I’m sure the insurance is suing/settling with MB in the background.
It happened to a friend with BMW SA, his car had defective rims which were cracking and were replaced for free by BMW all over the world but BMW SA didn’t want to hear of it. His insurance paid the replacement but then the insurance sued BMW and won.
In this instance the damaged car was auctioned off.
For all we know there might be litigation in progress.
What has this got to do with an engine shutting down due to water?