So besides for water damage, what else am I really missing out on?
A drop can cause internal damage to the phone too. It can cause bending and cracking of the case. If your phone is clearly smashed and not turning on, Apple won't just throw a new screen on it an call it a day. They will charge the $~300 out of warranty replacement fee.
If all you worry about is the screen cracking and not really how the phone looks after the steamroller went over it, sure, it's not a great value. Effectively, it is an insurance plan. Like all insurance plans, you pay some up front, and a small deductible, in case something happens. It's also up to you if it's worth it to pay up front right away, or simply put some money aside each month for potential repairs/replacement (or, of course, you can just do nothing at all).