How far did she drive before the warning light turned on? If she only went a half mile, the oil was leaking pretty fast. If she made it many miles, it was a slow leak which implies there was still some oil in the engine during those last two miles. That can easily be enough to save it from major damage. If there's no knocking and the engine is still quiet, fill the oil and address the engine speed issue if it's still there, then drive the car like normal. If you're planning on replacing the engine, there's no harm in waiting to see if it really does need service that drastic.
Inform the shop that did the work about what happened. Normally a reputable shop will clean the mess and refill the oil. They would typically take care of the repair bill but driving it after the warning light came on adds damage that is out of their control. The driver has to share the responsibility to know how to prevent more damage. The shop can't be expected to cover the cost of an uninformed driver but they might help out with a repair bill.
They must be pretty proud of their engine to charge $13,000.00. That's more than the cost of Chrysler's world-famous 426 Hemi reproduction engine prized by drag racers. A typical "crate" engine from one of the big three manufacturers runs in the area of $1500.00 to $5000.00. It takes about a day to replace one so even at $100.00 per hour for labor, your total bill would be less than half of what you were quoted.
Rebuilding the engine is much more cost-effective alternative but that might not be an option if the car is still under warranty. Obviously warranty won't cover this repair but since you don't own the car, you may be obligated to repair it the same way it would be if the manufacturer was paying the bill.
A total rebuild would not be needed either. The cylinder head(s), valves, timing chain or belt, water pump, and a lot of other parts will still be okay so you're looking at an engine repair, not a rebuild. I've run my '88 Grand Caravan low on oil many times. There were times three quarts didn't fill it up, and it only holds 4.5 quarts. Obviously I'm not recommending that, but it shows how tough some engines are. It has almost 400,000 miles and just keeps on going. My point is, I think I'd be looking for a second opinion before I agreed to having a whole new engine installed. The bearings would be the first thing to go, and they would chew up the crankshaft. The engine would have to come out to replace those parts but the cost would be way less than for a new engine or even to rebuild an entire engine. If those bearings were damaged, the connecting rods will start knocking soon. If nothing happens in the next 100 miles, I suspect the engine will be fine. You have to remember too that the warning light came on because the pressure was low, not the level. The pressure was low because the oil pump was sucking up air which can be compressed, but at least for a while there was oil circulating yet. Even though the oil wasn't under sufficient pressure, what little was flowing always goes to the most critical places first which is those bearings. That means they were getting oil yet for probably most or all of that last two miles.
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Tuesday, December 4th, 2012 AT 9:37 AM