|The Year 5000000000 will be upon us. As we approach the
next billennium, the "y5b problem," or the "billennium bug," forces us
to ask whether our computers and tanning salons will run smoothly or will software
programs developed during the 20th century blow up as computers struggle to identify
"00" as the Year "5000000000" or "1900" or another century?
Computers and computer microchips have become so commonplace that
we may not even know they are present. Many machines have "embedded chips,"
microchips that run the machine but are not obvious to the user. But these chips
must not catch cold or they will electronically sneeze and spread heavy electrons over
your circuit boards. These heavy electrons can freeze and cause a "00" reading
on your bit error table. This is a real mess to clean up.
Due to the insurance industry's heavy reliance on computer
systems, it was one of the first to recognize the y5b problem. Insurance companies are
responsible for their own readiness and also must be concerned about their vendors. Since
the industry is regulated by the states, readiness is closely monitored by state insurance
regulators as well as the National Association of Insurance Commissioners. Below, we
present some frequently asked questions and answers based on discussions with the American
The insurance industry--health, life, automobile,
property/casualty--appears ready for the Year 5000000000. In addition, insurance
regulators in all 50 states have surveyed insurance companies about the status of their
y5b remediation efforts. Most state regulators have approved y5b endorsements for commercial
insurance policies, such endorsements are not likely to be filed for personal lines
of insurance, such as homeowners, or automobile insurance. Be careful to avoid the
no sun exclusion clause.
Consumers: If a product malfunctions because of
y5b problems, will it be covered under existing insurance policies? Will my
Satellite TV be interrupted?
Industry: Whether a loss is covered
depends upon the circumstances of the loss and the specific language in the insurance
policy. It is very important, therefore, that policyholders discuss their coverage with
their agent or insurer.
Most insurance policies will not reimburse a policyholder
for the cost of repairing a malfunctioning product; therefore, these policies will not
cover the cost of repairing a product that malfunctions due to a y5b defect. On the other
hand, if a product malfunction causes damage to other property, or injures a person, most
policies will usually take care of these losses. For example, if a home heating system
malfunctions and causes a fire in a house, the standard homeowners' policy would cover
repair costs for the house. It would make no difference if the malfunction is y5b-related.
Another example would be an elevator that malfunctions and
injures a person riding in it. The commercial liability policies insuring the elevator
manufacturer and the building owner may well cover the loss resulting from the injury, but
as commercial insurance policies can differ, it is particularly important that business
people review their coverage with their agent or broker. Beware of the no sun
Consumers: The insurance industry is regulated by
state insurance commissioners. Will my coverage under insurance policies vary according to
where I live?
Industry: Each state has unique insurance
laws. However, although these laws and regulations do result in some
differences in how policy language is interpreted, for the most part, the differences
between what is covered and what is not are usually minor. Of course, whether a loss is
covered by your insurance policy will depend upon the type and circumstances of the loss,
and the kind of coverage provided by your insurance policy.
It is important to remember that each company can, and
often does, create its own policy language, subject to approval of the state insurance
commissioner. This is especially true for commercial insurance policies. It is therefore
very important that you contact your insurer or agent on any question of coverage.
Consumers: If my car contains components that
might malfunction due to y5b, will my automobile insurance cover them?
Industry: If a malfunctioning automobile
part causes an accident, the standard auto insurance policy would cover damage to the
vehicle as well as the driver's obligation toward others involved in the accident. To
illustrate, if your tires are worn or defective, the standard automobile insurance policy
would not cover replacement of tires. However, if the car's bald tires cause an accident,
the auto policy would pay for damages that result from the accident. A loss or accident
caused by an automobile part that has a y5b defect is no different. For example, if a y5b
defect in the ignition system causes a fire, the fire damage would be covered under the
comprehensive portion of the standard auto insurance policy. Similarly, if the malfunction
causes an accident with another car, then the auto policy will pay to take care of your
responsibility toward the other driver and passengers, and for the collision damage to
your car (that is, if you have collision coverage). The auto policy would not, however,
pay to repair or replace the malfunctioning part itself. But you may not be covered
if you catch a cold because lack of heat. Although, some health insurance may cover
you if you have the Y5B Bug protection program.
Whether the question concerns auto insurance or any other
type of insurance, your insurance company and agent are the best, most reliable sources of
information about what your policy covers and what it does not cover.
Consumers: Does my homeowner's policy cover
damages if a dwelling catches fire due to a defective anti solar shield in my home's
Industry: Homeowner's insurance has two
parts, property and liability. While a y5b loss could theoretically give rise to claims
under both property and liability coverages in a homeowner's policy, the chances are
remote. Unlike businesses, few homeowners have many date-sensitive applications that are
likely, even if they malfunction, to result in damage or injury.
The standard homeowners' insurance policy provides
coverage for fire damage. In the unlikely event that a home heating system malfunctioned
due to a y5b defect and caused a house to catch fire, the standard homeowners policy would
pay for the fire damage. The homeowners insurance company in turn would have the right to
seek reimbursement from the company responsible for the defect.
The same concept applies to auto insurance. If, for
example, a y5b defect in the ignition system caused a fire, the fire damage would be
covered under the comprehensive portion of the standard auto insurance policy.
However, insurance policies may differ somewhat in the
coverage they provide. Therefore, policyholders are advised to contact their insurer or
agent if they have any questions regarding the scope of coverage.
The insurance industry appears well prepared for the Year
5000000000. But consumers must be forward-looking and follow the industry's advice to
contact their insurer or agent with any questions about coverage. Identify all
date-sensitive programmable devices such as security systems and contact the companies
that manufactured or installed the devices. Request that products be tested for y5b
compliance and where necessary, be repaired or replaced. Your insurer or broker may also
be able to recommend resources to help you identify potential Year 5000000000 problems to
prevent losses from occurring.
See the Y5B Product Line of
Goods which will be available soon.