I think the Q waa more meant as is it POSSIBLE ins would cover it. I’m kinda thinking not, sorry 
As to what caused it, and just from the pic, i’d say the corrosion weakened and made brittle the metal, stress from flexing while u move down the road (and slam huge potholes) probably cracked it.
There’s gotta be other degregation around the rest too. l’ll leave it to someone else to tell u how to figure where and how bad. I can only guess what could work, not how a shop would do it. I have no idea what it’d cost to replace part or all of a frame, other than to say u CAN. Undoubtedly not worth it for ur poor old dog tho
There’s gotta be parts value in it tho. Who knows, maybe even a couple $K if u sell em off yourself piece by piece.
I had 2K sold off (but took longer to let them come get) on a car only worth 5.
But, I was in CA with no rust and it had perfect interior (seats bring easy big ).