People buy a service contract for two different reasons, and each reason calls for different checks. One is spreading the cost of a repair. The other is getting service at all when a breakdown comes. A contract may help with one, the other, or neither, depending on its terms. Name the problem before you compare any product.
The cost problem
The cost problem is a repair bill that would arrive all at once and strain the household budget. Signs that you have it include a past repair that you paid in a single sum and still resent, a vehicle or appliance that is aging into more frequent calls, or a budget with no room for an unplanned charge. If that describes your household, compare the contract's payment and cost terms against the sum you could set aside yourself, and check what the contract says about each visit.
The access problem
The access problem is getting a working vehicle or home system back quickly, with a repairer who will come, and without waiting on a part that may not be stocked. Signs that you have it include past breakdowns that left you without a car for days, appliances that sat unrepaired for weeks, or a unit rare enough that local repairers say they do not stock its parts. If that describes your household, look at how the contract handles the call, the repairer, and the wait, rather than its price.
How to tell which problem you have
Write the problem in a single sentence. If the sentence is about the bill, your checks go to the cost terms and to what you could set aside yourself. If the sentence is about waiting, your checks go to the repair process and to the rules that apply when service is delayed. If it is about both, you have two sets of checks, and neither replaces the other.
A contract does not prevent a breakdown. It changes who handles the call and who pays for the repair, within the limits the contract sets. The state page on this site describes how these contracts are treated in your state, and the contract itself describes the rest.