The short answer is "because Clark Howard says so" and perhaps that is enough said. But here's more food for thought.
An extended warranty is essentially an insurance policy. Now I'm a big fan of insurance, and in fact that's an area where Kate and I sometimes disagree (I want more coverage, she thinks it's a waste of money). But consider that the purpose of insurance is to reduce the risk of severe financial harm (e.g. house fire, car accident, expensive medical issue).
In most cases, the loss of a consumer good (e.g. laptop, cell phone, camera, refrigerator, breadmaker) is not going to cause "severe financial harm". It could cause inconvenience and frustration and perhaps a brief financial setback, but likely not severe harm.
It could also be argued that, if the loss of a particular product WOULD cause someone a major financial problem, perhaps they shouldn't purchase that item in the first place, or should consider a less expensive alternative. Laptops, for example, can be purchased for $300 or $3000. Same with refrigerators and TVs. I don't even need to mention Craigslist, ebay and manufacturer refurbished.
Now there's a good chance that, of the two people who read this post, at least one of you has benefited from an extended warranty. You paid $30 bucks for the warranty, and got a new phone for free after you dropped it in the...puddle on the street, let's say.
But think back over all the times you have purchased the warranty and estimate all the money you spent. Now compare that to what you would have spent on repairing or replacing any products that broke. I believe the data would show that the vast majority of consumers who buy warranties spend more on warranties that they would have spent on repairing or replacing broken products.
There is also the question of when to purchase the extended warranty. Do you accept it every time it's offered? The store will offer you one on everything from $15 toasters to $1500 TVs. For it to even begin to make sense to engage in that gamble (that's essentially what it is, and like casinos, the house almost always wins) one would need a criteria, such as declining it on purchases below a certain amount, or for products that are generally very reliable (e.g. TVs).
However, let's say you decide it's worth it simply to reduce the risk of inconvenience and frustration should you drop your smart phone in the puddle. You could decide that's something you'd like to insure, and that is of course perfectly reasonable.
But rather than purchasing an extended warranty, consider the idea of a "self-insurance" program. Every time you purchase something that you believe is worth insuring, instead of purchasing the warranty deposit the same amount of money in a savings account designated for repairing and replacing broken items. Over time, odds are very high that you will come out way ahead.
All that being said, I can contemplate a scenario where an extended warranty would make sense. One might, for example, require a particularly expensive item for health, safety or income production. Loss of said item might fall into that category of causing "severe harm". I'd also note that while I firmly subscribe to the "delayed gratification" philosophy, an occasional splurge that provides great pleasure or significantly enhances quality of life (e.g. a refrigerator with exterior ice dispenser) is eminently justifiable, and might need to be insured depending on specific family economics.
But probably not the toaster. Well, maybe this one.
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