A bad ESN is usually the result of a phone that has been reported stolen or lost. As far as I know from working as tech support for a wireless company before, the phone cannot be a activated on the original network or any other network. The phones you see on Ebay are normally bought for spare parts or testing apps.
The only way you can get ins on a phone covered by Verizon is it has to be bought from a corporate or a retailer for Verizon. Ebay has an ins co for electronics. Squaretrade