Did it break because you "did" something, or it just stopped working properly? Maybe your phone is still under the 1 year warranty? Check into it.

If they were charging you the insurance each month, I'd say you are entitled to get a new phone (albiet refurbished) for the $50 deductible. If they don't honor that, I would use that as a reason to legitmatly get out of the contract. They aren't holding up their end...you didn't just pay them, they billed you for insurance...

maybe find a friend who's a lawyer and ask them about it?!

It doesn't seem right.

I will say, you should be glad that at least they knew they were giving you bad equipment and let you swap it out in the beginning. Not all companies will do that. They try to "fix" it until it's no longer under warranty.