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Depends on the insurance. Some will. A new SEI drive will come with 3 year no fault warranty, which does cover hitting something. You can also get no fault boat insurance. Pay the deductible and voila.
Judging by how much damage has been done to the prop... it looks like the drive has been run through rocks and debris.
If it were me, I'd pull the entire drive and replace it with a good used unit. That one has obviously been thrashed pretty bad.