Does Apple have a warranty on water damaged products?

Today, my iPhone 4 fell into the sink and automatically stopped working. However, I don't have insurance on it with my phone carrier. Apple has a 1 year warranty on all its products, but i don't know if they accept water damaged products. If i bring it to the store, will they exchange it for a new one?

Added (1). I've only had my iPhone for 28 days.

When did you buy your Iphone? If it's been a year since the warranty then you will be paying a lot of bucks, but you may get an exchanged for a new one but it will cost more possibly.

Sadly,

Apple's iPhone warranty does not presently cover water damage.

This is the from the Apple Care terms and conditions:

4. What is not Covered?

4.1 Hardware Service. Apple may restrict service to the Covered Equipment's original Country of Purchase. The Plan does not apply to:
(i) Installation, removal or disposal of the Covered Equipment, or provision of equipment while the Covered Equipment is being serviced;

(ii) Damage caused by (a) a product that is not the Covered Equipment, (b) accident, abuse, misuse, liquid contact, fire, earthquake or other external causes, (c) operating the Covered Equipment outside the permitted or intended uses described by the manufacturer, or (d) service (including upgrades and expansions) performed by anyone who is not a representative of Apple or an Apple Authorized Service Provider ("AASP");

You should have purchased extended coverage.

In the warranty they refuse but I've taken my iPhone into the apple store 3 or 4 times, all with water damage, and just pretended I didn't know it had gotten wet. They have always been nice. Exchanging it and only refusing me once, charging me 100 bucks to fix it. If its not too far you miss well go to an apple store and see what they say (just don't mention you dropped it in the sink)