I'm not 100% on one side of the argument or the other here. I don't think the OP being asked to pay less than $500 is unresonable as it was a small event on a closed provate road. However, I don't think it's unresonable to expect the entry fee for a W2W race series on a privately owned facility that should be set up to handle damage to armco or tire walls as part of regular maintinacnce to have that covered by the entry fee and insurance, possibly with a resonable deductible.
My view:
US Hillclimb on closed private road, damage to city/township infrastructure = OK
UK Hillclimb on privatly owned dedicated facility with purpose built safety equipment and facilities to maintain it = expect it to be covered by insurance and entry fee
Nurburgring paid laps, which is technically a one way open to the public toll road. = Expect to pay for damage
Nurburgring when closed to the public for sanctioned racing = Should be covered by entry fee and insurance
Private race track for sanctioned W2W racing, time trials or similar = should be covered by entry fee and insurance
Private race track for non competition HDPE or similar = Well I haven't considered this before, but I think you're back to you break it you pay for it.
Private race track closed for testing purposes. i.e. not a track day, but not full on competition put on by the facility = should be covered by entry fee and insurance
Private race track closed for testing purposes. i.e. not a track day, but not full on competition rented by a team for private testing or by a group of teams = You break it you pay for it.
Private race track closed for testing purposes. i.e. not a track day, but not full on competition rented by a a race series (IMSA, Trans AM, F1, Indy car) = should be covered by entry fee and insurance
Not perfect, but seems workable.
It comes down to realistic expectations of a sanctioning body and the type / level of track activity. Note, I know that rally organizers often have to pay to grade and re-grade dirt roads before and after events. But that's a known before hand and factored into the entry fee as it's expected the roads will get torn up.
This brings me back to the Q I mentioned up thread. I wonder if there's a market for a privately owned and run Hillclimb facility here in the States?