The $7 Total Equipment Protection plan covers just about anything you could do to your phone to be honest. You have the first 30 days after buying a phone to add TEP if you chose not to at the time of purchase, after that you are stuck without it.
If you break the phone, or something is wrong with it like the mmic or spewaker going out, just go to a service location and they will have a tech look at the phone and try to fix it if they can. If they cannot fix it then they will either swap it out with a new one at the store, or order a replacement phone to the store and call you back once it is in stock (Assuming no water damage). If you go to an "Advanced Exchange" location instead, there are no techs, but they are authorized to order a replacement as long as there is no water damage (yes they are trained for that at least, its not hard to spot).
If you lose the phone, it is stolen, or there is water damage, then there is a $50 deductible and you have to go through Asurion insurance, you can get the toll-free number from a retail store. After the deductible they will send you out a replacement phone, pre-activated I believe (but I may be wrong). You can only collect an insurance phone 3 times per year however, and the previous ESNs are blacklisted, to prevent fraud.
If you actually break down the price of an insurance phone compared to buying a new phone at retail price, it is something like $134 for TEP including deductible, versus at least $180 for a new cheapest phone in store, so it is well worth it
