Texas Statutes
Subchapter D. Practice by Service Contract Providers,
Section 1304.1581. Cancellation by Service Contract Holder; Refund

Sec. 1304.1581. CANCELLATION BY SERVICE CONTRACT HOLDER; REFUND. (a) A service contract must allow the service contract holder to cancel the service contract at any time.
(b) If a service contract holder cancels a service contract before the 31st day after the date of purchase, the provider:
(1) shall refund to the service contract holder or credit to the account of the service contract holder the full purchase price of the contract, decreased by the amount of any claims paid under the contract; and
(2) may not impose a cancellation fee.
(c) If a service contract holder cancels a service contract on or after the 31st day after the date of purchase, the provider:
(1) shall refund to the service contract holder or credit to the account of the service contract holder the prorated purchase price of the contract reflecting the remaining term of the contract, based on mileage, time, or another reasonably applicable measure of the remaining term that must be disclosed in the contract, decreased by the amount of any claims paid under the contract; and
(2) may impose a reasonable cancellation fee not to exceed $50.
(d) A provider may allow a service contract holder to cancel a service contract on other terms included in the contract, provided the terms do not conflict with this section.
(e) A provider who does not pay the refund or credit the service contract holder's account before the 46th day after the date notice of cancellation is received by the provider is liable to the service contract holder for a penalty for each month an amount remains outstanding equal to 10 percent of the amount outstanding. The penalty is in addition to the full or prorated purchase price of the contract that is owed to the service contract holder under this section or the terms of the contract.
(f) The right to cancel a service contract is not transferable to a subsequent holder of the contract.
(g) Notwithstanding Subsection (b)(1) or (c)(1), a provider is not required to deduct the amount of any claims paid under a service contract from the amount of a refund required under this section.
Added by Acts 2011, 82nd Leg., R.S., Ch. 1081 (S.B. 1169), Sec. 1.14, eff. September 1, 2011.
Amended by:
Acts 2017, 85th Leg., R.S., Ch. 473 (H.B. 2275), Sec. 2, eff. September 1, 2017.