ard's reply above should be THE guide for anyone considering any of these "add-on" insurances. I was about to say what he said in his points 3 and 4 but he bettered it by adding 1 and 2, which together and in the long run mean you have paid FAR more for this seemingly innocuous and beneficial plan than you ever imagined.

Some equations:
Warranty = Insurance
Insurance = Gambling
Gambling = The House Always Wins (in the long run)
The House Always Wins = You Lose!

Another truism is that insurance is bought more by the less-well-off sections of society than the other way 'round. Repair warranties on TV sets etc are the most obvious example, the majority of which are sold to lower-income people (who, one may argue, should not be buying that fancy tv to begin with, but that's another story).

Similarly, if you can afford a $60k car then surely you must have some $1-2K socked away that you can spend on brakes, tires or whatever. If you don't then you really shouldn't be buying such a car to begin with.

People with means self-insure a lot. We have a local consumer guru (Clark Howard; you can look up his site) who is always lamenting the evils of extended warranties and such things.

An example, somewhat related to this: the Bugatti Veyron, a hyper-car that costs between 1.7 and 2.2 million US dollars... last I heard this car is NOT insurable! (as in collisions, etc, because of its performance it represents too much of a risk to the State Farm types). Yet, they sell every one of them before they are built. I don't think the people who can afford $2m to spend on a car worry too much about these things.

From what I know, F&I people in dealerships (the guys who close your paperwork and attempt to sell you this stuff) are likely the highest-paid individuals there next to the GMs and owners. Back in the '80s these guys made in the six figures (what the poor showroom salesman makes is a fraction of their pay -- ask me how I know). They don't get paid that kind of money for giving away "good deals". If they get paid that much as a commission, think of what the dealership makes, then think of what proportion of that dollar goes to (maybe) benefit you, the buyer.