## Facts

- Aegis Security Insurance Company (Aegis) issued Kelly Broschart a preferred homeowners insurance policy in 1998.
- Aegis followed an underwriting practice of not providing preferred coverage to applicants who owned animals “known to be unfriendly.”
- At the time Broschart applied for the policy, her dog—Heidi, a nine-year-old three-legged Springer Spaniel—was not known to be unfriendly.
- Broschart’s property bordered a creek and woods at the rear, and a “No Trespassing” sign was posted at the creek; the ordinary approach to the home was from the front/driveway.
- On July 6, 1999, Pennsylvania State Police Trooper Frederick Dyroff entered the property from the rear by crossing the creek and climbing embankments rather than approaching from the driveway.
- Heidi was on the porch and approached Dyroff. Dyroff waved a hard leather portfolio at the dog to shoo her away.
- Heidi nipped Dyroff, tearing his pants and causing a superficial wound to his thigh. Dyroff drew and pointed his service weapon at Heidi.
- Broschart came outside, called Heidi, and the dog immediately obeyed and returned to her.
- After the incident was reported, Aegis cancelled Broschart’s homeowners policy, stating the event constituted a “substantial increase in hazard” after the policy began.
- The Pennsylvania Insurance Department investigated and concluded the cancellation violated the Unfair Insurance Practices Act (UIPA), ordering that the policy remain in force.
- Aegis appealed to the Insurance Commissioner of Pennsylvania, who affirmed the Department’s determination.
- Aegis then petitioned the Commonwealth Court of Pennsylvania for review.

## Issues

1. Whether Aegis lawfully cancelled Broschart’s homeowners policy based on a single dog-bite incident as a “substantial increase in hazard” after policy inception, or whether the cancellation violated the UIPA.
2. Whether the Insurance Commissioner’s decision was supported by substantial evidence and was free of legal error on judicial review.

## Decision

- The Commonwealth Court of Pennsylvania affirmed the Insurance Commissioner’s order.
- The court agreed that the record supported the Commissioner’s determination that the incident did not amount to a “substantial increase in hazard” justifying cancellation.
- Because the stated ground for cancellation was not shown, the cancellation was treated as an unfair insurance practice under the UIPA, and the policy was ordered to remain in force.

## Legal Principles

- Under Pennsylvania’s UIPA framework, an insurer may not cancel a policy mid-term unless a legally recognized ground is shown; the insurer bears the burden to support the asserted basis for cancellation.
- A “substantial increase in hazard” requires a meaningful change in the insured risk after the policy begins; a single, minor incident may be insufficient when the surrounding facts support a situational reaction rather than a continuing increased risk.
- On review of an administrative insurance order, the Commonwealth Court defers to the Commissioner’s fact-finding when supported by substantial evidence and will not disturb the order absent legal error.

## Conclusion

The Commonwealth Court affirmed the Insurance Commissioner’s order barring Aegis from cancelling Broschart’s homeowners policy, holding that the evidence supported the finding that Heidi’s single, superficial nip—occurring after a trooper entered from a posted rear area and waved a portfolio at the dog—did not constitute a substantial increase in hazard under Pennsylvania law and the UIPA.


Aegis Security Insurance Company v. Pennsylvania Insurance Department, 798 A.2d 330 (2002)