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Catherine Poulin Scovill & Harry Scovill v. Farm Casualty Insurance Company
Docket No. INS-06-2029, Decision Issued May 2, 2006

The insured requested a hearing following receipt of a notice of homeowners insurance coverage nonrenewal citing an increase in hazard due to the home being under construction for an indefinite period as the reason for nonrenewal. At hearing, witnesses on behalf of the company testified that the company has been unable to confirm the status of the construction and alleged that the insured refused to permit an inspection. The company further cited risks common to unoccupied properties as well as those for unfinished buildings. The insured denied receiving telephone messages relating to the status of the construction and also denied refusing to allow an inspection. The insured confirmed that construction has been complete since mid 2005.

Held: For the insured. In order not to renew a homeowner’s insurance policy, an insurer must comply with the requirements of the Property Insurance Cancellation Control Act, 24-A M.R.S.A §§ 3048-3059, which provides that the reason for nonrenewal must be a good faith reason related to the insurability of the property or a cancellation ground pursuant to 24-A M.R.S.A. § 3049. See 24-A M.R.S.A. § 3051. Section 3051 further requires that the reason or reasons for nonrenewal accompany the notice of nonrenewal and that such reason or reasons be explicit.
The company’s reason for nonrenewal specifically states that an increase in hazard due to construction is the reason for nonrenewal. Although the company argued some of the common hazards inherent to incomplete construction, it did not establish that the home is incomplete. To the contrary, the evidence on record indicates that the construction is, in fact, complete. The reason given in the nonrenewal notice does not encompass the concept of failure to permit an inspection, and thus, the company may not use the alleged lack of failure to permit an inspection as a reason for nonrenewal at hearing. The company also argued that it has been unable to determine occupancy of the home but again, the company’s nonrenewal notice does not provide this argument as a nonrenewal reason. Accordingly, as the company has not substantiated the reason given in its notice of nonrenewal, this nonrenewal action is denied.

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