BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced an $82,000 agreement on Thursday with a premium finance company that allegedly prematurely canceled auto insurance policies belonging to state small businesses and consumers.
The settlement with IPFS Corporation affects premium finance accounts that were serviced or originated by Imperial Credit Corporation. Coakley's office alleges that ICC, a company acquired by IPFS in 2010, systematically issued requests for cancellation to insurance companies that only provided a three-day window in which the customer could try to bring the account current before policy cancellation became effective.
State law, however, requires that premium finance companies give at least 20 days notice of cancellation to the insurance company after giving 10 days worth of notice to the insured stating that the company intends to cancel the financed insurance policy.
"These statutory notice periods are important because together, they provide consumers and small businesses an opportunity to bring their accounts current and avoid costly interruptions to insurance coverage," Coakley said. "In these challenging economic times, we need to be particularly vigilant in monitoring and enforcing our existing legal protections for consumers and the small businesses that drive the Massachusetts economy."
IPFS is a premium finance company that provides loans enabling customers to pay their insurance premiums over time. As part of Thursday's settlement, IPFS will make payments totaling $62,042 to 50 Massachusetts consumers and small businesses whose policies the company allegedly prematurely cancelled or attempted to cancel prematurely in violation of state law.
The company will also pay $20,000 to the state, modify its auto insurance cancellation procedures and bring the ICC unit into compliance with state statuses.
Coakley's office is currently looking into illegal cancellation practices by several other premium finance companies.