Maine law specifies how, when and why an insurer may cancel or non-renew an homeowner's policy. For any termination action, the insurer must send written notice to the named insured and provide the correct amount of notice. Except for initial underwriting cancellations, the notice must include the reason and also notice of the right to request a hearing.
Cancellation
When a policy is first written with an insurer, the insurer may cancel for any reason as long as you receive notice of cancellation before the 90th day of the policy. This is the initial underwriting period.
Once the policy has been in effect for 90 days (120 days if it covers a seasonal or secondary home), or is a renewal policy, there are a number of specific grounds for which an insurer may cancel, including:
- Nonpayment of premium - At any time an insured does not pay the amount required by its due date, the insurer can cancel for nonpayment of premium.
- Fraud or material misrepresentation
- Violation of terms or conditions of the policy
- The property is vacant and custodial care is not maintained.
- Presence of a trampoline - You have 30 days to remove it after the insurer tells you the policy will be cancelled if it is not removed.
- Presence of an unfenced swimming pool - You have 30 days to bring the pool into compliance with standards in 22 M.R.S. § 1631 after being notified of the insurer's intent to cancel the policy.
- A loss caused by a dog bite unless the dog is no longer on the premises.
- Failure to comply with reasonable loss control recommendations within 90 days.
The full list of allowable cancellation grounds is at http://www.mainelegislature.org/legis/statutes/24-a/title24-Asec3049.html
These grounds may also be used for nonrenewal of a policy.
Except for nonpayment cancellations which require 10 days' notice before the cancellation date, all other reasons require at least 20 days' notice.
Non-Renewal
In addition to the statutory grounds for cancellation, an insurer may also nonrenew a homeowners policy for a good faith reason that is related to the insurability of the property. This generally involves a situation or condition that may increase the risk of a loss that is covered by the policy.
The insurer must provide an explicit reason to clearly inform you of why it does not want to renew, and not simply cite "underwriting reasons" or "loss record."
Hearings
When a policy is first written with an insurer, the insurer may cancel for any reason as long as you receive notice of cancellation before the 90th day of the policy. This is the initial underwriting period.
For all other termination actions, the insured may request a hearing before the Superintendent of Insurance to contest the reason for cancellation or nonrenewal. You must request the hearing within 30 days after you received the notice of cancellation or nonrenewal. The request must be received by the Bureau of Insurance during the hours that it is open.
For more information about hearings, please see our frequently asked questions.