Insurance coverage

our insurance policies should be inventoried and analyzed to determine whether they could cover damage caused by year 2000 noncompliance, help pay for compliance efforts, or provide protection in the event claims arise from your noncompliance. Many standard policy terms have exclusions which except most year 2000 problems from coverage: solely financial damage may not be covered; definitions of "property" may exclude loss of computer use and/or data corruption from property damage (and "property damage" may only extend to damage to property apart from the software/hardware itself); year 2000 problems may not be a specified peril for which coverage applies; and so on.

Policies covering damage from "unanticipated" or "unpredictable" factors arguably may not apply since the year 2000 problem was created purposefully by software and hardware engineers to conserve expensive memory space, and thus it can be said to arise owing to an economic design choice rather than an error or accident. However, some provisions relating to property damage and damage to business records may allow recovery. Policies should also be reviewed for subtler year 2000 problems that could affect coverage. For example, if property insurance is contingent upon maintaining an operative fire and/or intrusion detection system, consider whether coverage will become inoperative if these systems are affected by the year 2000 problem. Finally, owing to increased insurer awareness of the year 2000 problem and eagerness by insurers to avoid further claims, it will be important to review all policy renewals very carefully to determine whether new exclusions or changes in terms might adversely affect year 2000 coverage.