2020 MacBook Pro 13 Touch ID sensor cracking or peeling

Has anyone noticed or experienced this issue?

My new 2020 Macbook Pro 13" touchID sensor has started peeling or cracking on the edge. It is only 2months old, I take good care of it, never put anything on it, not even when screen was closed but can't understand how it happened. The only thing I have is the rubber keypad cover & outer case. The functionality is not 100% normal, sometimes I have to scan my index finger like 4-5 times for it to sense it. I am attaching a picture of it and I do have AppleCare plan, will it be covered? and what will they possibly do(replace the TouchID sensor)? or replace the whole Macbook with another one? TIA for your response!

-Yadav