That's what I'm saying. They should treat it like an 'exchange' where you return the old 'broken' phone for a brand new in box replacement. I hope they wouldn't give a refurbished cause it isn't a repair unless past the return period which when you experienced the issue it was. I'm not a lawyer or know the law too well but if isn't illegal it should be cause that's rude when you try to legit fix something instead of immediately returning it and get punished for it.
Unfortunately in a warranty situation with phones, they do not replace defective phones with new ones (unless during the WFG period of 14 days), because it is at their own discretion whether they wish to insure to replace with new, or save costs and warranty replace with CLNR. In their defense, if they did have to replace defective units with brand new ones, the insurance costs would be exhorbitant, and that would only get passed on to you and I, the end users, in the form of higher initial costs.
Also, if they were forced to replace with new, then there would be a GLUT of returned units that they would have to sell at deep discount to keep them out of inventory, and that would reduce the retail value of the new units, again, ultimately costing you and I more money as they would then have to find a way to offset those lost profits. It would likely result in higher activation, line and data fees overall. In the end, the company is going to maintain a profit margin that is palatable to them and we would be the ones to support that profit margin with our pockets.
This is why they sell the supplemental insurace (that and to give them an additional profit center). So if you want new, you buy the "rider" insurance that replaces with new, and you get what you want, and only YOU pay for it. This means your replacement costs aren't borne by the other owners, most of which will never replace theirs.