In the past they would get you a new one if they didn't have a refurb available. Demanding that you take a much lesser phone in exchange is not credible, even if their terms dictate they can. I have to file a claim soon as well, been living with a cracked screen for awhile now. They can replace it with a Droid 1, Droid 2, or Droid X, but nothing else. In fact I'm going to wait until Droid 2 is out before I make a claim.