Hi working...one of the problems with this sort of repair is that anyone who comes to look at it honestly will not be able to see the extent of the damage just by looking.
This often leads to one of two situations...
Firstly, the estimate you get will be either really high or secondly, too low to be true. Often, when that is the case, the low estimate ends up costing you more because of all the extras the contractor manages to find.
It isn't necessarily all his fault, but if he is good with lots of experience, he should have a pretty good idea of what he will find.
Perhaps you should have a quick chat with the siding company (why aren't you doing this yourself?) and get them to hold off until...
1. You have determined the extent of the damage
2. What will be necessary to repair it and
3. Will you do it yourself or contract the job out?
I think if I were you I would be willing to put some considerable effort into checking out all the damage as fully as possible. In the long run this will save you both time and money.
Whether or not you need a permit I don't know. But my advice to you is to see if you can get an inspector from your town to come out and have a look. Many times they are incredibly helpful. They aren't there to badger you to death. Most of them are pretty good people. In your case I think it is better to be safe than sorry.
Up here, technically speaking, our code says any repair over $25 needs a permit! I think that was probably written when Christopher Columbus arrived! Realistically, if there are no alterations, and exactly the same thing is going back, we don't need a permit here. If it is a structural repair, which yours may well be, then yes, it's permit time.
How about if you post as many pics as possible and then you can get some guidance here before you spend a fortune.
With all the expertise available here, we may be able to get you headed in the right direction.