An Act To Amend the Laws Relating to Property Insurance
Maine Legislature, Session 121, LD 1853
Committee: Insurance and Financial Services
Sponsors: TREAT, PERRY, DAMON, HALL, LAFOUNTAIN, MAYO, CANAVAN, COLWELL, O'NEIL, PINGREE

Legislative Document 
No. 1853 
S.P.692 
In Senate, February 12,2004 
An Act To Amend the Laws Relating to Property Insurance 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Senator TREAT of Kennebec. (GOVERNOR'S BILL) 
Cosponsored by Representative PERRY of Calais and 
JOY J. O'BRIEN 
Secretary of the Senate 
Senators: DAMON of Hancock, HALL of Lincoln, LAFOUNTAIN of York, MAYO of 
Sagadahoc, Representatives: CANAVAN of Waterville, Speaker COLWELL of Gardiner, 
O'NEIL of Saco, PINGREE of North Haven. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec.t. 24·A MRSA §305t, as amended by PL 1979, c. 347, §12, 
is further amended to read: 
§3051. 
Rotice of intent 
Ne An insurer sha~~ may not fail to renew a policy except by 
notice to the insured as provided in this subchapter. A notice of 
intention not to renew sha~~ is not ae effective unless received 
by the named insured at least 30 days prior to the expiration 
date 
of 
the 
policy. 
A 
pes~-effiee--aepa~tmeB~ post 
office 
certificate of mailing to the named insured at his the named 
insured's last known address shaJ:J:--ae is conclusive proof of 
receipt on the 3rd calendar day after mailing. The reason 
sha~~ 
I!lY.§.t. accompany the notice of intent not to renew, together with 
notification of the right to apply for 
a 
hearing before the 
Superintendent of Insurance within 30 days as provided. 
The reason or reasons for the intended nonrenewal action 
sha~~ must accompany the notice of intent not to renew and the 
reason or reasons 
sha~~ must be explicit. Explanations such as 
"underwriting reasons," "underwriting experience," "loss record," 
"location of risk," "credit report" and similar insurance terms 
are not by themselves acceptable explanations of an insurer's 
intended nonrenewal of a policy insuring property of the kind 
defined in section 3048. 
If the intended nonrenewal is based in 
whole or in part on the reason that repairs are necessary to 
maintain the insurability of the property, then the policy may be 
nonrenewed in accordance with this subchapter only if prior to 
issuing the notice of 
intent not 
to 
renew 
the 
insurer 
has 
provided the insured with a detailed written explanation of the 
necessary repairs, 
the insurer has permitted a 
m~n~mum of 
months for the insured to complete the repairs and the insured 
has failed to complete the repairs. 
The reason for nonrenewal 
sha~~ must be a good faith reason and rationally related to the 
insurability of the property. 
This section sha~~ does not apply: 
1. 
If the insurer has manifested its willingness to renew; 
or 
2. 
If the insured fails to pay any premium due or any 
advance premium required by the insurer for renewal. 
Sec. 2. 24·A MRSA §3054, as amended by PL 1989, c. 172, §8, 
is further amended to read: 
§3054. 
Bearing before Superintendent of Insurance 
Page l-LR2725( 1) 
ARy A named insured who has received a statement of reason 
for cancellation, or of reason for an insurer's intent not to 
renew a policy, may, within 30 days of the receipt of a statement 
of 
reason, 
request 
a 
hearing 
before 
the 
Superintendent 
of 
Insurance. The purpose of this hearing saa.J..J.--ae II limited to 
establishing the existence of the proof or evidence used by the 
insurer in its reason for cancellation or intent not to renew. 
The burden of proof of the reason for cancellation or intent not 
to renew saa**-ae-apeR ~ 
the insurer. 
In order to prove that 
a reason for nonrenewal is a good faith reason and rationally 
related to the insurability of the property, the insurer must 
provide sufficient evidence to demonstrate a relationship between 
the reason for nonrenewal and an increased risk to insuring the 
property. 
