[CigarNut]

I've had Applecare and used it to replace my iPhone 3G when the screen cracked and my iPhone 4 when it stopped working correctly. No deductable and easy replacement as long as you are within the coverage period (I think it's one year, but it might be two). The only catch here is that you might have to wait for a period of time (a few days) for an exchange.

Next time I will probably go through Best Buy. You can pay a one-time fee and have complete coverage for as long as you want (1-3 years I think). No questions asked return policy and they have a stolen phone app that erases and locks your phone if you report it stolen. The replacement is immediate if you are in the store and they have it in stock.