Thanks Pete, that makes sense and is reassuring. I have pretty much decided I will definitely buy the warranty at the end of the first year, when my cheap warranty ends.
My only decisions now are whether to bite the bullet and do it now as I am doubtful how comprehensive my comprehensive policy really is. For instance, it has a claim limit of £5k and limits labour rates to £70ph (which means I have to pay £30ph if I go to BMW) and specifies that exchanged or reconditioned parts may have to be used. I presume the BMW warranty will allow for new BMW parts to be used, and I think its claim limit is the value of the vehicle. It also does not cover damage caused by war, sonic booms or nuclear radiation; what kind of cover is that?
My other decision relates to BMW Emergency Services; given I am already in the AA (but only with a basic membership) is this worth paying another £105pa? Does it offer what it promises?