Originally Posted by dexx
It is not a sucker's bet, it is pooling risk and they are skimming of the top for profit.
What you get for your money is literally "insurance" against the risk of very very costly repairs. It's the same thing the collision coverage or even *gasp* health insurance.
What I (and I surmise the OP) want to know is what is the size of the risk? Am I look at a $25,000 bill if x happens? What are the odds?
I understand your point of hedging against a truly catastrophic repair; however, in the long run, you're always better off to go it alone.
On the other hand, let's say you pay the premium for CPO. We'll call it $3k dollars. You buy the car with 20k miles on it and intend to drive it for 50k miles. At the end you can sell a car with an extended warranty to 100k miles and get a premium for it, which will offset your insurance premium somewhat. So for your 20k miles of extended warranty you pay maybe $1.5k.