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Arch failed to properly notify the policyholder of renewal



Maine's Supreme Court overturned a lower court ruling on Tuesday, claiming that an Arch Capital Group Ltd. entity did not adequately inform a wood pellet operator that it had not renewed its coverage in connection with a $ 15 million fire payment. 19659002] Arch Capital Unit Arch Specialty Insurance Co. had issued Corinth Maine-based Corinth Pellets LLC a surplus policy covering property losses, business interruptions and additional costs for a first period January 2017 to January 2018, according to the unanimous decision of the Supreme Court of Maine in Portland Corinth Pellets, LLC v Arch Specialty Insurance Co. et al.

The coverage was then extended by three consecutive three-month periods until 1

8 September 2018, according to the decision.

In early September 2018, an agent for Scarborough, Maine-based broker Varney Agency Inc. Corinth warned that Arch would not renew the policy after its expiration on September 18, the decision said.

"The agent assured Corinth that he was in the process of finding a new insurance policy" and that there was no need for Corinth to do anything in the end, the decision said.

However, on September 17, Varney's agent Corinth announced that it could not provide a "fixed quote" from an issuer, and Varney did not receive replacement property insurance for Corinth before September 19, 2018, the decision said.

"Although Corinth knew on September 17, 2018, that Arch did not intend to renew the policy, Arch did not in any way give a written notice of intent to Corinth or Varney," the decision states. On September 19 – the day after the final expiration date of the Arch policy – Corinth's wood pellet factory suffered a catastrophic fire that caused approximately $ 15 million in damage, which met the covered definition of a covered loss under the Arch policy.

Arch declined to participate in the investigation into the cause and origin of the fire and eventually denied coverage on the ground its coverage had ended on 18 September.

Corinth brought an action against Varney and Arch in Maine District Court in Biddeford, and Varney filed a cross-case against Båge. Arch moved to dismiss both claims. The Maine lawyer and insurance inspector opposed Arch's proposal for dismissal.

In April 2020, the district court granted Arch's claim to dismiss Corinth's claims against Arch and Varney's cross – claims.

Arch had argued that under state law, an insurance company must notify an insured in advance when the insurance is both canceled and not renewed, and all parties acknowledged that Arch had not terminated the policy. The lower court ruled that since this was the case, the insurer had not violated state law and dismissed the case against Arch. State law "requires insurers to notify in advance their intention either to cancel an insurance or not to renew an insurance," it said.

This is supported by the legislative history of the law, which provides that surplus. Line insurers must issue a 14-day "prior notification of non-renewal as a policyholder protection measure", was mentioned in the decision, as it twisted the lower court and reconsidered the case for further negotiations.

Varney's attorney Brett R. Leland, a partner with Verrill Dana LLP in Portland, said in a statement, "We are very pleased with the Maine Supreme Court's decision on this important first impression issue. It will provide important guidance not only to insurers in Maine but across the country and will result in more protection for high risk insureds.

Corinth and Arch's attorneys did not respond to a request for comment. Catalog

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