Preliminary period -- Cancellation -- Refund

(1) (a) A vehicle value protection agreement shall provide for a preliminary period of at least 30 days. (b) If a purchaser cancels a vehicle value protection agreement within the preliminary period, the purchaser is entitled to a refund of the charges under the vehicle value protection agreement as follows: (i) if benefits have not been provided, a full refund; or (ii) if benefits have been provided, a refund to the extent provided for in the vehicle value protection agreement. (2) (a) Except as provided in Subsection (2)(b), if a provider cancels a vehicle value protection agreement, the provider shall mail a written notice to the purchaser at least five days before the day on which the vehicle value protection agreement is canceled. (b) A provider may immediately cancel a vehicle value protection agreement upon sending a notice of cancellation to the purchaser if the reason for the cancellation is: (i) the purchaser's failure to pay the provider's fee under the vehicle value protection agreement; or (ii) the purchaser's breach of the purchaser's duties relating to the covered vehicle. (3) A notice described in Subsection (2) shall include: (a) the effective date of the cancellation; and (b) the reason for the cancellation. (4) If a provider cancels a vehicle value protection agreement for a reason other than the purchaser's failure to pay the provider's fee under the vehicle value protection agreement, the provider: (a) shall refund the purchaser any unearned provider fee under the vehicle value protection agreement; (b) may charge the purchaser an administrative fee of up to $75; and (c) may deduct the amount of a benefit paid under the vehicle value protection agreement from the refund.