I know that it is "official" that Apple will replace water damaged Iphones for a fee (http://www.apple.com/support/iphone/service/faq/#warranty7). There are also several threads, and a blog, all that I have completely read. But two key points remain unanswered: 1. Water damage replacement is defined as an "Out of Warranty Repair". But, it remains unclear whether the definition of "Out of Warranty Repair" is defined as an Iphone under warranty with a "condition" (e.g. water damage) that is not covered, or if an Iphone with an expired warranty is also eligible for this paid exchange. 2. Will the replacement Iphone carry a full 1 year warranty from the day they give it to you, and be eligible for extended Applecare? On a side note, last week my Home Button (on my 3G under warranty) stopped working. I bought it into the Apple Store. The "Genius" looked into the earphone hole (for water damage), saw none, and replaced the front assembly (screen and home button) at no charge. After I brought it home, by happenstance I was reading an article that described the two water sensors. I checked mine, and found the one in the bottom connector (that the genius did NOT inspect) was red. (It works fine, and has never been exposed to water AFAIK). So, here's my question/dilemma. The warranty is up in a couple of months. I was going to buy Applecare for an additional year. I have also read (and my recent experience seems to verify) that many times they only check the earphone indicator. So, should I still buy Applecare, and hope that they make the same mistake in the future, or is it likely a waste of money at this point?