Typically, standard car insurance does not include coverage for the costs associated with replacing the engine because of normal wear and tear, at times lack of maintenance, and other mechanical issues of the engine. Nevertheless, coverage may apply where damage to the engine is sustained directly as a result of a covered event such as a collision, fire, flooding, vandalism, or damage caused by an animal, subject to the terms of the agreement and deductible amount.
Normal car insurance does not cover a new engine just because the old engine wears out, develops a defect, or stops working. Car insurance is used for damage that occurs due to specific accidents, not for car maintenance, gradual vehicle wear, or auto malfunction. Whether the engine replacement is covered depends on the cause of the engine failure, the types of coverage in the insurance, and exclusions in the insurance policy.
When Engine Replacement Is Usually Not Covered
In a collision policy or comprehensive coverage, one thing that is typically stated in the terms is that normal wear and tear and mechanical failure are not included in terms of coverage. Collision coverage is usually used in cases of damage resulting from a crash or rollover but does not cover losses resulting from engine problems that occur due to aging or other factors unrelated to a collision.
Engine replacement is therefore usually not covered when the damage results from one of the following situations:
- Normal engine wear or high mileage
- Internal bearing, piston, valve, or timing-component failure
- Gradual oil consumption
- Sludge caused by neglected oil changes
- Overheating resulting from poor maintenance
- Driving after an oil-pressure or temperature warning
- A manufacturer defect unrelated to a covered accident
- Failure of a noncovered mechanical component
Normally, the sources from which payment can be obtained for the problems include warranty, extended warranties, mechanical breakdown insurance, or the owner paying for the repair out of pocket. Mechanical breakdown insurance is different from normal collision and comprehensive insurance, as it can cover various parts of the vehicle after a deductible; however, it does not cover wear and tear.
When Engine Damage May Be Covered
When the damage to an engine arises from something that is covered under the insurance policy, the insurance company can either repair or replace it. Collision insurance may apply if the accident causes damage to the oil pan, cooling system, or engine block. The insurance company investigates whether the damage to the engine is caused by the accident and not by some preexisting issue.
Comprehensive coverage could apply to events that do not involve collisions, such as damage from fire, vandalism, theft, severe storms, falling objects, flooding, or contact with animals. Comprehensive policies typically fully cover these types of loss unless all terms of the policy, including the deductible, say otherwise.
It is crucial to be cautious about submitting claims for engine flooding. While an all-risk policy may include compensation in the case of damage from water entering an engine, transmission, or electrical system, that does not mean that every flooded or hydrolocked engine will consequently be compensated for damage. The insurance company may try to figure out how exactly the engine got flooded, whether the driver knowingly drove into deep water, whether the damage occurred gradually, and whether the vehicle was operated after evidence of trouble appeared. In such cases, the wording in the policy and the specific situation come into play.
How the Insurer Determines Payment
The insurance company may not, even if it is an insured event, give the go-ahead for the installation of a brand-new factory engine. It might approve the repair of the damaged engine, the installation of a rebuilt engine, the use of a similar secondhand engine, or declare the car a total loss if the total repair bill is either equal to or above the insured value of the vehicle. Payments typically are made less the amount of the deductible according to the insurance policy.
Whenever you are about to do engine removal or engine replacement, make sure from the start that you notify the insurance company and receive written proof of the reason for the loss of your engine. The repair facility should record diagnostic codes that are used, condition of the fluids, information about the damage caused by the impact, water infiltration, fire damage, photos, results of the tests conducted, and the connection between the incident and engine failure. Taking the engine apart or replacing it before the inspection by an insurance company may complicate the claim.
The best way to handle this situation is to read the declarations page and the exclusions from the insurance policy, notify your insurance company of the lost items, keep the damaged property, and have the insurer confirm your claim in writing and state whether the repairs are covered.
