Four New Jersey-based insurance companies have implemented a new system to help it avoid the errors on cancellation notices that cost it $5,000 in Maryland.

The companies — Federal Insurance Co., Great Northern Insurance Co., Pacific Indemnity Co. and Vigilant Insurance Co., all of Warren, N.J. – paid the fine in August in response to a Maryland Insurance Administration investigation, records show.

The MIA investigation found that the companies sent 12 notices of cancellation, between Jan. 1, 2008, and June 30, that failed to meet state requirements. The notices failed to advise policyholders that they may be eligible for coverage with the Joint Insurance Association and failed to include the association’s current address and phone number. The notices also failed to advise the policyholders of the right to contact the insurer for additional information in support of the proposed action and an address to submit the request.

The insurer implemented a new system, effective July 2009, that automatically edits for state requirements, according to MIA records.

This story originally appeared in the December 2009 print edition of Insurance & Financial Advisor.