I think it's terrible for any company to cause an employee to reasonably think they need to pay out of pocket for the company's equipment. "Bay Area standards" have little to do with it. My first part-time job was doing tech support for a small town public school district that had very little money and was far from a flashy Bay Area tech company, but they had a supply contract with HP that covered equipment failure and damage.

I don't think anyone was prepared for this to be something that wasn't covered under warranty or, if it wasn't covered, so expensive.

Where I work there is an insurance policy to cover laptop damage, they are currently in talks with the insurance company to get the damage covered. I think that in the end my co-worker will be refunded the money. I don't think they will be left with the bill.