The Federal regulations do not define insurance. But (you are in Texas aren't you?) if that was the case, why do they have to be authorized by the Texas Department of Insurance to sell GAP insurance in Texas???
http://www.tdi.state.tx.us/commercial/gaplist.htmlNow what you are describing may not be GAP insurance, but the Texas Insurance Code has a whole chapter devoted to this product:
CHAPTER 3501. CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE
Sec. 3501.001. DEFINITION. In this chapter, "credit involuntary unemployment insurance" means insurance that indemnifies a debtor for installment or other periodic payments on an indebtedness while the debtor is involuntarily unemployed. The term includes policy forms and endorsements that define involuntary unemployment to provide coverage and a premium charge for interruption or reduction of a debtor's income during periods of leave, whether paid or unpaid, authorized by the federal Family and Medical Leave Act of 1993 (29 U.S.C. Section 2601 et seq.), as amended, or other state or federal law.
How can they claim it is not insurance????