A torn ligament in a dog will not heal and if left torn, they develop severe arthritis. This is information that was given to me by the orthopedic vet surgeon that I use.
If you have not already, I strongly recommend a consult with a board certified surgeon. If you don't know one in your area, you can search on
American College of Veterinary Surgeons
With regards to insurance coverage, I am sorry I have no knowledge.
Good luck!