What kind of "tough case" do you have? This sounds like a case where the screen (or more accurately the whole Kobo) was twisted or bent which cracked the screen. Drops and bangs are less damaging than twisting (very thin sheet of glass that forms the backbone for the e-ink screen doesn't take well to bending or twisting). Most cases I've seen will probably protect the screen from something being dropped on it or a point pressure on the screen, but if you can flex the case at all it won't protect it from fatal twisting/bending if you put it in a purse or backpack or briefcase. So even if you treat it very carefully that might be why you're still getting damage (especially considering the number of bum screens you've had).
And yes, Kobo customer service generally ranks up there with the worst of them, but as others have said paying shipping and getting a refurb are par for the course for warranty. Ironically I bought a new watch tonight for $12.99 and happened to read the warranty info and it says they want $8.50 to cover shipping and handling if I ever need to use the warranty
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