Years and miles past the factory warranty set the gap. The factory warranty covers a set list of parts for a set time and a set odometer reading. Once one of those limits is reached, the owner carries the cost of the repairs that follow. A service contract is one way to plan for that stretch. It is not the only way.
Find the factory limits
Open the warranty booklet that came with the car, or the manufacturer's published warranty page for that model year. Note the basic term and the powertrain term, each stated in years and in miles, and note which limit ends first. Write both limits on a sheet with the in-service date. A used car may have a different start date, so check the service record for that car.
Test whether you are in the gap
Take the in-service date and the odometer reading you see on the dash. For each group of parts, ask whether the calendar has passed the year limit, or the odometer has passed the mileage limit. If either limit has passed, that group sits outside the factory warranty, and you are in the gap for those parts.
What the gap looks like
A repair can start in any system the factory list no longer names. List those systems on the sheet, and keep a note of any warning light, noise, or leak that appears in them. The note gives a shop and a contract company the facts they need to answer your questions.
Read what fills the gap
A service contract may fill part of the gap, but only within the terms it prints. Compare the parts it names with the parts the factory list still covers. Look for overlap, and look for any part the contract leaves out. The page on exclusionary and listed-parts contract types explains how those two wordings differ before you compare.
Keep the sheet
Keep the factory limits, the in-service date, and the gap list in the same folder as the service record. When a repair starts, the sheet shows whether the factory list, the contract, or your own budget has to answer it.