A Kobo representative could probably have better answers, but I'll say that I bought the Protection Plan within 48 hours of getting my KT. Some points to think about
: you have to plug in the KT and sync over the Internet to complete the purchase of the Protection Plan. That'll probably be hard to do if it is already damaged significantly.
As well, I read the fine print, and one of the points is that, to make a claim, you must send your KT to them in the original box/packaging -- so don't throw that away!
Personally, I think it's worth it, assuming they keep their word, because it covers drops and liquid damage, which is not something I see with many other electronic device warranties. I've had three hand-held devices damaged in my life so far, so I think the empirical evidence is against me.