Carnet Insurance: a snake in the grass

I started on with carnet in March 2001. I went through Freeway and payed over 300 dollars for my down payment which I was told included my first month. my payments were due on the third of each month. On july 17, 2001 they canceled my insurance due to not receiving a payment. I know i sent it and checked with the place i sent it through. They said it had been cashed on july 16, 2001. I called Carnet and asked why I had been cancelled and they said that the initial down payment did not include the first month and that every month I payed I was a month behind. Tell me, why would I be allowed to do this for three months without receiving a notice and then just like that, i'm mysteriously canceled? Scam? I think so!! Then they said they would update my insurance but it would cost "a little bit". Yeah, like I'm gonna sign back up with a scam artist!!!