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Ralph Lariviere dba Custom & Collision v. Middlesex Mutual Assurance Company
Docket No. INS-07-2118, Decision Issued January 7, 2008.

The insured requested a hearing following receipt of a notice of cancellation of commercial garage insurance citing the failure of the risk to meet underwriting guidelines and the insured’s unwillingness to sign a driver exclusion as the reasons for cancellation. At hearing, the company argued that it issued a renewal policy with the expectation that the insured’s daughter would be excluded from the policy. The representative maintained that the insured misled the company into renewing the policy but the representative was unable to confirm when the agent had conveyed the exclusion requirement to the insured. The insured disputed that he had been notified of the company’s requirement in time for nonrenewal. He stated that he informed the agent that he could not exclude his daughter as soon as he became aware of the issue.

Held: For the insured. Title 24-A M.R.S.A. § 2908(2)(B) permits cancellation of the subject policy for “fraud or material misrepresentation made by or with the knowledge of the named insured in obtaining the policy, continuing the policy or in presenting a claim under the policy.” Section 2908(2)(C) permits cancellation for a “[s]ubstantial change in the risk which increases the risk of loss after insurance coverage has been issued or renewed, including, but not limited to, an increase in exposure due to rules, legislation or court decision.”

The company was not able to provide any evidence relating to when the agent had notified the insured of the driver exclusion requirement for renewal. Thus, the allegation that the insured engaged in fraud and material misrepresentation resulting in policy renewal is unsupported.

The argument that a substantial change in the risk that increases the risk of loss has occurred since the policy has renewed is also unpersuasive. The insured’s daughter as an insured driver and her driving record are not changes to the risk since the policy renewed. This cancellation action is not approved.