I am a new iphone 4 user... I have insurance what does the Manufacturer Cover in damages or design flaws ?

I recently was talked into upgrading to an iphone 4.....I Love Apple and all of their products and accessories!!! My son & I have become computer genius
within 5 minutes, there is actually an app for everything....Except a design flaw or water/steam damage? I was hoping to resolve this unfortunate experience!!!
I had my iphone 4 in the outlet in the hallway near my bathroom.. I love the 80's I Heart Radio App...Apparently, the phone has water damage and needs to be looked at or replaced. I have been to 3 AT & T Stores before I received excellent customer service by speaking to the store manager...I had a different design flaw with Moto Atrix was still within the Manufacture waranty. They said it was a desin flaw with the keyboard...not able to fix and would have to pay the deductable.. That is not good enough!!! I buy everything i this i that!!! I can't live without my iphone I have money with Starbucks and also linked to Shell Rewards
and Speedway... Not to mention all my personal numbers, emails, facebook friends.....The phone was not dropped in water and was not in the same room as water but being 10 to 20 feet away something with the steam set off the water display for water damage??? I don't know why this is? When I first started on my quest with AT&T I thought I would have a grace period or design flaw? Please help!! I am unable to conduct daily day to day things without my iphone I was advised if they cracked my SIM card it's broken forever???

If the little built-in water detector on the iphone shows positive, ie water damage, then Apple will not do anything for you under warranty. The best thing that they will offer you is a swap to an identical (new phone) at a price around £150 in UK or the equivalent in your own country.   If you are backing up to iCloud (or your computer), the new replacement unit will be able to load up all your old information etc. everything apart from synced data like music which you will need to re-upload.
You could argue that the water damage sensor on the iPhone is too sensitive etc. but Apple don't respond too well to this although you will be in a better position (and will be listened to more sympathetically) if you have bought AppleCare for your iPhone.
I know that this is annoying but I hope that you manage to get your problem resolved soon.

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