A statement from the insurer that the risk does not 
meet 
the 
insurer's 
underwriting 
guidelines 
alone 
is 
not 
considered sufficient evidence. 
The superintendent shall adopt 
rules for carrying out this section. The superintendent saa;!,;!, 
aaye-~~~~~~-te may order the policy to continue in effect 
both pending and, if the superintendent finds in favor of the 
insured, subsequent to a hearing. 
If the superintendent finds in 
favor of the insurer at a hearing, the superintendent may order 
the policy to remain in force for 14 days to allow the insured to 
obtain other coverage. 
Sec.3. 24·A MRSA §§3057, 3058 and 3059 are enacted to read: 
S3057. 
Actions related to age of dwelling prohibited 
An insurance company authorized to transact business in this 
State may not cancel or refuse to issue or renew a property 
insurance policy subject to this subchapter solely on the basis 
of the age of the dwelling and without consideration of the 
current condition of the property. 
S3058. 
Refusal based on previous owner's losses 
An insurance company authorized to transact business in this 
State may not refuse to issue a property insurance policy subject 
to this subchapter for the sole reason that a previous owner of 
the property submitted claims for losses to the property. 
S3059. 
Insurer valuation of property; increase in premium; notice 
1. 
Increase in valuation. 
If an insurer determines that 
the stated insured value of 
a 
property covered by 
a 
policy 
subject to this subchapter should be increased to depict more 
accurately its current value and the increase in valuation will 
result in an 
increase in premium for 
the 
policy, 
then 
the 
increase 
in the 
stated insured value 
and 
the 
corresponding 
increase in premium may 
be 
implemented only at the time of 
renewal. 
2. 
Notice. 
If an insurer increases the stated insured 
value in accordance with subsection 1, then the insurer must 
provide notice to the named insured on the policy at least 30 
days prior to the effective date of the renewal policy stating 
the reason for the increase in premium and the amount of premium 
increase associated with the increase in valuation. 
The notice 
also must state that upon written reg:uest by the named insured 
the insurer will disclose the specific reasons 
and specific 
property 
characteristics 
that 
contributed 
to 
the 
resulting 
increase in stated value. 
3. 
Exemptions. 
This section does not apply to routinely 
scheduled increases 
in valuation under 
the 
policy based 
on 
inflation or to reg:uests initiated by an insured to increase the 
stated insured value of a property. 
SUMMARY 
This bill prohibits an insurer from cancelling or refusing 
to issue or renew a property insurance policy subject to the 
Maine Revised Statutes, Title 24-A, chapter 41, subchapter 5, the 
so-called "Maine Property Insurance Cancellation Control Act," 
solely on the basis of the 
age of the dwelling. 
The bill 
prohibits an insurer from declining to insure a property subject 
to the Maine Property Insurance Cancellation Control Act on the 
basis that a previous owner of the property submitted claims for 
losses 
to 
the 
property. 
The 
bill prohibits 
insurers 
from 
increasing the stated value of a property insured under a policy 
governed by the Maine Property Insurance Cancellation Control Act 
at any time other than at renewal. 
The bill also requires 
insurers to provide notice to the named insured explaining the 
reason for any increase in premium associated with an increase in 
stated value and disclosing how an insured may obtain additional 
information that led to the increase in value. 
The bill requires 
an insurer to provide advance notice of needed property repairs 
to a policyholder and to allow for a reasonable time for the 
policyholder to complete the repairs before issuing a nonrenewal 
notice 
based 
on 
lack 
of 
necessary 
repairs 
for 
a 
property 
insurance 
policy 
subject 
to 
the 
Maine 
Property 
Insurance 
Cancellation Control Act. 
Finally, the bill amends the hearing 
section of the Maine Property Insurance Cancellation Control Act 
to clarify the proof required by an insurer to establish that its 
reason to nonrenew a policy is a good faith reason and rationally 
related to the insurability of the property.