I can see going 1%-3% of purchase price for 100k miles, but this car already has the extended warranty for the drivetrain so its like buying it twice.
I'm not paying 8% for redundant insurance.
Same thing when they hit you at Best Buy. Sorry. I'll self-insure unless its a great deal like 1% of the cost or less. Got a LCD TV and extended the full factory warranty from 1 out to 5 full years for 1%. Knowing about the backlighting issues they have, I popped for it. Even then some would say "You're an idiot, man." over $10.
In all, set the $1500 aside for emergency money and then spend a little on the 'emergency non-drivetrain problem' if it ever pops up. Doubt one will and then YOU will still have the $1500, not the dealer for his concubine's apartment.