The answer depends upon which homeowners form applies to the situation.

If the coverage is written on a 1991 ISO HO 00 03, you could make the argument that the cost to dig up the broken underground pipe is covered under Section I Additional Coverages, Reasonable Repairs. Under the 1991 ISO HO 00 03, water that has passed through the meter may be considered covered property of the insured. As you state, the cost to repair the line would not be covered, but the excavation costs would be covered as a reasonable repair to prevent further loss—the loss of water.

However, the 2000 ISO homeowners forms state that water is not covered property. Therefore, it is unlikely that the reasonable repairs coverage under the 2000 edition could be triggered unless the broken pipe and leaking water damaged a covered structure.