Does Car Insurance Cover Engine Failure?

Well, that depends. Generally, the standard car insurance does not cover engine failure unless it’s a covered peril due to an accident or unexpected event, such as an accident, theft, fire, or flood. So, the answer is circumstantial.

If you’re trying to figure out whether car insurance covers engine failure, you either need to claim insurance for a blown engine, or you’re shopping for car insurance, so you’re considering different options.

Now, to make the right decision, you need to be sure whether car insurance covers engine failure based on your circumstances. This article provides a situation-based breakdown to help you understand when car insurance covers engine failure and when it doesn’t.

When Does Car Insurance Cover Engine Failure?

If your car's engine is damaged or if it has stopped working entirely, you either need to get it repaired, rebuilt, or replaced. Minor engine repairs can cost you about $400 to $1,200, while a full engine replacement can cost you around $4,000 to $10,000 or more, with an additional labor cost of $2,000 to $4,000.  

If it’s a luxury car, sports car, or any high-end car with a powerful engine, the cost of rebuilding or replacing your car engine can be $14,000, especially when specialized parts and labor are involved. In some cases, engine replacement becomes unavoidable, such as after a serious accident or major unexpected events like flooding, severe storms, or other natural disasters. 

Whether you’re dealing with a blown engine right now or comparing auto insurance coverage options to avoid expensive surprises later, it’s essential to understand when car insurance covers engine failure.  

If you’re not sure whether your engine damage qualifies for coverage, you should contact your insurer to review your policy or connect with a reliable insurance agency for a second opinion or a better solution.  

Let’s explore situations when your car insurance policy will cover the repair or replacement cost of your car’s engine.

Accidental Crash

If your car’s engine gets damaged or completely stops working after an accidental crash, your car insurance will cover the engine’s repair and replacement cost as long as you have collision coverage. 

On the other hand, if you’re at fault for the accident, leading to the engine failure of the other driver’s car, your liability coverage will pay the repair and replacement costs.  

When you file a claim for engine damage, your insurer will typically investigate whether the problem was directly caused by the crash, not by mechanical breakdown, wear and tear, or poor maintenance. 

If it’s determined that the engine damage resulted from the accident, your policy may cover the repair or replacement cost after you pay your deductible (up to your vehicle’s value). 

Damage Due to Theft, Vandalism, Fire, Natural Disaster, or Unexpected Events  

If your car’s engine gets damaged due to unexpected events like theft, vandalism, fire damage, or natural disasters like flood or severe storms, the comprehensive coverage of your car insurance will cover the repair and replacement. 

In the case of car theft, your auto insurance policy will only cover the engine failure when your car is recovered, and it’s proven that the engine has malfunctioned after recovering your stolen car due to reckless driving or tampering with the engine.  

On the other hand, if your car isn’t recovered, the comprehensive coverage will reimburse your car’s actual cash value up to your coverage, which technically covers the engine too.  

Flood or Water Damage

Your car’s engine can suffer severe damage if water enters the engine, which is common during heavy flooding. When water gets into the engine, it can cause the vehicle to stall or even seize, and the longer the car sits in floodwater, the greater the risk of serious engine and electrical damage. 

In many cases, extensive water damage makes the engine difficult or impossible to repair, which means an engine replacement may be necessary. If you have comprehensive coverage, it may help pay for engine damage caused by flooding or other sudden water-related damage. 

What Type of Car Insurance Covers Engine Damage or Failure?

If you’re shopping for car insurance or upgrading your policy, it’s important to choose the right protection with limits that can help cover costly engine damage. Here are the types of car insurance that may cover engine repairs or replacement, depending on what caused the damage. 

Collision Coverage

Collision coverage can help pay for engine repairs or an engine replacement if your engine is damaged in an accident, such as a crash with another vehicle, hitting an object, or rolling your car. If the impact causes damage to critical parts like the oil pan, cooling system, or engine mounts, collision coverage may cover the repair cost after you pay your deductible. 

Comprehensive Coverage

Comprehensive coverage can help pay for engine repairs or replacement if your engine is damaged by something other than a collision. This includes events like theft, vandalism, fire, falling objects, severe storms, and flooding, which can all lead to serious engine damage. 

Liability Coverage

If someone claims insurance for engine damage involving a car accident where you’re at fault, your liability coverage will pay the engine’s repair or replacement cost to the other driver. Similarly, if someone else is at fault for a car accident that has caused significant damage to your engine, their liability coverage will cover your engine’s repair or replacement cost.  

Keep in mind that liability coverage does not pay to repair your own car if you’re at fault; collision coverage is what covers your vehicle. 

Roadside Assistance Coverage

If your car’s engine suddenly stops working while you’re traveling, it is necessary to get it towed to your garage or the nearest auto repair shop. Roadside assistance coverage pays for emergency towing service, especially in the event of a car engine breakdown. Whether your car’s engine malfunctions due to an accidental crash, sudden mechanical failure, shortage of fuel, or dead batteries, the roadside assistance coverage provides towing expenses. 

Mechanical Breakdown Insurance (MBI)

When it comes to securing significant engine repair and replacement costs, the mechanical breakdown insurance (MBI) is another great option, either as an endorsement with comprehensive coverage or as a separate coverage.  

