Does MS replace it with a new surface, or a refurbished one if you do it online?
When I went to the store, they swapped it out for a brand new one, granted I was still under the 30 day return policy.
A few months down the line, I bet they will have a nice build-up of returned units that are waiting to be refurbished units. Maybe that is why the ADP warranty is so cheap, lol.
In any case, most warranties will always give you a refurbished unit.
I have a squaretrade warranty for my Samsung Galaxy S4 with a $99 deductible, recently after a year, the phone has a broken vibrator motor and dirt inside the camera. After I called them I decided to repair it myself, because squaretrade promises to repair your product and if not repairable, pay you out the cost of a replacement "refurbished device". I ended up buying a replacement camera for $17 and a replacement vibrator motor for $5, opened it up and repaired it myself, better than getting a refurbished unit back and spending $99 on the deductible.
In any case, the SP3 is probably glued together so it will be hard to repair anything major except the battery.