A successful business doesn’t have to be about creating something that doesn’t exist-sometimes augmenting what’s lacking in other products can be a road to success. I recently interacted with a company that found a way to fill a much-needed gap, and at a price point that for me that was truly worth it.

I am a self-proclaimed techophile, a gadget junkie, what tech companies call “the early adopter” or what Malcolm Gladwell would call a “maven.” So when the iPhone first came out I was already heavily invested, and I had to prove everything I had thought and said about it was true.

To make that first purchase, I stood in line outside of an Apple store in San Diego for about three hours. I invested not just dollars but a significant amount of time in getting it. So once I had the phone, I took it everywhere with me. Then tragedy struck—in the third week of ownership I made an awkward arm motion and spilled water all over the device. The phone was dead.

When I went to back to the Apple store, where they told me that the $79 warranty I had purchased (via Applecare) didn’t cover water damage. I was livid, I was heartbroken, I was outraged. Why wouldn’t a warranty that expensive (nearly half the price of the phone with a two-year agreement) not cover one of the most common causes of damage? I knew the reason-of course Apple had realized that covering water damage would be more than the warranty was worth, and tailored their agreement accordingly. I also knew that they were well within their rights to do so and I should have been aware of the terms of the warranty, which I accepted, when I registered my phone.

But shouldn’t there have been an option? It took years but now there is one: SquareTrade, a company offering warranties on all kinds of hardware that they don’t produce. They offer simple warranties with easy to understand pricing. You sign up, post a copy of your receipt, pay an appropriate fee and you’re covered. This company doesn’t cover just iPhones either; their services work on all of kind of high-end electronics: Blackberries, appliances, TVs. You name it, SquareTrade is willing to work out a quote for it.

And did the warranty pay off? I personally know that it does, because my wife just did the same thing I did with her iPhone 4. It took about a week to go through the process of letting SquareTrade know we had a claim, replacing the phone, and getting reimbursed for the replacement cost.

An interesting business plan to say the least. BestBuy and others have been offering “protection plans” for years, yet something was still missing from the market. I think SquareTrade found it with their simplicity and straight-forward offering. And from what I experienced, excellent customer service.

The insight for business owners is that you can improve on what is out there For many products and services, there are needs that are not being met, and you might get further finding solutions than shutting down a segment of your consumer base. Customers today are willing to meet companies in the middle; in the case of Apple I would have been happy to pay a little more for a warranty that covered more than the standard one, which is exactly what I did with SquareTrade.

This post isn’t meant to incite you to go and buy supplemental insurance for your electronics, but maybe it will help you consider one question: What can your company do to improve on what you offer customers so that a third party doesn’t have to fill the gap?