You can always check with your Homeowner's insurance provider, but I think once an electronic device is of a certain age, it will probably cost more to insure it with just about any third party than it will be worth paying. My original series Apple Watch Sport will be two years old next month. I will just replace it with a newer Series 1 or 2 if/when it breaks (heck... it might last me all the way to Series 3).
Of course the Stainless Steel case was a bit more of an investment than the aluminum Sport cases. And what about the Gold Edition owners? Actually the Gold Edition owners will probably have enough money that they don't worry about such things. But there are probably many Stainless Steel owners who are hoping to get at least another year or so out of their investment.
It seems like original series SS models are selling used for around $200 to $350 or so... but it depends on the included band. You might find a third party that will offer some degree of insurance, but it will probably cost you in both premium and deductible.
I would do one of two things at this point: Hope for the best, but be prepared to pay for repair or buy a new watch when the time eventually comes. Speaking as someone who makes a living in IT support it seems that most devices last longer than their owners want them to. Meaning the owner eventually replaces the device because it's simply too old and too slow....and they want to upgrade to a newer model.
The other option is to sell your SS Apple Watch while it still has some value, and put the money towards upgrading to a Series 2. Apple even sells refurbished stainless steel Series 2 watches for about a $100 less than new. You could upgrade to a new (or refurbished) watch and get AppleCare+ for it.
Sean