[§481X-7]  Service contract returns and
refunds.  (a)  Service contracts shall state that the contract holder may
return the contract within:



(1)  Thirty days of the date that the contract was
mailed to the contract holder;



(2)  Twenty days of the date the contract was
delivered to the contract holder, if the contract was delivered at the time of
sale; or



(3)  A longer time period as specified in the service
contract.



(b)  Upon return of the service contract to the
provider within the applicable time period, and if no claim has been made under
the service contract prior to its return to the provider, the service contract
shall be void and the provider shall refund to, or credit the account of, the
contract holder with the full purchase price of the service contract.  A ten
per cent penalty per month shall be added to a refund that is not paid or
credited within forty-five days after the return of the service contract to the
provider.



(c)  The right to void a service contract under
subsection (b) shall not be transferred and shall apply only to the original
service contract purchaser upon the terms and conditions provided in the
contract and consistent with this chapter.



(d)  Upon cancellation of a service contract by
the provider, the provider, at least five days prior to cancellation, shall
mail to the contract holder at the contract holder's last known address, a
written prior notice of cancellation that states the effective date of the
cancellation; provided that prior notice under this subsection shall not be
required if cancellation is for:



(1)  Nonpayment of the provider's fee for the service
provided under the service contract;



(2)  A material misrepresentation by the contract
holder to the provider; or



(3)  A substantial breach of duties of the contract
holder under the service contract, relating to a covered product or its use. [L
2000, c 221, pt of §2]