Sound like low cost, low effort, high profit snake oil to me.
In March a dealer told me a “mandatory” ding and scratch insurance policy on my MDX was non-negotiable. I told them everything was negotiable, crossed out the entire deal they offered and wrote a figure with “out the door” after it and told them to distribute the funds as they saw fit, but that’s all I would be paying for the deal. It worked. Then the nimwits allocated over $500 to that insurance policy that they were selling for $399 initially. I read the policy, it was refundable if not used and canceled within 30 days. Yup, I got over $500 back a couple weeks later. I doubt they learned anything from it.