mobile device protection association possible scam or fruad

a couple of months ago i purchased an insurance for a cell phone it insures if its stolen or damaged but not if you lose it. the company is called mobile device protection association this is what it states "# Negligent loss, Unexplained disappearance or loss due to voluntary surrender to a third party such as leaving your phone unattended or unsecured. and i said phone was stolen but they is was do to unsecured and negligence loss. the story is this "My brother Alberto Saravia, the user of the cell phone, was playing soccer with my dad in Zalud Park in Porterville, California. He put his cell phone in a gym bag along with my dad's eye glasses, tennis balls and other personal things. They were very close to the bag, approximately 50 feet distance. While they were playing, somebody stole his cellular. He was reasonable, careful and diligent taking care of his cell phone. Accordingly, I am requesting a replacement of the cellular device within two weeks(14days) of receiving this letter , since we paid the insurance and I totally disagree with your conclusion of "UNSECURED & NEGLIGENT LOSS." they made me fill out a police report and they have offered me a refund for the insurance which is 50 bucks after i told them i do not want the money i want a replacement phone which is a att blackberry 9000 retail value is 439.99 i don't know why its so expensive. i have looked many bad things about this company because when you loss or get a phone stolen its always your fault regardless what happens. many places have bad experiences with this company and now i know why. i said the phone was in a gym bag making it secure and being diligently looking at it so there is no Negligence or it was unattended by the definition part of the word which means looking at it..... what should i do the 14 will pass by 8/2/10 i have asked for a replacement but didn't answer back... any advice would help full