Mechanical Breakdown Insurance (MBI) is one of the few coverage options that may help pay for engine repairs if your engine fails due to an internal mechanical issue, not an accident, theft, or storm-related damage. In other words, MBI is designed to cover unexpected mechanical breakdowns that would normally be excluded under standard car insurance policies. 

Does Gap Insurance Cover Engine Failure?

No, gap insurance does not cover engine failure or any specific part of your car. It pays the difference between your car’s actual cash value (ACV) and the remaining loan or lease balance. So, gap insurance only applies when your car is declared a total loss, or if it’s stolen and couldn’t be recovered.  

Even then, it doesn’t pay to fix the engine; it only helps cover the remaining loan or lease balance if your standard insurance payout isn’t enough. In other words, gap insurance pays the remaining loan balance after a total loss; it does not cover the repair or replacement cost of your engine. 

When Does Car Insurance Not Cover Engine Failure?

Your car insurance will specifically cover your car’s engine only when it’s due to a covered peril, such as an accidental crash, theft, fire, or natural disasters. If the engine failure is not tied to a covered event, your policy usually won’t pay for repairs. Here are the most common situations where car insurance excludes or doesn’t cover engine failure. 

Gradual Wear and Tear

If your car’s engine wears out over time due to gradual wear and tear, your auto insurance policy typically won’t cover the damage. Car insurance is designed to protect you from sudden and unexpected events like accidents or covered incidents, not routine maintenance, standard repairs, or long-term engine deterioration. 

Lack of Routine Maintenance

If engine damage happens due to missed or improper maintenance, such as ignoring oil changes, driving with low oil, or failing to address overheating, your car insurance typically won’t cover the repair costs. Auto insurance is meant to cover sudden, unexpected losses, not routine maintenance or preventable engine damage, which is generally listed as a policy exclusion. 

Manufacturer’s Defect

If your car’s engine malfunctions or stops working due to a manufacturer’s defect, it will not be covered by your car insurance policy. A manufacturer’s defect is typically the manufacturer’s responsibility, which should apply under your car’s warranty policy. However, if your warranty expires, or if you don’t have one, you will have to cover the engine’s repair or replacement expenses out of pocket.  

Overheating or Oil Sludge Damage

Engine overheating or oil sludge damage is typically not covered by car insurance, because it’s usually caused by maintenance-related issues rather than a sudden covered event.  

For example, driving with low engine oil, ignoring warning lights, skipping oil changes, or continuing to drive after the engine overheats can lead to severe internal damage over time.  

Since this type of engine failure is considered preventable wear and tear, your insurer will usually deny the claim, and you’ll be responsible for the repair or replacement costs out of pocket. 

What to do if Car Insurance Does Not Cover Engine Failure?

If your car insurance does not cover engine failure especially due to common exclusions like manufacturer’s defect, gradual wear and tear, along with lack of routine maintenance, you have the option to use your factory warranty or purchase extended warranty for 3 to 5 years.  

According to the Consumer Affairs and MarketWatch data, it can cost you $600 to $1,300 or more per year, mainly depending on coverage level and term length. Although the extended car warranty is undoubtedly a great option to protect your car and its engine, you’d still need car insurance in various situations.  

This is mainly because both factory and extended warranty won’t cover accidents, and other unexpected events that can severely damage your car’s engine leading to significant financial loss or overwhelming out of pocket expenses.  

Now, if you decide to opt for an extended car warranty, it’s recommended that you consider making a balanced combination with your car insurance policy, especially collision and comprehensive coverage.  

The Bottom Line: Is Car Insurance Reliable Protection for Engine Failure?

Yes, car insurance is definitely a reliable method of financial protection, especially from unexpected damage or failure that can happen due to an accident, fire, theft, or any other covered peril in your policy. 

So, to keep your car’s engine and finances secure from unexpected damage, it is important to consider having the right coverage options with adequate limits. If you need help obtaining a car insurance policy to protect against unexpected engine damage, contact us to get a free quote and expert advice.   

Frequently Asked Questions (FAQs)

Will insurance pay out for a blown engine?

Yes, but only in certain situations. Car insurance may pay for a blown engine if the damage was caused by a covered event, such as a car accident (collision coverage) or flood, fire, theft, or vandalism (comprehensive coverage). However, if the engine blew due to wear and tear, poor maintenance, overheating, or mechanical breakdown, standard car insurance typically won’t cover it. 

What happens if your engine blows and you still owe money?

If your engine blows and you still owe money on the car, you’ll usually have to keep making your loan payments even if the car can’t be driven. 

If the engine damage is caused by a covered event (like an accident or flood), your insurance may pay for repairs, or pay out your car’s actual cash value (ACV) minus your deductible if it’s declared a total loss. But if it’s not covered (wear and tear or mechanical failure), you’ll likely have to pay out of pocket for repairs or consider selling/trading the car as-is. 

Does comprehensive coverage cover engine issues?

Yes, but it depends on the situation. Comprehensive coverage may cover engine damage if it’s caused by a covered event such as flooding, fire, theft, vandalism, falling objects, or severe weather. However, it typically won’t cover engine problems caused by wear and tear, poor maintenance, overheating, or mechanical breakdown. 

Does insurance cover an overheated engine?

Usually no. Car insurance typically won’t cover an overheated engine if it happens due to maintenance-related issues, such as low coolant, oil problems, or ongoing wear and tear. However, if the overheating is caused by a covered event like a crash (collision coverage) or flood/fire damage (comprehensive coverage) your policy may help pay for repairs.