Does car insurance cover engine replacement?

5 minute read Published on Jan 4, 2024 by BrokerLink Communications

Closeup of car engine parts

At some point in the lifespan of a car in Canada, the engine might falter or even fail altogether. This can be a stressful situation for any reliable car owner, not only due to the sheer inconvenience but also the potential dent in your wallet. One question that often arises during these moments is: Will my car insurance cover the cost of engine replacement? Let’s dive in and explore the circumstances under which your car insurance might – or might not – come to your rescue.

Your warranty or mechanical breakdown insurance coverage can pay for engine replacement due to mechanical breakdowns

When you purchase a new or even a used vehicle, you’re not just investing in a mode of transportation but also hoping for reliability. However, like all machines, vehicles can experience mechanical failures over time. This is where warranties and mechanical breakdown insurance come into play to help cover engine replacement scenarios:

Manufacturer’s warranty

A manufacturer’s warranty typically comes with a new car and covers specific parts or systems of the car for a set period or mileage limit. If there’s a defect in materials or workmanship, the manufacturer is responsible for repairing or replacing the affected part. Warranties are often limited to certain components or specific time frames. They also do not cover damage from accidents, neglect, or routine wear and tear.

Mechanical breakdown insurance

Mechanical breakdown insurance (MBI) is a type of insurance coverage that pays for repairs to specific car parts when they break down due to mechanical failure, not due to an accident or normal wear and tear. MBI isn’t part of a standard car insurance policy. Instead, it is an additional coverage some insurers offer. It covers many types of mechanical failures, including engine breakdowns, which aren’t related to an accident or external event. If you’ve opted for this coverage and your engine fails due to a mechanical reason, this policy can cover the repairs minus any deductible.

How to choose between an extended warranty and mechanical breakdown insurance

Choosing between an extended warranty and MBI requires a clear understanding of what each offers, your specific needs, and long-term financial considerations. Both options aim to safeguard against unexpected repair costs but function differently. Weigh the pros and cons, and choose what’s best for your peace of mind and wallet. Here’s a comprehensive guide to help you make an informed decision:

The basics

The vehicle manufacturer or third-party companies offer extended warranties. This is essentially a service contract that covers specific repairs or issues beyond the original warranty’s expiration. On the other hand, an MBI is an insurance policy, typically offered by insurance companies, that covers repairs due to mechanical or electrical failures.


For extended warranties, the specifics can vary widely. Some may offer bumper-to-bumper coverage, while others might only cover certain components. Often, you must use authorized dealerships or repair centres. As for MBI, coverage is usually more standardized and may allow more flexibility in choosing a repair facility. Additionally, you might be able to bundle MBI with your standard auto insurance.


An extended warranty generally has an upfront cost, which can sometimes be rolled into the vehicle financing, whereas MBI usually has a monthly insurance premium and might require a deductible per repair. Over time, it can be more cost-effective, especially if bundled with other insurance policies.


Extended warranties can be restrictive regarding where repairs can be done. Also, transferring the warranty if you sell the car might come with fees or not be possible. On the other hand, MBI typically allows you to choose where repairs are made, and policies can be more flexible.

Does standard car insurance ever cover engine repairs?

Whether you live surrounded by the Rocky Mountains in Banff, along the Atlantic coast in Halifax, or amongst the giant city skyscrapers of Toronto, car insurance comprises various coverage components, each designed to handle different situations. When it comes to engine repairs, certain engine damage scenarios might be covered under collision or comprehensive coverage, while others won’t be. Here’s a breakdown of some common types of auto insurance coverages and how they relate to engine repairs:

Collision coverage

If your engine is damaged due to a collision with another vehicle or object a tree or pole, collision coverage will pay for the repair or replacement, subject to your deductible.

Comprehensive coverage

This coverage handles non-collision damages. Comprehensive coverage would step in if your engine is damaged due to fires, floods, or vandalism. For example, if water gets into your engine during a flood and damages it, comprehensive coverage might cover the repair or replacement minus your deductible.

Liability coverage

Liability car insurance primarily covers damages you cause to others or their property. Third-party liability insurance does not pay for repairs to your own car.


Navigating the intricacies of car insurance can sometimes feel like trying to solve a complex puzzle. But it’s crucial to understand where you stand when it comes to engine replacements. While standard car insurance might cover engine damages under certain scenarios, it’s not a blanket guarantee for every engine issue.

However, there’s a silver lining for those seeking protection against unforeseen mechanical issues: mechanical breakdown insurance.

This specialized insurance can be your safeguard against the hefty costs associated with engine replacements and other mechanical failures. If you’re thinking of adding mechanical breakdown insurance to your car insurance policy, call BrokerLink today!

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FAQs for if car insurance covers engine replacement

Can I file an engine failure claim on my car insurance?

Yes, you can file an engine failure claim on your car insurance, but whether it’s covered depends on the cause of the failure and your policy details. If the engine damage resulted from a covered event like a collision or specific non-collision incidents, your policy might cover it. However, if you have mechanical breakdown insurance, it might cover certain mechanical failures not related to accidents.

Will gap insurance cover engine failure?

No, gap insurance is designed to cover the difference between the actual value of a vehicle and the outstanding loan or lease amount if the car is totalled or stolen. It does not cover mechanical issues. You’d need to look into options like mechanical breakdown insurance or warranties for engine failures.

Does collision insurance cover engine failure?

It depends. Collision insurance specifically covers damages to your vehicle caused by a collision with another vehicle or object, a tree or pole. It does not cover engine failure due to mechanical issues, wear and tear, or neglect. However, if the engine failure directly resulted from a collision, then collision coverage will apply.

If you have any questions, contact one of our local branches.