Appeal from the Order of the Insurance Commissioner of the Commonwealth of Pennsylvania, in case of In Re: Appeal of Pennsylvania National Mutual Casualty Company, File No. 86-303-04775.
John C. Carlin, Jr., Mercer, Mercer, Carlin & Scully, for petitioner.
Richard J. Enterline, Assistant Counsel, with him, Theodie L. Peterson, III, Chief of Litigation and Linda J. Wells, Chief Counsel, for respondent.
Judges Colins and Smith, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge Smith. Judge MacPhail did not participate in the decision in this case.
[ 121 Pa. Commw. Page 619]
Petitioner, Pennsylvania National Mutual Insurance Company, appeals from an order of the Insurance Commissioner (Commissioner) affirming a January 21, 1987 order of the Insurance Department of the Commonwealth of Pennsylvania (Insurance Department) which found Petitioner to be in violation of Section 5(a)(9) of the Unfair Insurance Practices Act (Act)*fn1 and ordered Petitioner to cease and desist from terminating the homeowner's policy of Mary Herron (Herron) and refusing to honor her valid claims. The order of the Commissioner is affirmed.
Questions involved here are whether the Commissioner erred in finding that Petitioner violated Section 5(a)(9) of the Act for terminating or refusing to write a homeowner's insurance policy fourteen days after the policy application was taken by an agent, and in finding that a valid insurance policy was in effect.
[ 121 Pa. Commw. Page 620]
The Commissioner found that on May 22, 1986, Herron and her husband met with Kelly Moore (Moore), an insurance agent for Petitioner and an employee at the Rittle Insurance Agency (Rittle), to purchase a homeowner's insurance policy for their personal residence. Prior to the meeting, Herron received notice from Commercial Union that her existing homeowner's policy was cancelled because of a claim submitted by her as a result of a burglary on June 2, 1985.*fn2 Commercial Union, however, reversed its position and offered to renew the policy.
On May 22, 1986, Herron was advised by Moore that her home would be insured from the moment of payment. In reliance thereon, Herron did not renew her policy with Commercial Union but instead tendered a check for $204.00 to Moore in payment of a one-year premium and signed a policy application which was forwarded to Petitioner by Moore.
Moreover, there was an agency contract in effect between Petitioner and Rittle at all relevant times which gave Rittle authority to receive and accept proposals for insurance contracts subject to restrictions imposed upon the agent by law as well as by Petitioner's written instructions. Petitioner's written instructions provided that Rittle could not extend coverage to an applicant who incurred losses in the immediate past three years with the exclusion of only one loss due to natural causes not within the homeowner's control. The original policy application of Herron shows that although the binder section was checked and dated, it had been altered with
[ 121 Pa. Commw. Page 621]
"wite-out" and the no-binder section had been checked. The Commissioner concluded that a contract of insurance was extended to Herron as of May 22, 1986, the ...