BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced a $200,000 settlement on Thursday with an Illinois-based premium financing provider to resolve allegations it prematurely cancelled auto insurance policies.
FIRST Insurance Funding Corporation allegedly issued cancellation requests to insurance companies with an effective date that was the same as the date of the notice. State law requires premium financing providers to give at least a 20-day notice to the insurance company that issues the policy. Coakley alleged close to 200 Massachusetts consumers were affected by the cancellations.
"Financing companies are required to give Massachusetts customers adequate protections and proper notice of auto insurance cancellations so they can determine a solution for continued coverage," Coakley said. "Our office will continue to track these providers to make sure that they are complying with state laws when dealing with the insurance policies of consumers and small businesses."
The state insurance statute works with other laws to make sure customers have sufficient time to bring their accounts current before their policies lapse, forcing them to take vehicles off the road or seek replacement coverage.
Under the terms of assurance of discontinuance, FIRST will pay more than $140,000 to approximately 200 customers in Massachusetts. The company will also pay $60,000 to the state, modify its cancellation procedures and bring its notice practices into compliance with state laws.
Since 2011, Coakley's office obtained more than $484,000 in restitution to consumers and payments to the state as a result of inquiries into cancellation practices by premium financing providers.