It does, but you have to pay $79 per repair and you can only do it for 2 times during the 2 years. Applecare used to be amazing for the iPhone because a few years ago, if anything is wrong with your iPhone and you have Applecare, you get a brand new one right the way. Now they actually repairs yours.. imagine that LOL.

$79 is still a really cheap repair cost if you drop your phone into the pool or something. But not so much if you cracked your screen. I think you could find many places replace screen at around $79 or less. And even at Apple store it is around $150.