You have to remember that extended service contracts are like casinos. The house always wins. You may get $5,000 in repairs covered for your particular vehicle, but there were maybe another twenty customers who had zero dollars in repairs which covered your $5,000 in repairs (and then some).

I know someone who gets to buy stuff for his personal use from his employer at basically cost. He bought an extended service contract that normally retails for $20 for $3. That indicates that service contracts have a huge profit margin which is why some dealers will sell them to you at 50% off because they are likely still making money at 50% off.