It looks like it includes limited accidental coverage.
• Coverage for up to two incidents of accidental damage from handling of your iPod, each subject to a $29 service fee plus applicable tax.
Of course the most common damage is cracked screens/cases etc. which cost ~$25 to replace yourself anyway. In the end, you’re paying for convenience I guess, you got a problem, walk into an Apple store and have somebody else fix it.
I’d do it. The most common injuries are cracked screen and water damage. Replacing the screen yourself is at least $25 in supplies, plus hours of labor if it’s your first time. If you drop the phone in the toilet there’s little you can do, short of powering down immediately and leaving it out to dry for a week.
A few differences…
Apple’s base 1-year warranty doesn’t include accidental damage but AppleCare does, as well as extending to two years and adding Apple phone support.
Best Buy will ship the unit out and get a refurbished replacement to you in a week or so. These are handled by a third party so you may have issues they won’t help with. I’ve heard horror stories with refurbs coming back dinged and scratched for example with no recourse for “cosmetic issues”.
Apple Stores will usually have refurbished units so you can walk out with a replacement in hand. Only caveat is iPod Touch in the right size and color may not be well stocked. The several refurbs I’ve seen have been flawless.
I’d never get an extended warranty for an adult, even with the limited accident insurance, since you’re paying for the warranty and the $30 per incident fee. But a 13 year old? That seems far more likely to be an issue. Some kids are careful at that age, but most aren’t.
You might also consider just getting a nice rubberized skin, one with enough of a bumper in front that the skin takes the impact if it’s dropped on the floor. It’s difficult to break the glass face with one of those protecting it - you have to drop it on a hard, pointy object, not just the floor. It won’t protect from water damage, but dropping it into a toilet or something requires a lot more talent than just dropping it on the floor.
In the end I purchased a 2-year policy from Square Trade which includes accidental damage. Before buying it online, I called them and asked if they had any coupon codes. The woman emailed me a coupon code for 30% off. I then purchased the two-year coverage for $42. And since the iPod was bought with Amex, my cc will give me a third year of that coverage AFAIK.