Should I pay this extra fee or fight it?

I faxed my insurance company on November 17, at noon saying that I was discontinuing my service with them. My insurance ended on November 18. I later received a $49 charge in the mail saying I still owed them. I called and asked about it and was told because I faxed them half a day early I was charged an extra fee. If I would have put the notice in the next day I would not have been charged. I have not paid yet and have been in discussion with the insurance company, but have been told they were going to collections. The premium had been paid in full. I had been with the company 15 years. Never had an accident or filed a claim. This seems a bit heavy handed and not right. I did not see anything in my insurance information saying this would happen and had I known I would be charge an extra fee I certainly would of discontinued the insurance the next day. I thought if I sent the fax the day the insurance ended that was too late. What are my options?