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The goal for all insurance you buy should be for you to "lose" money - that means you were one of the lucky ones with no claims. The financial proposition for insurance (or extended warranties) isn't that everyone will come out ahead (or that everyone won't) - it is essentially guaranteed that some will come out ahead and some won't.
The financial proposition for insurance is risk pooling - we know (actuarially) that X% of the population will suffer a fire, or get cancer, or have their engine melt down, or die young, or cause an accident that paralyzes someone for life (or whatever else you are insuring/warrantying against). 100-X% of the people who pay in won't have that expense, and lose money on the inurance, but the X% who suffer that loss don't have to pay the full cost of the loss, they only have to pay their premium/deductible/copay.
Insure against things that are possible but unlikely, and also very expensive. Use your own money to pay for things that are likely (even if expensive) or things that are inexpensive.
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