Insurance is usually from Asurion which is not the cell provider.
Put it this way, if you get a 700 dollar phone for 200 and it breaks 3 weeks later, without insurance it will be pricey to replace.
I just made a claim for a bb classic for a friend. Had phone 5 days. 100 deductible and got new one no problem. Would have been 3-400 to buy...