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Peter & Bernadette Traverso v. Metropolitan Property & Casualty Insurance Company

Held June 10, 2008 - Docket No. INS-08-2050
Decision Issued: June 16, 2008

Metropolitan issued a notice of nonrenewal of the insureds’ homeowners policy because of two losses that had occurred. The company did not offer any reason relating the losses to the insurability of the property.

Held: For the insured. Section 3051 provides that the “reason for nonrenewal must be a good faith reason and related to the insurability of the property or a ground for cancellation pursuant to section 3049.” It also states that “loss record” by itself is not an acceptable reason for nonrenewal. A company must demonstrate a nexus or pattern to illustrate that the cause or nature of past claims is such that similar or continued future claims are likely. Because section 3051 also requires that the reason for nonrenewal be explicit, the company must clearly identify in its notice the connection between the claims and its reason for anticipating that claims will continue.

In the present case, the company identified the occurrence of two claims as the reason for nonrenewal, with no further explanation. The losses appear to be distinct from one another and the company articulated no reason in the notice of nonrenewal or the hearing for the nonrenewal action other than the fact that claims have occurred.