I just dropped my phone in water.  It is less than 90 days old.  I have AT

I just dropped my phone in water.  It is less than 90 days old.  I have AT&T...does anyone know if they will cover it or does apple care cover it?  Are you just out of luck with an iPhone if you have water damage?

Of course they do not cover it. 
Out-of-Warranty Service
If you own an iPhone that is ineligible for warranty service but is eligible for Out-of-Warranty (OOW) Service, Apple will service your iPhone for the Out-of-Warranty Service fee listed below.
iPhone model
Out-of-Warranty Service
iPhone 4, iPhone 3GS,
iPhone 3G, Original iPhone
$199
A $6.95 shipping fee will be added if you arrange service online or by calling Apple Technical Support. All fees are in U.S. dollars and are subject to local tax.
For example, an iPhone that has failed due to damage or liquid damage is eligible for Out-of-Warranty service. However, certain damage is ineligible for OOW service, including catastrophic damage, such as the device separating into multiple pieces, and inoperability caused by unauthorized modifications.
Apple reserves the right to determine whether or not your iPhone is eligible for Out-of-Warranty service. iPhones that are repaired or replaced have a 90-day limited hardware warranty or assume the remainder of your standard warranty or AppleCare Protection Plan for iPhone coverage, whichever is longer. Please see Apple's Repair Terms And Conditions for further details."
http://support.apple.com/kb/index?page=servicefaq&geo=United_States&product=ipho ne

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