You can get it replaced the same day at an Apple Store instead of waiting for them to ship a new one. It sometimes takes Best Buy a couple weeks to get a replacement. If you need to get the phone replaced for whatever reason and don't live near an Apple Store, they will waive the $29 two-day shipping fee and ship it for free. Tech support is extended from the included three months to two years. It's pro-rated, so you'll get a portion of your $99 back if you cancel/sell it before the end of the two years.
It covers two incidents of accidental damage. It doesn't cover theft or loss. That type of insurance costs more. The main factor I look at is how fast I can get a replacement. I also prefer to go through Apple because it seems to put you in a VIP status with them. Using a cheap loner phone from Best Buy for two weeks would completely suck.