It's more like road hazard insurance and wheel insurance (but not cosmetic, which is what most damage is going to be).
Just as a comparison, if you buy 21" Continental ExtremeContacts from TireRack, they include the manufacturer's Road Hazard warranty. Other tires for the Model S in 21" size are about $30 per tire for the road hazard warranty.
So Road Hazard warranty's are moderately cheap. You are buying a warranty for strucural damage to your wheels. Personally, I'm not bothering. Most often I get curb rash, which isn't covered anyway. Maybe if I lived in a pothole-heavy area, it would be worth it. But $900 is awfully expensive to insure $3500 in wheels (it costs $3500 to buy 4 new 21" wheels direct from Tesla). The tire warranty's are either included or a better deal direct from Tire Rack.
For the 19" wheels, I definitely wouldn't bother -- the 19" wheels will eventually be all over ebay for cheap (they are already selling person to person for $1000ish for 4 wheels -- may as well buy 4 spares for $1000 than $700 for insurance...).
Just my opinion, but I'm not bothing with the wheel/tire warranty.