2020 New Mexico Statutes
Chapter 59A - Insurance Code
Article 58 - Service Contract Regulation
Section 59A-58-9 - Right of holder to return service contract for refund.

A. A service contract is void and a provider shall refund to the holder the purchase price of the service contract if the holder has not made a claim under the service contract and the holder returns the service contract to the provider:

(1) within twenty days after the date the provider mails a copy of the service contract to the holder;

(2) within ten days after the purchaser receives a copy of the service contract if the provider furnishes the holder with the copy at the time the contract is purchased; or

(3) within a longer period specified in the service contract.

B. The right of a holder to return a service contract pursuant to Subsection A of this section applies only to the original purchaser of the service contract.

C. Subsequent to the time period specified in Subsection A of this section, or if a claim was made during that time period, a holder may cancel a service contract and the provider shall refund to the contract holder one hundred percent of the unearned pro rata provider fee, less any claims paid. If the service contract is canceled by the holder, a reasonable administrative fee may be charged by the provider, not to exceed ten percent of the purchase price of the service contract. A provider who cancels a service contract may not impose an administrative fee.

D. A service contract must include a provision that clearly states the right of a holder to return a service contract pursuant to this section. Notwithstanding Subsection C of this section, a provider is not required to deduct the amount of any claims paid under a service contract from the amount of a refund a holder is entitled to.

E. The provider shall refund to the holder or credit to the account of the holder the purchase price of the service contract within sixty days after a service contract is returned pursuant to Subsection A of this section. If the provider fails to refund the purchase price or credit the account of the holder within that time, the provider shall pay the holder a penalty of ten percent of the purchase price for each thirty-day period or portion thereof that the refund and any accrued penalties remain unpaid.

History: Laws 2001, ch. 206, § 9; 2019, ch. 254, § 2.

The 2019 amendment, effective June 14, 2019, revised the procedure for canceling a service contract; in Subsection B, after "contract pursuant to", added "Subsection A"; added a new Subsection C and redesignated former Subsections C and D as Subsections D and E, respectively; and in Subsection D, added the last sentence.