BMW picks up all of the cost (parts and labor) to replace the engine block, however you would be foolish not to replace other items such as hoses, thermostat, belts, etc. while the engine is out of the car. I had the engine replaced in my 840 last year and all of the extras came to around $450 (don't remember the exact cost). This was mostly just parts prices plus some other things like brake fluid change and differential oil change. My dealer - Otto's BMW in West Chester, PA (excellent in my opinion)- told me up front to replace these items and the approximate cost.
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