It does not mean you are covered when your phone drops into water. There are certain occasions when you may accidentally drop your phone in to water. Probably it is raining on you where you can not get any shelter and you have your phone. It is likely to suck water and get damaged. Your phone may simply drop on a hard surface as a matter of accident. Probably you fell on the side of the pocket where the phone is. You need some consolation for that and iphone 3gs insurance does exactly that.