as the reasons for cancellation. At hearing, the company representative maintained that loss control recommendations had been discussed with the insured. The insured noted the repairs made and disputed the necessity of one recommendation.

Held: For the insured. Title 24-A M.R.S.A. § 3007(2)(D) permits policy cancellation for the failure to comply with reasonable loss control recommendations. In order to successfully utilize § 3007(2)(D), the insurer must demonstrate what recommendations it conveyed to the insured, that the recommendations were reasonable, and that the insured failed to comply. In this case, the company provided little information on what it required the insured to fix and why. The insured provided specific information on the recommendations where repairs had been made. The company failed to explain the reasonableness of the recommendation disputed by the insured. The company has not demonstrated that the insured failed to comply with reasonable loss control recommendations.

The notice of cancellation inferred that an increase in hazard was also a reason for cancellation. Section 3007(2)(C) permits cancellation for a “substantial change in the risk which increases the risk of loss after insurance coverage has been issued or renewed...” In the present case, the company did not establish that any change in the hazard occurred. Accordingly, the company has not met its burden of proof as required by § 3007(6) to prevail in this cancellation action.