An insurance company canceled Knudsen’s policy.

Lumbermens Mutual Casualty Co., based in Long Grove, Ill., canceled its bonding coverage for the financially troubled Los Angeles dairy company, effective in mid-August, the state Department of Food and Agriculture reported. A department spokesman said that under state law, a dairy processor cannot operate unless it posts $20,000, either as a bond or in cash, for each milk plant. Knudsen operates nine plants. A Knudsen spokesman said the company believed that its policy expires Sept. 10 and that it is trying to get new insurance.