One of the common problems with any aircraft design is that you can't have backups for everything. There simply isn't the capacity, unless you double the size of the aircraft and thus eliminate all of the benefits of having a backup engine (perhaps the most critical system to have a backup of). Thus, some level of failure is inevitable.
(Even if you have backups, that won't necessarily save your skin. The DH98 Mosquito could fly perfectly fine on one engine, but crashes from engine failure still happened. The Space Shuttle, on at least one occasion, lost two or more of the five onboard computers. There's a limit to what you can do in these sorts of cases.)
All flight is, inherently, dangerous. That's the nature of the beast. You can improve safety, which is always a good thing to do, but improvements will be asymptotic to a value below perfectly safe. How much below is unclear, I don't think anyone has really done that calculation. Nonetheless, whatever it is, there's declining returns after a given point. Commercial manufacturers tend to put a ballpark figure on what's an acceptable number of deaths per thousand (miles|hours) of flight and will invest to around that level of safety. Understandable - more than that gets very expensive very quickly but won't affect sales, aircraft usage or aircraft reputation.
Now, high atmospheric/suborbital/orbital/space travel is a great deal worse. Engines have to cope with vastly higher pressures, which means that much smaller defects can be disastrous. You've far worse radiation to contend with, so control circuits have to be better screened and radiation-hardened. They also have to cope with far greater G forces, vibrations from hell, variations in temperature that they're not going to like, and (since atmospherics can be nasty) survive (without producing erroneous signals) plasmas and electrical discharges that aren't always predictable and not always that well understood.
In this particular case, it looks from the amateur footage that claims to be of the accident (you can never be sure) that the engine ruptured. The engine, as I understand it, was a new type. Probably smarter to do the first flight unmanned for that, but that's easy to say now. My guess would be that the engine casing had not been properly made and failed. Not enough to total the aircraft at high altitude, but enough to make a complete mess of things. Again, it's only a guess, but that sounds like the engine wasn't yet full power. If it had been, I doubt there'd have been anything large enough for the video cameras to film.
Engine casings are tough to make flawlessly. You can do limited testing with ultrasonics and assorted remote sensors, and those'll find a lot of flaws, but the only known way to test if an engine is working perfectly is to fire it up to maximum power and hold it there until the fuel runs out or it explodes. If it's still intact, it was fine. It probably isn't now, though.