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David and Kelley Sayer v. Patrons Oxford Insurance Company

Held March 7, 2008 - Docket No. INS-08-2014
Decision Issued: March 18, 2008

The insured requested a hearing regarding the company’s nonrenewal of a homeowners policy for an increase in hazard due to the lack of owner occupancy. The company’s notice referenced the property’s susceptibility to many specific losses covered by the policy as a result of the lack of occupancy by the insured. At the hearing, the company asserted that there is an increased risk of loss due to the insured not being resident in the premises to either prevent losses or mitigate losses that do occur. The insured argued that adequate custodial care is maintained, eliminating any basis for termination of the policy.

Held: For the company. Although the Cancellation Control Act requires an insurer to demonstrate both vacancy and lack of custodial care in order to terminate a policy mid-term, the nonrenewal standard in the absence of statutory cancellation grounds is a good faith reason related to the insurability of the property. The company argued that the custodial care does not substitute for the daily occupation of the dwelling by the insured, and the lack of owner occupancy increases the susceptibility to many covered perils. As the company has demonstrated that the lack of owner occupancy is related to the insurability of the property, the statutory standard for nonrenewal has been met.