That's because unless you got the accidental protection plan it's not covered.
The standard warranty protects against manufacture defects and normal "wear and tear" on the device. A cracked LCD screen is not normal wear and tear. But the accidental protection plan would cover things like dropping your phone, spilling liquids on it, etc etc
Best Buy's "Warranty" is a scam. When I got an iPod touch from there, the salesman said that it covered everything, including accidents. I paid the extra 30 bones because I thought that was a good deal. When my screen got a small crack in it, I took it to them and of course, they wouldn't replace it.
The worst part was I didn't drop it or anything. It just came out of my pocket like that one day, and of course, the small crack spread until the whole screen was one big crack and the iPod was unusable.
And this isn't just one salesman that will lie to you and tell you that either. When I went to buy my V the salesman tried to sell me the warranty. I told him what I related here and he said "That's weird, they should have replaced it."
I don't doubt what you are saying is true, but the salesman are either uninformed or straight lying. Eitehr way, its a scam. Don't bother buying it.
At least on the V you can buy the insurance from Virgin. OP if you get another phone, get the insurance and leave it stock.