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A warranty protects you against manufacturing defects. A protection plan protects you against accidental damage or breakage. Thus, if you sit on your Kindle and break the screen, the warranty would not cover you, but the protection plan would.
Personally, though, I've lost count of the number of eInk devices that I've owned now, and I've never broken one. I'd use the money on a decent case for your Kindle.
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