As for why it goes bad, I'm not sure. I think mine failed because the regulator went bad and that burnt out the stator.
That was my experience.
There are three segments on the stator and mine was only bad in one segment. The insulation on that segment was burnt black. When I tested it I was getting AC voltage from the other two segments but nothing from that segment.
Again, that was the state of my stator. Unintentional pun.
What happened to me: we were touring in Oregon. My bike stalled --- flat battery. Took it to the shop, it was shot, bought a new one. Next day, coming down a very long hill between Elgin and Wallowa, Oregon, my bike started to sputter and die. I should have left it for dead and coasted 'deadstick', but I kept trying to keep it running, nursing it however I could until we got to a place to pull over. We towed it back to Baker City where the stator was pronounced DOA.
The problem all along was the regulator. It wasn't charging the battery and once it went flat, the long downhill run overloaded the stator. Once you let the smoke out, it's never the same.
My bike is a 2009 AN650 Executive, Canadian model. My wife's bike is the same, but from a different production batch, per the VIN. I've had problems with the regulator/stator and with the sticky starter switch where my wife's bike has had no such problems.
Either way, replacing the stator requires tearing the bike down to where you can get the transmission apart, since it lives in there. It's an expensive part, but rebuilt ones are available, as noted. There's nothing wrong with them if they're rewound properly and they are half the price. Your dead one has salvage value. Replacing the regulator takes thirty seconds, but it's impossible to reach without disassembling the entire rear half of the bike. All in all, it's not a cheap repair if you're paying shop rates.
Good luck
Scott Fraser