The opposition charges my War Engine.

After the initial Assault move is finished, I declare Overwatch fire from another unit.

Can the opponent claim the -1 penalty to be shot for being in BtB with an opposition vehicle?

Yes.

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Think of it as the overwatching formation having to be careful not to cause any "friendly fire" incidents as they fire on the enemy so close to their friends.

But it doesn't apply when two opposing Infantry formations are fighting?

Especially given Infantry attacking a War Engine are hit by AP attacks, and the WE is immune to AP fire.

Morgan Vening

It's just an example as to what "might be happening", a rationalization.

AV/WEs give cover to infantry, infantry and LVs don't give it to each other, those are the rules, but it's nice to think of the "real world" why that is.

Firing at enemies who are mixed with friendly troops *should* be dangerous, but this is a game, so some things need to be compartmentalized and abstracted, and this is one of those cases.

Whoa - back up!! You want to claim cover by touching an enemy vehicle?! I think this is a misreading of the rules for a start and conceptually this is totally different from where friendly tanks and infantry are working together to support each other. Also worth remembering that conceptually most formations are in motion, not standing around for enemy infantry to hide behind.

so you do have to be carefull and watch out that they don't drive over your toes

It is worth noting that formations that are making the assault can never claim cover saves, per 1.12.5 (3rd para), and that per 1.8.4, AV's only provide infantry with a -1 for being shot into cover.

In this case, an assaulting unit that has the momentum to physically reach a WE, which is the only LOS blocking unit in the game, should, I feel, be rewarded with the -1 to being shot at. They will not get any cover, however, during the resolution of the assault itself. This actually would work with any AV's, not only WE's, but I feel the rule interpretations of C&E and Chroma are correct.

Not that anyone actually needs my blessing...