A friend broke a wrist coming off a rented jet ski and discovered afterwards that his policy excluded it. The medical bill was manageable and the point stands, because the same exclusion covers a lot of things people do not think of as risky.
This is a description of how these policies commonly work rather than advice about any specific one. The only document that governs your situation is the one you hold, and it should be read.
The exclusion lists are longer than people expect
Standard travel policies typically cover ordinary swimming and little else in the water without an add-on.
Commonly excluded or restricted: jet skis and powered watercraft, water skiing and wakeboarding, kitesurfing, windsurfing, surfing in some policies, parasailing, scuba diving beyond certain depths or without certification, and open water swimming beyond a stated distance from shore.
Some of these surprise people. Surfing being excluded from a standard policy catches a lot of travellers, as does snorkelling from a boat rather than from a beach in a small number of policies.
The pattern is that anything powered, anything involving height, and anything at depth attracts either an exclusion or a surcharge.
The conditions attached to what is covered
Even where an activity is included, the cover usually depends on conditions that are easy to breach without noticing.
Supervision. Many policies require the activity to be conducted with a qualified instructor or licensed operator. The same activity done independently is not covered.
Certification. Diving cover generally requires you to be qualified to the depth you are diving, and to be diving within the limits of that qualification.
Equipment. Some policies require the use of provided safety equipment. Not wearing a helmet or a buoyancy aid where one is provided can void a claim.
And local law, which is the one people breach most easily. Riding a powered craft without whatever licence the jurisdiction requires generally puts you outside cover entirely.
The alcohol clause
Present in nearly every policy and applied unsympathetically.
Claims arising from an incident where the claimant had been drinking are commonly excluded, with wording that ranges from excessive consumption to any consumption.
On a beach holiday this catches a great many incidents, because the combination of a hot day, a few drinks and a rented board or ski is extremely common.
Medical records taken at the point of treatment frequently note alcohol, and those records are what the insurer sees.
What the add-on actually costs
Usually much less than people assume, which is the frustrating part.
Water sports extensions on a standard policy are frequently a modest addition to the premium, and specialist activity policies exist for anybody doing something seriously.
Diving in particular has dedicated cover available, including the specific and very expensive thing that general policies exclude, which is treatment in a decompression chamber.
The cost of that treatment, and of the evacuation to reach it, is the single largest financial risk in recreational diving and it is exactly what a standard policy will not touch.
Repatriation and evacuation
The part that dwarfs everything else in cost and gets the least attention.
Treatment abroad can be expensive. Getting somebody home who cannot travel commercially is dramatically more so, and evacuation from a remote coast or an island can involve boats, helicopters and long distances.
Any policy taken for a coastal trip somewhere remote should be checked specifically for what it covers here, and for whether there is a limit.
The equipment side
Separate from injury and worth knowing.
Personal possessions cover commonly excludes items lost in or damaged by water, which is exactly what happens on a beach holiday.
It also commonly excludes anything left unattended, and a bag on a beach while you swim is unattended by most definitions.
Which is a decent argument for not taking anything to a beach that you would mind losing, since the insurance is unlikely to help.
Rented equipment is another gap. Damage to a hired board, ski or boat is generally not covered by travel insurance, and the rental agreement usually makes you liable. Some operators offer their own waiver, which is worth reading rather than dismissing.
The practical minimum
Read the exclusions before the benefits, and specifically look for the activity list.
If anything you plan to do appears there, buy the extension.
Check what supervision or certification is required and make sure you meet it.
And save the assistance number somewhere you can reach without a phone, since a phone that has been in the sea is the most likely reason you cannot reach it.
Existing conditions
The other common reason claims fail, and it applies regardless of activity.
Policies require disclosure of pre-existing medical conditions, with a definition that is usually broader than people assume and often includes anything you have consulted a doctor about within a stated period.
Non-disclosure can invalidate the policy generally rather than only for related claims, which is the part that catches people out.
Disclosing costs a higher premium. Not disclosing risks the whole thing, and it is a poor trade on any trip involving water.