I bought a Chrysler extended warranty when I bought my Chrysler. I have saved lots of money because of it.
The dealer offered it to me for $3600 at first. I said no and he came down to $3300. I declined as I saw the policy could be purchased until the original warranty ran out. About a month after purchase I got a letter from Chrysler offering me the same warranty for $2800. I started searching the net and found a Chrysler dealer in Illinois offering the EXACT SAME warranty for $1650.00. In addition he gave one year no interest to pay. Think about the markup that allowed the $3600 policy to be sold for $1650 and the dealer who sold it still made money.
Shop the net look at Good SAMS offering but do not jump into it.
The dealer is trying to make money. If you want the policy you can negotiate the price; try offering about 70% of what the are asking. Settle at 80% max.