Yes, you can claim a casualty loss on a car that had a blown engine. However, you will be subject to the $100 casualty floor and 10% of AGI requirement. That means you can't deduct the first $100 of loss and after that, only the amount of the loss exceeding 10% of your AGI can be deducted. You can deduct casualty losses on Schedule A.
According to the IRS:
Deductible casualty losses can result from a variety of causes such as car accidents, earthquakes, floods, fire, hurricanes, or vandalism.
Casualties that are not deductible losses include progressive deterioration such as termite or moth damage. Also the loss of a personal belonging, like a ring that is dropped in the garbage disposal, is not deductible.
In TurboTax, jump to the entry area for casualty loss:
Related Information:
@dgamble88 You cannot claim a theft or casualty loss on a federal tax return since the tax laws changed for 2018 and beyond.