In RL, I'm one of those guys who is always hitting balls OOB, into the lake, etc. And I always go after them. I have no objection to coming off the course dripping wet, covered with mud, whatever.
I find it hard not to suspect that WGT sees this as a money-making opportunity. Personally, I would not declare balls lost under any circumstances. You paid for a certain number of hits, you should get them.
As it is, I almost never play closest-to-the-hole challenges because they all contain nasty shots over water and I'm opposed to giving my money away.