Some (all?) extended warrantees will have issues such as the
following:

a) The allowed repair shoppes will be limited in some sort of way -
certified mechanic, just dealers, etc. - so your choice of repair
shoppes are reduced. .

a') are you required to religiously follow maintenance schedules?
Whoops we won't cover you because you waited a bit to long on that one
maintenance. Meanwhile, practitioners in the field may know from
experience that such maintenance can be done less ofter. Is the plain
old factory recommended maintenance sufficient or do you have to do
more?

b) what happens if you move to another state? Usually insurance
companies are licensed in a state ... will the policy be honored in
another state? By whom?

c) oops ... bad accident - car is totalled....now what....$$$$ down
the drain?

d) even though Joe Blows repair shoppe is a qualifying repair shop for
insurance purposes, do you think they want to screw with it? Labor
rate paid by contract will probably be reduced from the normal retail
rate. Once the problem is diagnossed, the shop will need to get
authorization to proceed with the repair. (Meanwhile you call and you
get "sorry, the insurance company hasn't authorized the repair
yet"...time delays). And Joe Blow can repair other peoples car
because yours is sitting on the lift all torn apart.

e) Fraud prevention: The insurance company makes its profits by
controlling expenses. Necessarily, tis means it must guard against
fraudulent claims. Thats gobbs of overhead to audit, verify and
deter. $$$$$$.