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Daniel and Sarah McCue v. Pacific Indemnity Company

Docket No. INS-06-2096, Decision Issued September 25, 2006.

The insured requested a hearing following receipt of a notice of homeowners insurance nonrenewal citing two losses and an increased likelihood of future loss as the reason for nonrenewal. At hearing, the company maintained that the insured’s loss history has a bearing upon the condition of the property, but it did not identify any unfavorable condition. The company further argued that based upon its own statistics, the property has been identified as likely to incur future loss. The insured disputed the company’s allegations.

Held: For the insured. The applicable statute, 24-A M.R.S.A. § 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.” Section 3051 specifically states that an insured’s 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 or the past claims is such that similar or continued future claims are likely and the connection must clearly be indicated in the notice of nonrenewal. Simply the fact that claims have occurred does not by itself meet this standard.

In support of its reason for nonrenewal, the company testified only that the loss history indicates that future losses are likely. The losses at issue appear to be unrelated, and no connection between them has been articulated. The company has not demonstrated that its reason for nonrenewal is related to insurability.