Philly Water Line Leak & Notice of Defect - Best way to handle?

[Jun Ho Lee]

Hello everyone, 

So a few days ago I found a small hole near my sewer lines in the basement where water was gushing out. I called a plumber and City PWD for inspection since I didn't want bigger problems (enlarged holes etc.) down the line. The City PWD came out yesterday (plumber is scheduled to come tmrw) and told me that there is a potential leak in the water line and gave me a Notice of Defect (NOD).

A quick google search reveals that a typical work of this nature costs thousands of dollars. I initially thought home insurance would cover such situations, but after research, I realized I need a separate insurance for service line protection... 

Did I pick the short end of the straw with this property purchase? What's the best money and time saving way to deal with this situation? 

Any help or guidance will be hugely appreciated. Thank you everyone in advance!

FYI, this is my residence which I bought recently for house hacking.