Whoever told you that gave you the wrong information. Think about it. How would any company, let alone Apple, let you add any type of protection plan or insurance on something that was already accidental damaged? What's the point? If that was the case there'd be no need to add on ANY type of protection plan prior to buying a phone or any device. Let's just wait till it's damaged. Makes total sense.
My granddaughter (with her mother alongside) about 3-4 weeks ago took her 5 month old broken screen 5S into an Apple store and that is EXACTLY what they told her. "If you buy AC+ will we cover the screen replacement for you under the plan." She went in just to have it replaced with NO intention of buying AC just paying the cost for replacement which she saved up for like 3 months.
This offer has been documented MANY times all over the web over many years. It's just exceptional customer service (plus they are selling their plan). AC+ is not "insurance" it's simply a service plan for an electronic device. While most other companies would never do that Apple (as much as I hate them) tries to go the extra mile for a customer.
Consider it a "perk" from a company that sells overpriced electronics trying to do good for their customers and maintain their reputation. That's one of the reasons why they are so highly rated for customer service. Think of it as like Costco who will take back and refund a fully eaten turkey from a customer who brought in the carcass 2 weeks after Thanksgiving because they felt it wasn't good enough, or fully refund a 4 year old vacuum cleaner because the customer SAID it should last longer (I swear, I saw it with my own eyes plus a lot more). Sometimes the GOOD WILL is worth millions (or billions in the case of Apple). Doing this "favor" for a customer might cost Apple $10 in the end but generates 100 more customers worth a lot more money then it cost them to fix it because of the goodwill it generated.
Here is an interesting article: https://www.americanexpress.com/us/...es/7-customer-service-lessons-companies-best/