Watch your iPhone! (See all news)

A study performed over 10,000 iPhones reveals that nearly a third of all Apple iPhones suffer a break-down within their first two-years, although the majority of the failures are due to owner damage, reports warranty provider, SquareTrade. Of all iPhone accidents studied, drops resulting in broken screen and water damage were the most encountered.

The study also found that while the iPhone had a better failure rate (only10%) from normal use over 22 months, compared to the Blackberry (15%) and Treo (20%), failures from accidental damage were high at over 20% in the same time period.

The analysis concludes that nearly two-thirds of iPhone accidental failures were the result of a drop or fall, mostly resulting in cracked, unusable screens. Water damage was the next most frequent source of failure, accounting for over a quarter of reported accidents.

The most commonly reported water incidents were iPhones dropped in drinks and in the toilet. An interesting fact is that the iPhone 3G’s malfunction rate is 40% lower than the iPhone Edge model, after the first 9 months of data for the 3G, cool right?

We’re not sure you all know, but Apple`s warranty doesn’t cover accidental damage and most consumers are not even aware there is an option to better protect their iPhone. SquareTrade, for example, in business since 1999, is the one of the largest independent warranty provider, offering consumers an alternative to big retailers' or manufacturers' overpriced and under-serviced warranties.

The company offers iPhone owners affordable warranty coverage including coverage from accidents, starting at just $3.20 a month, while AppleCare is both more expensive $5.75 a month and does not cover drops and spills.