Is the cracked insulation bad enough, and in a location where, a short could occur? If not, I would keep an eye on it and continue to enjoy driving your car.

Good luck,

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Larry Bible
'01 C Class, Six Speed
'84 Euro 240D, 523K miles
'88 300E 5 Speed
'81 300D Daughter's Car
Over 800,000 miles in
Mercedes automobiles