Foremost Insurance Co. paid a $35,000 fine to Maryland insurance regulators to settle claims it improperly canceled more than 4,800 policies over a seven-year period.

Foremost Insurance Co. Grand Rapids Michigan paid the fine after the Maryland Insurance Administration found it canceled policies on the effective renewal date, not 15 days from the notice date.

Between May 1, 2001, and Dec. 5, 2008, Foremost issued notices of prospective cancellation of personal policies if renewal premium had not been received by the effective renewal date, according to the MIA. The notices said the policies would be cancelled 15 days from the notice date. But in 4,542 cases, Foremost cancelled policies retroactive to the effective renewal date, which violates state law. During the same period, another 273 renewals were handled in the same improper fashion.

Foremost said it changed its practices for handling personal and commercial policies in December 2008 to reinforce its intent that no coverage is provided on a renewal term without payment of premium.

This story originally appeared in the June 2010 print edition of Insurance & Financial Advisor.