This should make it clearer.......from the Kindle support page.
"Protect your Kindle for two full years -- Every Kindle comes with a one-year manufacturer's warranty. With the 2-Year Extended Warranty for Kindle, you will receive protection against accidental damage such as drops or spills for the entire two years. In the 2nd year, your coverage extends to protect against failures that occur during normal operation. This helps avoid the inconvenience and costs associated with a broken device. The warranty stays with the device even if it is gifted or sold to another party.
What is Covered
* Two years of coverage (limited to a single claim) for accidental drops or damage such as spills that affect the functionality of your covered device
* One additional year of coverage (after the end of the manufacturers warranty) for failures that occur during normal operation
* Only available for U.S.-based customers
How it Works
* Purchase 2-Year Extended Warranty for your qualifying Kindle (you will receive an email and an information packet in the mail)
* Contact Service Net customer service at (877) 441-3836 if your Kindle fails
* For covered failures, receive a replacement Kindle and return your damaged device to Service Net "
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