Appeal from the Order of the Insurance Commissioner in case of In the Matter of: Donna R. Dorman and Lititz Mutual Insurance Company, Docket No. P77-6-2.
Donald W. Bebenek, with him John E. Kunz, and Meyer, Darragh, Buckler, Bebenek & Eck, for petitioner.
Kathleen Walsh Cramer, Assistant Attorney General, with her John H. Isom, Assistant Attorney General, and Robert P. Kane, Attorney General, for respondent.
Judges Crumlish, Jr., Blatt and MacPhail, sitting as a panel of three. Opinion by Judge Crumlish, Jr.
Lititz Mutual Insurance Company appeals a decision of the Insurance Commissioner who in response to a complaint filed by one of its insureds, Donna Dorman, determined that its attempted non-renewal of her homeowner's policy violated the standards of the Unfair Insurance Practices Act.*fn1
At issue is whether Dorman's acquisition of a large dog constitutes a substantial increase in the insured hazard so as to justify Lititz's refusal to renew her policy.
The essential facts are undisputed. Dorman had sustained two burglary losses since she first obtained homeowner's coverage from Lititz in May, 1976. After the second burglary, a claims adjuster visited Dorman's home to investigate the loss and discovered she had obtained a dog which is at least part German Shepherd. Thereafter, Lititz mailed her a "Notice of Cancellation or Refusal to Renew" which stated that her coverage would terminate on May 3, 1977, and which gave the following explanation:
Increase in hazard: Due to loss frequency Insured has purchased German Shepherd guard dog which creates potentially dangerous liability exposure.
Lititz took this action pursuant to a directive it had sent to all its agents and which had been in effect since April, 1971:
NO NEW or RENEWAL Homeowners policies will be acceptable for an insured who owns a potentially fierce or unmanageable dog. This restriction applies to any dog of a size and/or disposition whose breed or mixture represents the possibility of attack upon human being. Past cases have involved German ...