Apple has recently revised its replacement policy regarding water-damaged iPhones. The company still won't replace your damaged device for free if its Liquid Submersion Indicator has been activated (see "Liquid Submersion Indicators Reveal Accidental Dips," 2009-02-17), but you can now purchase a $199 replacement phone. While $199 isn't cheap, it's still $400 to $500 less than purchasing a new iPhone without a 2-year contract.

According to coverage at Ars Technica, an Apple Store sales rep indicated that whatever generation your damaged iPhone was, the replacement would be the same (e.g. if you soak a 3G iPhone, your replacement would also be a 3G iPhone). Other sources note that the $199 replacement phones are refurbished models, meaning they've been previously returned to and tested by Apple, and come with 1 year warranties.

Just why Apple has decided to revise its replacement policy is unknown. Speculation ranges from Apple's need to unload extra inventory as a likely refresh of the iPhone approaches, to general improvements to Apple's repair policies, to Apple recognizing the possibility that damage could be unfairly attributed to water (it's possible that the Liquid Submersion Indicator could be activated by an event that didn't damage the iPhone). Whatever the reason, this new policy will certainly be welcomed by those suffering from watery misfortune.