BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley has announced an assurance of discontinuance with a New York-based premium financing provider to resolve allegations it prematurely cancelled consumers' auto insurance policies.
AICCO Inc., a subsidiary of American International Group Inc., allegedly issued cancellation requests to insurance companies with an effective date that was only three days after the date of the notice. Massachusetts law requires premium financing providers to give at least 20 days of notice to the insurance company issuing the policy.
Premium finance companies provide loans that let people pay their insurance premiums in installments. The company uses the unearned premium on the policy as loan collateral. If a customer misses a payment, the premium financing provider may seek to cancel the policy.
The 20-day statute works with other provisions to make sure customers have enough time to bring their accounts current before their policies lapse.
"Massachusetts customers should receive proper notice of auto insurance cancellations so they can determine an appropriate solution for continued coverage," Coakley said. "Our office will continue to ensure that these providers are complying with state insurances laws, not prematurely pulling the plug on these policies."
Under the terms of the assurance of discontinuance, AICCO will pay more than $125,000 to approximately 100 Massachusetts customers and $35,000 to the state.