I work on the principle of never taking out an extended warrany on anything. During my (hopefully long and fulfilling) lifetime, I will of course have to pay for some things to be fixed, but in the long-term I believe that I'll save more than I spend. After all, that's how the insurers make their money.
That is probably true for simple household consumer goods, TV, Hoover, cooker, fridge etc. and even some more delicate items like PC's and cameras, where the replacement cost may be less than you paid, for a better spec item. Couple that to the simple fact that most kitchens / TV's and PC's are replaced before they die, simply on grounds of style or better spec. Plus the items are in your house and you can, quite possibly, claim for some damage / loss under your vanilla Household policy, loss of frozen food, for instance.
Automotive is different. The labour costs alone, run at what? £50 an hour? Six hours, perhaps, to relace your con rod, plus parts? That's £300 plus parts. Add in transport costs, as Sod's Law dictates that it will happen in Spain, when you live in Aberdeeen......
Of course, you can always cheat and say...I was going to replace the telly anyway.....so discount the cost. This is more tricky with a vehicle.....
Yes the manufacturers charge a premium and most run it through in-house insurance companies. The profitabilty will vary, year-on-year and depend quite a lot on what sort of reinsurance the insurer can buy, but that's a different matter. We have seen some huge (multi-million) claims for automotive recall / guarantee covers, that never make the newspapers.
At over £600 the old BuMW deal looked very pricey....at about £300 it's starting to look not too bad.
It's my guess that the old scheme may have lost BuMW money, the few that bought it, made a claim. By halving the price (and competing with alternative insurers) BuMW possibly hope to get more income (sell at least twice as many policies) and hope that the failure (claims) rate does not rise in proprtion to policies sold.
It may just come down to simple maths, made simpler as BuMW (with a vast database or real claims, not the 'I'm shocked and disgusted' stuff seen here) will know exactly what the likely trend will be.
I had missed that one 
