Does Apple care cover Water damage?

Depends on what the damage is. Apparently they may not cover submersion, such as dropping one in a bathtub. But they might cover a drink spill. Here are the current terms in the US for Macs.

https://www.apple.com/legal/sales-support/applecare/applecareplus/2209/220907_applecareplusmac_us.pdf

3.2 Services for Accidental Damage from Handling (“ADH Service”)

If during the Plan Term you submit a valid claim notifying Apple that the Covered Device has failed due to accidental damage from handling resulting from an unexpected and unintentional external event (e.g., drops and damages caused by liquid contact from spills) (“ADH”), Apple will, at its discretion and subject to the service fee described below, either (i) repair the defect using new or previously used genuine Apple parts that have been tested and pass Apple functional requirements, or (ii) exchange the Covered Device with a replacement product that is new or comprised of new and/or previously used genuine Apple parts and has been tested and passed Apple functional requirements. Exclusions apply as described below.

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4.1 Hardware Service and ADH Service

Apple may restrict Hardware Service and ADH Service to the country where the Covered Equipment was originally purchased.

Apple will not provide Hardware Service or ADH Service in the following circumstances:

(d) To repair damage, including excessive physical damage (e.g., products that have been crushed, bent or submerged in liquid), caused by reckless, abusive, willful or intentional conduct, or any use of the Covered Equipment in a manner not normal or intended by Apple;

Hi,

The standard AppleCare Protection Plan does not cover water damage. AppleCare + does: About liquid damage to Mac computers and accessories not covered by warranty - Apple Support

When exactly did you purchase the device/Applecare?

There is the regular one year manfacturer's warranty - liquid damage not covered.

Then there is the older version of Applecare - liquid damage not covered (and it would have most lkely expired by now).

The new version is Applecare plus - liquid damage is covered in certain instances.