An internal Apple document made the rounds online this week after someone leaked it.
Dated March 3, the "Visual/Mechanical Inspection Guide" (VMI) showed up recently on Dropbox, and applies to the iPhone 6, 6s, and 7 generations. Business Insider did not publish a direct link, but shared screenshots from the document.
We have one just like that for all of the products. It's used more for the physical inspection and how to determine cost for damage. That's basically half the training for iPhone techs.
Another Apple technician said that VMIs are "something we use, but we don't refer to it all that often unless we get some oddball issue. We can normally pick out abnormal issues without using it.
Water damage cannot be covered by the warranty!
Apparently, in 2014 Apple decided to cover a single hairline crack. Also, if there are dead pixels on the screen, the owner has to specifically ask to have them repaired.
If a customer has problems not discussed in the VMI, their phone might still be repaired under warranty.
There are always those one-off issues that the phone is technically not covered under warranty but we swap the phone anyways under warranty.