Cancellation of Extended Warranty Contract

What is the name of your state? NJ
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In January of 2005 I purchased a used SUV form a small dealership in my town. The salesman encouraged me to purchase an extended warranty seemed a good idea at the time. I did so. I was told by the salesman that I could cancel the contract at anytime and get a pro-rated refund back.
When the gasoline prices started to go up a few months later, I decided to trade in the SUV for a new car, a small one, with better gas mileage. I purchased it from a different local dealer. When I completed the trade, I contacted the warranty company to cancel the contract. I was told by a rude woman that because I had already traded the car, I had voided my contract and was NOT entitled to any refund. I was not transferring the contract, I simply wanted to cancel it. I saw nothing in the fine print of the contract that said I could not get a refund. I should have received at least $1000.00 back. The dealership I had purchased the SUV from tried to fight with them also, but the warranty company refuses to budge.
Would it be worth it for me to take them to small claims court? My husband and I work very hard for the money we make and that money is a large loss for us to take. How should I handle this?

You should re-read the fine print.

If it really says that trading the car voids your entitlement to a refund, that's a problem for you. It doesn't matter what the car salesman told you -- the contract is not with him, it's with the warranty company.

If the fine print DOES NOT say this, then sure, you can file a claim in small claims court.

in your case, check NJ law

My law is from NY, check NJ laws, may be similar.

"N.Y. Ins. Law 7903(e) (McKinney 2000) provides:
(e) Service contracts shall require every provider ot permit the service contract holder to return the contract within at least twenty days of the date of mailing of the service contract or within at least ten days if the service contract is delivered at the time of the sale or within a longer time period permitted under the contract. If no claim has been made under the contract, the contract shall be void and the provider shall refund to the contract holder the full purchase price of the contract. A ten percent penalty per month shall be added to a refund that is not made within thirty days of return of the contract to the provider. The provisions of this subsection only apply to the original purchaser of the service contract.

N.Y. Comp. Codes R. & Regs. tit. 11. 390.5(a) (1999) provides:
(a) Every service contract marketed, issued, sold or offered for sale, made or offered to be made, or administered in this state shall specify any limitations on the right to terminate the service contract by the provider or contract holder and to receive a refund of the provider fee.
Based upon the above, a service contract provider may limit the contract holder's right to return the contract once 10 days from the issuance of the contract has eleapsed, except that nay such limit must be contained int eh service contract. **If the limitation is not contained in the contract, then the holder has the right to return the contract at anytime.**"

I hope this helps. Check NJ laws, may be similar. Read the contract again. See if a time limit was specified.