Can I sell my iPhone 5 and claim a replacement on my insurance?

I have good insurance for my i5. I wouldn't have to file a police report or do any paperwork. However if I choose to sell it and replace it will a friend be able to use it on a different network. It is unlocked.

Added (1). Update: There's a deductible $125 for the first replacement and $250 for the second

Yes, But i think youd have to pay for a new one but not full price

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