Verizon Wireless stolen phone Internet

I opened a new cell phone account and purchased a new iPhone, which came with a 2-year agreement.  Unfortunately, only a few weeks later my iPhone was stolen.  I contacted Verizon to get a new one, but they told me I would have to pay full price ($700) for it.  I explained that if that's how they were going to be, I'd just forget about the agreement and open a new account with another cellular provider and get a new phone through them.  But I also explained that I was more than happy to keep my account with Verizon and buy a new phone (for $200 or so) from them if they would make me such na offer.

The 2-year contract is what you need to consult with. Normally, the contract will allow you to have the phone (iPhone) in a discount rate because partial cost of the phone is divided and included into monthly payment of the contract. In other words, if you buy the phone alone without a contract, you would pay the full price ($700). If you entered a contract with the phone, you would pay ($200) or so and the rest is actually divided to be paid in the plan. In the past, the plan cost will NOT reduced after the contract ends because they expected you to buy a new phone, so that they can charge you for the same amount again (many people renew their contract with so called 'free' phone). That's why the contract is very strict and cannot be changed unless you pay the cancellation fees.

They simply refused, said there was nothing they could do because I did not purchase the additional insurance (which is true), and would only sell me another phone at full retail value.

That's why they want the whole new phone cost if you want to buy a new one. There is no way out and any cooporation would never want to be tagged with the cost of the phone (including all of other phone service providers).

It's not Verizon's fault that my phone was stolen, but they could have worked something out with me that would have allowed them to keep a customer (I might have even re-signed a longer agreement if they had offered)

Nope, they would not do that as I mentioned earlier (the cost of the phone has been included in the plan). If you go through the contract without a problem, then you would see nothing wrong with their service (or with any other providers). I did have similar problem (broke the phone instead of stolen) and that is the exact same treatment. However, I did understand why so no complaining.

PS: Your story is many years in the past, so I am guessing it was during the beginning of iPhone.