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Jeffrey and June Kontio v. Liberty Mutual Fire Insurance Company

Held February 15, 2011 – Docket No. INS-11-2005
Decision Issued: February 25, 2011

The named insured requested a hearing to contest the nonrenewal of a homeowners policy for substantial change in risk: business on property. The evidence on the record shows that a separately insured auto repair business had been operating on the premises in a separate building, known to the insurer, for several years. An office for a second business operated by the insured, and also separately insured, was added to the existing business structure.

Held: For the insured. 24-A M.R.S.A. § 3051 allows nonrenewal for a reason that is in good faith and related to the insurability of the property. The company acknowledged its acceptance of and lack of concern for the existing business, but argued that the addition of the insurance office was a problem with its related customer foot traffic. Although the second business is a change, it was not found to be a substantial change in light of the existing auto repair business. In addition, the company failed to establish why the additional customer exposure is related to the insurability of the property, as it testified there is no coverage under the homeowners policy for any business.