I've commented about this at a few blogs, but here's my experience with that plan. It really is as good as it seems. I used this feature in August, and this is how it went for me.
July 28th I paid my Verizon bill in full with my wells fargo signature visa. At some point in between then and August 10th I "damaged" my phone. I filed the paperwork, I think directly to a visa subsidiary (so I'm not really sure how this would work with the Propel). After going back and forth in a few emails/calls so that they could verify I did actually have active service at the time of the damage, they ended up (no idea how) paying out $585 after I purchased an LG G3 (replaced a damaged Samsung Galaxy S3) out of contract for $600+tax. I paid for the new phone with a Chase Ink card, and after putting in a request (it was coded so as to not get 5x points) they actually ended up awarding me 5x points on the phone.
I also earned 20,000 points for spending $1,000 in the first 3 months, and used this before the onevanilla cards stopped working on bluebird. So for a no annual fee card, no monthly fee insurance, and a $25 deductible, this is really a fantastic benefit.