I recently had my rack (Gen 3) replaced with a rebuilt unit by a specialist in Glasgow, cost was £707 fitted, 2 hrs labour. They told me they do tons of these racks as they are notoriously bad throughout the Audi range.
Apparently water ingres is the main problem and even if you get a new rack it will go again in a few years.
My local VAG stealer quoted me £1900 supply and fit and as the techicians there are that well trained it takes them a full working day to fit it.
The warranty company should cover it as it will be a separate claim to the servo.