Full Coverage Auto Insurance: Engine Damage Protection

Does Full Coverage Auto Insurance Cover Engine Damage?

It's important to clarify that there is no such thing as full coverage auto insurance. The term “full coverage” is often used to refer to a policy that includes comprehensive and collision coverage, as well as any other coverages mandated by the state. That being said, standard auto insurance policies typically do not cover engine repairs or damage unless they are a direct result of an accident or other peril covered by the insurance policy. In other words, if your engine suffers a mechanical failure or breaks down due to normal wear and tear, your car insurance will generally not cover the cost of repairs or replacement. However, there are some exceptions and additional coverage options worth considering.

Collision coverage

If you choose not to carry collision coverage, you will have to pay out of pocket for any repairs or replacements needed after an accident. Collision coverage can provide peace of mind and help you pay for expensive repairs or replacements.

When deciding on collision coverage, it is important to consider the cost of your car and its potential repair costs. Choosing a higher collision deductible will lower your monthly premium but may put you at risk of higher out-of-pocket expenses in the event of an accident.

In the context of full coverage, collision coverage will pay to repair or replace your car after a crash. It is one of the two types of coverage under full coverage, along with comprehensive coverage, which covers non-collision-related damages. Collision coverage will not cover engine damage due to normal wear and tear or mechanical failure unless it is a direct result of an accident or covered incident.

Comprehensive coverage

If you have comprehensive coverage, your insurance policy will generally cover engine repairs if the damage is caused by an accident or an event outside of your control. However, comprehensive coverage will not cover engine repairs if the damage is due to normal wear and tear or mechanical failure.

In addition to comprehensive coverage, there are other options for coverage that can protect your finances in the event of engine failure or other mechanical problems. These include mechanical breakdown insurance (MBI), extended warranties, and manufacturer warranties.

Mechanical breakdown insurance

MBI is available for new or leased cars that are less than 15 months old and have less than 15,000 miles on the clock. The customer must also be the first owner of the vehicle. Once purchased, MBI can be renewed for up to seven years or 100,000 miles, whichever comes first.

MBI is a good option for those who want to avoid the high upfront cost of an extended warranty. It is also a good choice for those who want to choose their own mechanic, as extended warranties often require the use of an approved repair shop.

MBI is available for various vehicles, including cars, trucks, and SUVs. It covers the cost of parts and labour for all covered repairs. Non-covered repairs can be done at the same time, but these must be paid for out of pocket.

The deductible for MBI is generally between $100 and $500, and this must be paid before the insurance coverage kicks in. For example, if the deductible is $250 and the repair cost is $2000, the customer pays $250, and the insurance covers the remaining $1750.

Some insurance companies that offer MBI include Progressive and GEICO.

Extended warranties

There are two primary types of extended warranties: those offered by the carmakers (OEMs) and aftermarket warranties offered by third-party vendors. An extended warranty from an OEM will usually mimic the coverage offered when the vehicle was new, extending the length of the coverage and the allotted mileage. Some will also include extra benefits such as roadside assistance. Third-party warranties often have stricter requirements, such as limitations on where you can get your vehicle fixed and higher deductibles.

It's important to note that extended warranties have limitations. They typically don't cover pre-existing damage, normal wear and tear, regular maintenance, neglect or abuse, damage from accidents or natural disasters, cosmetic issues, custom parts, or improper installation. Additionally, some extended warranties may have deductibles or limit the amount of coverage for individual repairs.

When considering an extended warranty, it's crucial to carefully review the terms and conditions, as they can vary significantly between providers. You should also check if the warranty can be cancelled and refunded later, and whether it can be transferred to a new owner if you sell the vehicle before it expires.

Gap insurance

Here's an example with gap insurance and without: You finance $30,000 for a new car. You've had it for a few years and have been making all your payments. It's now worth $20,000 but you owe $25,000 on your loan, representing a $5,000 gap. If the vehicle is totaled, your insurer would pay you $25,000 (minus your deductible) with gap insurance. Without gap insurance, you'd only receive $20,000 (minus your deductible).

To qualify for gap insurance, you must have comprehensive and collision coverage on your policy. Gap insurance doesn't cover engine failure or other repairs.

Frequently asked questions