my terrible experience with cell phone insurance

Last week Lauren dropped her phone in the bucket of soapy water while she was washing the car. Crazy, right? So nothing happens until about Friday when suddenly her phone won't turn on. "No big deal", I think, "We paid for the insurance on this phone." So we grab the receipt and box and toddle off to T-mobile to find out about getting a new phone. I explain what happened to the kid at the T-mobile and he smiles knowingly and pulls up our information on the computer.
"Wait", he says, "you don't have insurance on this phone." Well, I saw something on my account that seemed a little strange the day before so I explained that I had bought the phone for my husband, but he didn't like it, but when Lauren trashed her old one, he just switched the sim cards and took his old standard flip phone back. Of course, I had the original receipt showing that I had purchased the insurance on this phone and had been making the payments all along, about 10 months or $60.
Well, the kid informs me that insurance stays with the phone line, not the phone, which is ridiculous, because how many times do you drop your phone # into the toilet? Never, right? And so, even though I have a receipt for the phone and it says "handset protection and warranty" right on it apparently, I have insurance on David's stupid little flip phone.
I try to make some headway with this kid and he suggests that I talk directly to Assurant, the insurance company. I explain my predicament to them and they tell me the exact same thing. They say they're really sorry, but so many people try to scam them by trading phones when they don't have insurance that they can't do anything about it. (of course this is the exact opposite of what we did)
I explain again that I have the original receipt with the purchase of the phone and the "handset protection warranty" and both phone numbers are on the same account. We are the original owners. The phone hasn't switched owners, just users. However, this makes no difference. I ask to talk to the supervisor to whom I must explain the whole thing again. She comes on the line after the first person says that he's explained the situation to her. I ask if she know what's going on and she says, "Well I understand that you want to replace a phone that you don't have insurance on." I was fuming! I re-explain the whole thing and she basically says, sorry, Is there any thing else we can do for you. No! You can do what I've been paying you for 10 months to do. Oh, and during this conversation, they inform me that there would be a $40 replacement fee for the phone if they did cover it, so maybe I could just find a $40 phone for my kid.
Let's just forget that I bought this touch screen, web-enabled browser phone for my husband.
So I get off the phone with the &@#^ insurance company and the T-mobile kid suggests that I talk to the people at "customer loyalty" since I have been a loyal customer for so long and I'm now threatening to cancel my 3 phones. So I call and have to explain the situation to the first rep and then again to the loyalty department and they offer to take $40 off the price of a replacement phone. So after spending $60 on insurance, I can spend another $105 and get a replacement phone, or I can get a crappy phone for $40.
This begins to seriously tick me off.

Who in the world needs insurance on their phone #? I bought insurance on a phone!