If the company won't fix water damage, don't bother trying to trick them. Just get a new phone (this time without insurance).
They are very good at spotting such damage. As I said, forget about insurance in the future, they charge $5 a month plus a $40 fee and sometimes shipping ($10). If you broke your phone once per year (doubtful) it would cost you $110. Odds are you'll only break it once every 18 months ($160) or every to years ($210). New phones cost less than you'll pay for insurance.
In the past two months, two friends just broke their 7230's. One got another 7230 one on eBay for $100 (in almost new condition) and the other got a 7290 from T-Mobile for $199 (by extending his contract for 1-year). They wanted to charge him $299 but he said, "I guess I can just port my number to Cingular" since he had no contract with them at that point.
Even at $199, T-Mobile isn't losing any money (and they aren't losing a long time customer [known as churn]). Plus, when you really think about it, you'll most likely want to upgrade to a new phone once ever 24 months anyhow.
Just my $0.02.