An anecdote just to counter this: this summer I brought my 13 Pro in (which is under AppleCare+) when it started acting up after I had been in a terrible downpour with the phone in my pocket. It wouldn't charge, and the display wouldn't accept touch input. At my appointment, the water sticker in the SIM tray was not red. After about 5 minutes if fiddling, the touchscreen started working again. But, it was still failing diagnostics, and they said they wanted to send it out for repair, because unexpected failures (e.g., it should be able to get wet from a rainstorm) get sent out for advanced diagnostic repairs. They told me because of the suspected water damage it would cost the AC+ deductible.

It took over a week to get returned back to the store, surprisingly, and came back with a new rear system that was replaced free of charge under warranty.

So, no, they don't always find water damage, even when you tell them that the phone stopped working after it got wet.