A housing assembly for a rotary engine, has: a rotor housing extending around an axis, the rotor housing having an inner face facing a rotor cavity; side housings secured to opposite sides of the rotor housing, the rotor cavity bounded axially between the side housings; and a seal received within a groove at an interface between the rotor housing and a first side housing, the groove annularly extending around the axis, located outwardly of the inner face, and overlapping a peripheral section of the first side housing, the seal having: an elastomeric member compressed between the peripheral section and the rotor housing; and a shield disposed inwardly of the elastomeric member, the shield having a melting point above a temperature of combustion gases, the shield in contact with both of the peripheral section of the first side housing and the rotor housing.