I know that Southwest Airlines has damage coverage that is beyond the value of my Martin D28 so I never take out insurance. Here is what their policy is on baggage:
"Liability: Unless excess value is declared and charges paid at the time of checkin, Southwest Airlines’ liability for lost, damaged or delayed baggage is limited to $3,300.00 per fare-paying Customer"
http://www.southwest.com/travel_center/baggage.html