(a) A motor vehicle service contract or theft protection program warranty shall not be issued, sold, or offered for sale in this state unless a motor vehicle service contract provider or warrantor is insured under a reimbursement insurance policy issued by an insurer authorized to do business in this state, and providing that the insurer will pay on behalf of the motor vehicle service contract provider or warrantor all sums that the motor vehicle service contract provider or warrantor is legally obligated to pay and will guarantee the performance of the motor vehicle service contract provider's or warrantor's obligations undertaken according to the motor vehicle service contract provider's or warrantor's contractual obligations under the service contracts issued or sold by the motor vehicle service contract provider or theft protection program warranties issued by the warrantor.
(b) A policy of insurance shall not be cancelled, terminated, or nonrenewed by the insurer unless a sixty-day written notice has been given to the motor vehicle service contract provider or warrantor before the date of the cancellation, termination, or nonrenewal.
(c) A cancellation, termination, or nonrenewal shall not affect the liability of an insurer to guarantee the performance of a motor vehicle service contract provider or warrantor under the motor vehicle service contracts or theft protection program warranties issued or sold before the effective date of cancellation or termination or nonrenewal.
(d) The insured motor vehicle service contract or theft protection program warranty shall conspicuously state:
(1) That the obligations of a motor vehicle service contract provider to the service contract holder or the obligations of a warrantor to the warranty holder are guaranteed under a reimbursement insurance policy;
(2) The name, address, and telephone number of the issuer of a motor vehicle service contract provider's or warrantor's reimbursement insurance policy; and
(3) The procedure for filing a claim under a motor vehicle service contract or theft protection program warranty directly with a reimbursement insurer.
(e) A reimbursement insurer shall establish and maintain unearned premium reserves and claims reserves for any gross policy obligations under a reimbursement insurance policy, net of reinsurance ceded, that the insurer is entitled to as full reserve credit on its financial statements under this subchapter.
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