I had insurance through Asurion a few years ago but dropped it when I found out about the loopholes they had. Had a phone (Razr2) insured with them, after two weeks I was coming out of a nice air conditioned basement of a hospital and it was July and about 85 degrees and humid. Went to turn my phone on (had no service in the basement so didn't want to waste the battery) and it came up with a blue screen. Tried rebooting, a battery pull, no change. Took it into the store and they said the water damage stickers had been tripped and neither they nor Asurion would replace anything with water damage. So 2 weeks into a 2 year contract and I was back to my old phone. Ended up selling the Razr for parts and didn't use insurance again.
When I got my Incredible I figured I'd better get some insurance so I decided to look around and found that I was able to get insurance under my homeowners insurance. It's through a subcarrier named Inland Marine and it's for property that will be leaving the home that's insured like laptops, guns, etc. I pay $18 a year and have a $100 deductible for $600 of coverage. I asked what it did and didn't cover and they said it won't cover normal wear & tear, software issues, or electrical problems. They said just about anything else would be, like dropping, crushing, water damage, etc. All I need to do is bring it to my insurance agent so he can document the damage/ condition and they will cut a check for $600. It's cheaper than Asurion, I am assured of getting a new device (buying it retail), and if something is better I can switch without being hassled by Verizon (again as I would be buying it retail). Definitely something to consider!