Appeal from the Order of the Pennsylvania Insurance Commissioner, in case of In re: Appeal of The Statesman Insurance Company, File No. 85-346-12437; Raymond and Elaine Johnson, Policy No. H0333073, Docket No. P85-9-9.
Fredric E. Orlansky, Jones, Gregg, Creehan & Gerace, for petitioner.
James A. M. Zarrella, Assistant Counsel, with him, Linda Wells, Chief of Litigation, and M. Hannah Leavitt, Chief Counsel, for respondent, Insurance Department.
James A. Dattilo, Barry, Dattilo & Fasulo, for respondents, Raymond & Elaine Johnson.
Judges MacPhail and Colins, and Senior Judge Narick, sitting as a panel of three. Opinion by Judge Colins.
[ 107 Pa. Commw. Page 420]
Statesman Insurance Company appeals an order of the Insurance Commissioner directing reinstatement of a homeowners' insurance policy issued to Raymond and Elaine Johnson.
The Johnsons own a one-story ranch-type house without a basement, the floors of which are concrete slab. There is a hot water heating system utilizing copper pipes beneath or within the concrete floor. Although
[ 107 Pa. Commw. Page 421]
the policy in question does not cover repairs or replacement of the plumbing or heating system, it does cover repairs and replacement of the concrete surrounding the pipes. Since 1974, the Johnsons filed four claims on their policy, three of which concerned damage from leaks in their heating system in 1978, 1982 and 1983. After the first claim was made, Statesman hired an engineer to examine the heating system. The engineer concluded that the system was inadequate and unfeasible and recommended that it should be replaced. Following receipt of the engineer's report, Statesman unsuccessfully sought to non-renew the policy on the basis that there had been an increase in the policy's hazard, and it subsequently authorized funds to repair and replace the concrete surrounding the leaking pipes after it received notice of the 1978 and 1982 claims. In December 1983, the Johnsons made a claim for additional leaks in the heating system, and Statesman paid for some, but not all, of the claims arising from the work attributable to the repair of the leaks.
Following the 1983 claim, the Johnsons, pursuant to Statesman's instructions, began to compile and present Statesman with estimates, bids and recommendations concerning the system prepared by engineers and contractors. In September 1984, the Johnsons' engineer suggested that they should pursue alternate methods to solve the heating system's problems, and it was later recommended that the concrete-encased pipe system should be abandoned or completely reinstalled, the estimated cost being $40,000, exclusive of dislocation, storage and related expenses. Pursuant to further instructions by Statesman's claims supervisor, the Johnsons obtained another contractor's estimate in the amount of $16,000 for removal of the concrete floor and repair of the leaks in six rooms of the house. As late as April 30, 1985, the Johnsons were still receiving estimates
[ 107 Pa. Commw. Page 422]
from companies whose evaluations had been ...