From a purely actuarial point of view you should only insure items that would cause hardship should you incur the expense of replacing it, like your income (a la life insurance), the risk of large hospital bills etc.
For example, pretty sure Bill Gates doesn’t have health insurance. Why? Because he doesn’t need protection from large medical bills. A million dollar medical bill wouldn’t impact him at all. He is essentially covering himself.
So if I buy a toaster at Best Buy for $50 why should I buy an extended warranty for $10? The Andrew Insurance Group will cover it instead, meaning if it breaks I will just buy another. Otherwise, over a lifetime all the extended warranties will add up to waaaaayyyyy more than I save.
I tried to explain this math to the warranty sales guy the last time I bought a car but he wasn’t having it. “I buy the extended service on everything I buy,” he said proudly, “like the DVD player I bought last week!” He went on to explain that the peace of mind was worth it.
Peace of mind over a $40 DVD player…