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Bonnie Gibson v. Vermont Mutual Insurance Company
Docket No. INS-07-2007, Decision Issued April 17, 2007.

The insured requested a hearing following receipt of a notice of homeowners insurance policy cancellation citing the failure to comply with loss control recommendations. At hearing, the company discussed the concerns it had regarding the house. The insured maintained that weather conditions and uncooperative contractors had prevented completion of the repairs.

Held: For the insured. The Maine Property Insurance Cancellation Control Act, in 24-A M.R.S.A. § 3049(10), permits policy cancellation if the insured fails to comply with reasonable loss control recommendations within 90 days after notice from the insurer. However, the applicable cancellation ground in the insurer’s policy does not mirror the statute. Instead, the policy permits cancellation for “your failure to comply with reasonable loss control recommendations within 90 days after you receive from us our intent to cancel the policy.” Under the wording of the policy, the 90-day period to comply with the recommendations starts after the insured receives notice of the company’s intent to cancel the policy, not after receipt of the recommendations. An insurer is free to establish terms in its policy that are more favorable to the insured than what is provided by the statute. However, the insurer is then bound by such terms and unable to rely upon the actual statutory language in a cancellation action.

The cancellation notice was the company’s “intent to cancel the policy” from which the 90 days to complete the recommendations may be calculated. The proposed cancellation effective date was only 88 full days after the insured’s receipt of the cancellation notice. Therefore, the notice did not provide the required 90 days for completion of the recommendations. Thus, this cancellation action fails.