You are completely correct about the insurance company pricing to minimise their risk of loss across the inured pool. But as an individual there is an element of luck involved. To use a simple example, say the insurance company covers 1,000 vehicles. Across that pool only a small number will ever make a claim on the insurance, and priced correctly by the insurer they will never lose. However, the small number of owners who experience an insured problem will benefit from having the insurance. So, the luck factor is: are you one the few who will have a problem or one of the many who don't?
I am not advocating for or against taking extended warranty insurance. Personally I take insurance to cover the large things that would be painful to cover on my own, and therefore opt for high co-payments on all my insurance products (auto, home, PMI etc). The tolerance level of what is acceptable out-of-pocket will vary from person to person based on their financial circumstances.