You kept using it after you dropped it. Perhaps the autofocus wasn't working as flawlessly as you thought. Perhaps using it was hitting something in the lens and you damaged the USM.
I droped my 16-35 a few months back. Canon fixed it for about $300 no problem. I doubt they are trying to pull one over on you.
But, for that price I think I would get it back and use it till it died. A new one is not much more.
One other thought; It might be time to call the homeowners insurance provided you have it covered.




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