SIM free & insurance quezzies from newbie :)

JonPoint

Hello. New poster here. Been checking out this site for years and read with interest.

I am after an Iphone 3gs 8gb black version. I have worked out that If I get a sim free version and stick my SIM in there, I will save myself £300 over 2 years compared to the offerings out on the market at the moment :j

Only things I am concerned about are the 'Sim free/unlocked' aspect and the insurance.

1. I have heard that if you buy a sim free/unlocked phone, you can sometimes have problems in terms of the software reverting back to the old network and not the new one and thus it not allowing you to use it. Is this true?
2. Also, If i buy a sim free version brand new etc etc from the likes of ebay/other online auction websites, will insurers cover this type of online purchase? I ask as I have just seen a website that refuses to give iphone insurance if bought over an auction site.
3. And finally, I have heard good things about Oranges phone insurance, would they cover the Iphone if bought through an auction site even though I will be using it on their 'SIM only' packages?

Many Thanks,
JPoint