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Happy news, credit card insurance works!
I was refunded the cost of the Sony PRS-505.
I won't be replacing it straight away though as the Australian dollar is way to low for that. Currently around 65c to the USD and I got my PRS-505 when our dollar was 98c to the USD.
With the current readers out there at the moment I would probably go for the 505 again as nothing else seems much better. I have heard about the 700's bad screen and will stay away even though touchscreens are cool.
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