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Diane Hammond, Elizabeth Melanson, and Eva Madden v. Dorchester Mutual Insurance Company

Held November 14, 2012 – Docket No. INS-12-2118
Decision Issued:  November 20, 2012

The named insured requested a hearing to contest the cancellation of homeowners insurance for a total loss.  The company argued that the loss was a physical change leaving the property uninsurable but provided no evidence of the condition of the property.

Held: For the insured. 24-A M.R.S. § 3049(5) allows cancellation for a physical change in the property that results in the property becoming uninsurable. The company must establish the physical change and also how the property is now uninsurable. The company must also establish that it complied with statutory notice requirements and that the cancellation reason it is relying upon is permitted by the policy contract. The company submitted no evidence, asserting that the total loss was undeniable, and therefore failed to establish that proper notice was given or that the policy contract allows cancellation for that reason. Although the fire loss that had occurred was a physical change in the property, the company cancelled the policy shortly after the loss, not allowing a reasonable time for it to be rebuilt. The site has been cleaned up and rebuilding is projected to be completed within a few weeks. The company failed to explain how the property is currently uninsurable as a result of that loss. It is unlikely that the Cancellation Control Act intended to permit insurers to cancel a policy as soon as a loss has occurred.

Last Updated: April 15, 2014