Does Car Insurance Cover Engine Failure?

For a complete guide to what car insurance covers, see our article on what does car insurance cover.

When Car Insurance DOES Cover Engine Damage

There are rare situations where car insurance covers engine damage—but only if the damage resulted from a covered peril, not mechanical failure.

Collision coverage may apply if:

• You're in an accident and the impact damages the engine
• You hit a large object (rock, debris) that punctures the oil pan
• The crash causes engine fluids to leak, leading to immediate failure

Comprehensive coverage may apply if:

• Flooding causes water to enter the engine (hydrolocking)
• Fire damages the engine
• Vandalism (someone pours sugar in your gas tank or contaminates fluids)
• Theft-related damage (thieves damage the engine during a break-in or attempted theft)

What you won't get coverage for:

• Engine seized due to lack of oil
• Overheating from a failed thermostat or water pump
• Timing belt failure
• Worn piston rings or valve failure
• Any breakdown caused by age, wear, or deferred maintenance

For more on comprehensive and collision, see our guide on comprehensive vs collision insurance.

For flood-related engine damage specifically, read our article on does car insurance cover flooding.

What Is Mechanical Breakdown Insurance (MBI)?

Mechanical breakdown insurance (MBI) is optional coverage that pays for repairs to your vehicle's mechanical and electrical systems—similar to an extended warranty.

What MBI typically covers:

• Engine and transmission repairs
• Electrical system failures (alternator, starter, battery)
• Heating and air conditioning systems
• Fuel system components
• Steering and suspension
• Brakes (in some policies)

What MBI doesn't cover:

• Routine maintenance (oil changes, tire rotations, brake pads)
• Wear-and-tear items (belts, hoses, filters)
• Damage from neglect or lack of maintenance
• Pre-existing conditions

How MBI works:

• 1. You add MBI to your car insurance policy
• 2. When your engine or another covered component fails, you file a claim
• 3. You pay a deductible (typically $100–$250)
• 4. Insurance covers the rest of the repair cost

Cost: MBI typically costs $30–$100 per year, depending on your vehicle's age, make, and mileage.

Eligibility:

• Most insurers require your vehicle to be less than 15 months old with under 15,000 miles
• Some offer MBI for certified pre-owned vehicles up to 5 years old

Who offers MBI? Not all insurers offer mechanical breakdown insurance. Check with:

• Geico
• American Family
• Progressive (in some states)
• AAA

MBI is not the same as extended warranty plans sold by dealerships or third-party warranty companies.

Extended Warranties vs. Mechanical Breakdown Insurance

Both extended warranties and MBI cover mechanical failures, but they work differently.

Extended Warranty (Vehicle Service Contract):

• Purchased from dealerships or third-party companies
• Covers specific components listed in the contract
• May include routine maintenance in premium plans
• Costs $1,500–$5,000 upfront or financed into loan
• Deductibles range from $0–$200 per visit
• Often includes roadside assistance and rental car coverage

Mechanical Breakdown Insurance (MBI):

• Added to your car insurance policy
• Covers similar components as extended warranties
• Does not cover routine maintenance
• Costs $30–$100/year (much cheaper)
• Deductibles typically $100–$250 per claim
• Only available for newer vehicles (under 15 months old in most cases)

Which is better?

• MBI is better if: Your car qualifies (new or nearly new), you want lower upfront costs, and you prefer managing it through your insurer
• Extended warranty is better if: You buy a used car, want more comprehensive coverage, or prefer a standalone service contract

Both options have pros and cons. The key is having some form of mechanical coverage if you can't afford a $3,000–$10,000 engine replacement out of pocket.

How Much Does Engine Failure Cost to Repair?

Engine repairs vary widely based on the problem and your vehicle:

Minor repairs:

• Head gasket replacement: $1,500–$3,000
• Timing belt replacement: $500–$1,500
• Water pump replacement: $400–$800
• Oil pan replacement: $300–$600

Major repairs:

• Engine rebuild: $3,000–$6,000
• Engine replacement (used): $3,000–$7,000
• Engine replacement (new): $7,000–$15,000+

Luxury and performance vehicles cost more. European luxury brands (BMW, Mercedes, Audi) and performance cars often have engine repair costs 50–100% higher than domestic or Japanese vehicles.

Labor costs vary by location. Repairs in major metro areas (NYC, LA, SF) cost 20–40% more than rural areas.

What If You Don't Have MBI or a Warranty?

If your engine fails and you have no coverage, you're paying out of pocket.

Your options:

1. Repair the engine.

• Get multiple quotes from independent mechanics (not just dealerships)
• Ask about used or remanufactured engines as cheaper alternatives
• Consider engine rebuilds instead of full replacements

2. Sell the car as-is.

• If repair costs exceed the car's value, selling may be smarter
• You can sell to junkyards, "we buy any car" services, or private buyers who want parts
• Expect 20–50% of the car's working value

3. Trade it in.

• Some dealerships accept non-running vehicles as trade-ins
• They'll reduce the trade-in value by estimated repair costs
• This works only if you're buying another vehicle

4. File for lemon law protection (if applicable). If your vehicle is under manufacturer warranty and has repeated unfixable problems, you may qualify for lemon law buyback or replacement. Requirements vary by state.

How to Prevent Engine Failure

Most engine failures result from neglected maintenance. Follow these practices to extend engine life:

Follow the maintenance schedule.

• Change oil every 5,000–7,500 miles (or as recommended)
• Replace air filters, fuel filters, and spark plugs on schedule
• Check and top off fluids regularly (coolant, transmission, brake)

Watch for warning signs.

• Check engine light
• Oil pressure warning light
• Overheating
• Unusual noises (knocking, rattling, grinding)
• Loss of power or acceleration
• Excessive exhaust smoke

Address warning signs immediately—waiting often turns minor repairs into major failures.

Avoid aggressive driving.

• Don't redline your engine regularly
• Warm up the engine before driving hard in cold weather
• Avoid rapid acceleration and hard braking

Use quality oil and parts.

• Stick to manufacturer-recommended oil grades
• Use OEM or high-quality aftermarket parts
• Avoid bargain-bin oil filters and fluids

Keep records. Maintain a log of all maintenance and repairs. This proves proper care if you need warranty service or want to sell the vehicle.

Should You Buy MBI or an Extended Warranty?

Consider MBI or extended warranty if:

• You can't afford $3,000+ in unexpected repairs
• You're buying a new or lightly used vehicle
• You plan to keep the car past the manufacturer warranty period
• The vehicle has known reliability issues (research model history)
• You drive high annual mileage (15,000+ miles/year)

Skip MBI/warranty if:

• Your vehicle is still under manufacturer warranty
• You have significant emergency savings ($5,000+)
• The vehicle is older (10+ years) or high-mileage (150,000+ miles)—coverage may be expensive or unavailable
• You plan to trade in or sell within 2–3 years

Do the math. Compare the total cost of MBI/warranty over the coverage period against the likelihood of needing major repairs. For many reliable vehicles (Honda, Toyota), paying out of pocket may be cheaper than buying coverage you never use.

Frequently Asked Questions