UPDATE! I'll try to keep it short and detailed.
After a long night of research and with the help of a friend who's a mechanic, we found out that my 13' GTI is a PZEV vehicle and there is a CA PZEV warranty on emission related parts (FYI I'm located in CA).
I called up the service advisor next day morning and told him that since the O-zone sensor doesn't come separately and it's considered a part of the radiator, it should be an emission related item. At first, he said that the sensor is not covered under the emission warranty except items like the catalytic converter and such. Then I mentioned the PZEV emission warranty to him and he said he will contact the VW HQ to double check.
Later he called back saying yes, the radiator assembly IS covered under the emission warranty and that's good for 7 years/70k miles, therefore, he can replace it free of charge. However, the only thing is I've asked them to clear the code yesterday and they cannot perform warranty work on it unless the engine light is turned back on, so I was asked to pick up my car and drive it until the light comes back on (it may or may not come back) then bring it back to the dealer and have the radiator assembly replaced.
I just saved myself $990 there. Don't let your dealer rips you off! Spread the words!
TL;DR version: O-zone sensor on the radiator assembly is covered under emission warranty for 7 yr/70k (works in CA, not sure about other states, will need to confirm).
Are you on the NorCal VW Drivers Club group(Link in my sig)? We have a local member that was VW master tech that can probably do the install for you a good price. Let me know your name and I'll approve you. You can probably pick up the radiator online with a new ozone sensor for around ~$350 or so. So probably save 50%.
No I'm not, but it's fortunate that I've sorted it out with the dealer. I've sent a join request, my name is Kenneth. Thanks! Edit: I'm in the group now