After checking out the iPhone 3G display at my local Best Buy, I spoke with one of the employees in the cell phone department. At some point during our conversation, he mentioned that Best Buy also offers insurance on the iPhone 3G. According to the employee, the iPhone 3G is covered under the same product replacement plan (now called "Geek Squad Black Tie Protection") as other phones sold at Best Buy. It's a bit pricier than others at $15 a month, but it does cover everything including accidental damage. Theft, loss and water damage are not covered.
The only caveat is that Best Buy will only cover iPhones purchased at Best Buy.
