Major Malfunction - Need Advice

Well, on the bright side 2010 Gen3 Prius have a horrible history of having failed headgasket and piston ring problems and it's rare for them to go very far past 200K without needing major engine work. So this is a perfect opportunity to install a 2016 or newer Gen4 engine and you'll be good to go for another 300K miles or more. There's plenty of youtube tutorials on how to put a newer engine in a 2010. Just gotta find a mechanic to do it for you. Don't deal with the Dealership, they're gonna suggest a replacement Gen3 engine that won't last as long and will probably cost you three times as much as a regular mechanic doing a 2016 engine swap.

 

call toyota and ask for goodwill warranty help. you never know

 

True, but I think we have a pretty good idea.

I'm not sure the OP should let the insurance company off that easy. A hole in the block usually means a thrown connecting rod and a thrown rod can be caused by excessively low oil level or no oil at all.

So a very plausible scenario is that the OP hit an object in the road which punctured the oil pan, causing the oil leak out. The smoke was the oil spraying onto the hot engine. As the OP was getting to the side of the road, s/he was actually driving with no oil, which caused the thrown rod and the holes from the inside out that the adjustor saw.

With an object that comes flying at the car and you hit it with no time to react, such as a piece of broken truck tire, then that is a comprehensive claim. Hitting a stationary object is an at-fault, collision claim. Obviously, a comprehensive claim is better for future rate hikes, but either way, it looks like the insurance company should pay, minus deductible.

 

Do you have pictures of the damage?

 

This appears to be the key to it.

When an engine throws a connecting rod, (lower end bearing failure) it tends to blow a hole through the crankcase or oil pan outwards to the world, so the description is plausible if spare. It leaves marks that are fairly deterministic and hard to fake.

Engines tend to throw connecting rods due to lubrication failure.

Lubrication failure has many sources, and most of them are hard to prove.

It's plausible that you hit some debris in the road and your oil pan and/or the pickup tube for the oil pump were damaged. That could set up a lubrication failure that would ultimately result in a rod bursting out through the crankcase.

It is also plausible that the engine was gradually burning oil and simply ran out.

Unfortunately, it is very difficult to work out exactly what caused the lubrication failure. Front end damage that clearly extends down under to the oilpan would make an easier insurance claim.

Just having a hole in the engine with oil on the road and a story (without dashcam video) of other motorists avoiding obstacles is a harder claim to press.

I wish you luck!