A field device detects the presence of fluid in the terminal block area of the field device by generating an alternating current (AC) test current signal and measuring the amplitude of the resulting AC voltage signal. The field device includes a first terminal and a second terminal adapted for connection to a control room through a twisted-wire pair current loop. Impedance of the current loop is increased by the presence of fluid between the first terminal and the second terminal. By providing an AC test current signal to the control loop and measuring a resulting AC voltage magnitude, the impedance of the control loop can be determined. Increased impedance in the control loop indicates the presence of water in the terminal block.