iPhones are not waterproof. Warranty do not extend to water damage and iPhones have internal indicators of water leakage. If Apple is not confident with iPhones waterproof properties, neither should users.
You're right that water damage isn't covered but they're still pretty resistant:
> iPhone 12, iPhone 12 mini, iPhone 12 Pro, and iPhone 12 Pro Max have a rating of IP68 under IEC standard 60529 (maximum depth of 6 meters up to 30 minutes).