Verizon activating replacement phone; difference between "damaged" and "defect" phone/ cost difference.

So my iPhone 4s is broken and I just received a new replacement phone that I have to activate. The only hitch is- I have to send in my old phone. It says if my device has a "defect," I must return within 5 days or I will be charged $500/ if it is damaged and not defective, then I will also be charged $500. There is a possibiltiy that my phone may be damaged, but it says under "damaged" to just send in my old phone in the original packaging. Will I have to pay the $500 if I send it in as "damaged?"