The Year 2000 Problem

If you're reading this, it's highly likely that you are familiar with the upcoming event that's commonly referred to as Y2k or the Year 2000 Problem. Just in case you aren't, here's a very brief summary.

In the early days of computers, the cost of computer memory was extremely high. A major use of memory, especially for numerous business applications, was (and still is) related to the many functions, calculations and transactions involving calendar dates. In order to save time and money, computer programmers decided that it made sense to use a shortcut. Instead of using four digits to indicate years, they dropped any reference to the century and just used the last two digits. Since we now face the new century, many computer programs do not know what to do with "00" as a shortcut for the year 2000. Some programs may "freeze up," while others may try to proceed, using the assumption that "00" stands for 1900.

How is your insurance affected? If you use insurance to protect your assets as well as to protect you against the cost of damage or injury you may do to other people or property, you may be curious about how your policies are affected by the Year 2000 Problem. The answer is….no one will know for sure until the event occurs.

Coverage For Losses

It is possible that you may lose the use of some of your property because of the problem. Particularly, some of your electronics could possibly fail because of the computer technology used in their construction. Whether your insurance policy provides protection for this is a different question. In most cases, no coverage will be available because the source of loss is not one similar to fire or theft. In other words, the cause of such losses is not one which is covered under most insurance policies. Of course, some coverage may be available if, due to oversight, your policy language doesn't specifically EXCLUDE such losses.

Interruption Of Policy Coverage

A more likely problem faced by insureds is an interruption in coverage. Part of the premium you pay covers the cost of administering your policies, including premium payments, policy changes, policy issuance of new and renewal policies, and handling claims. Many insurance companies are busy with making sure that their computer systems are able to handle the millennium. Your insurers should be contacting their agents and their customers to advise them of how they're addressing the problem.

Action You Should Take

While there are many things that are out of your control, you can contact your agent or company and ask for written information about how they either have or will handle the Year 2000 event. You need to be assured that your company will be able to handle and account for any of your premium payments, show that you have coverage in effect, be current concerning the exact coverages you carry, and be able to tell you what property and persons are covered. If your companies are unable to do these basic items, you may face the danger of being unprotected in the event of a loss. It makes sense for you to:

• keep a written record of all of your premium payments
• get hard (paper) copies of all of your policies, showing dates, persons and items that are covered, including your limits of insurance
• ask for written information about your insurance company's action plan for handling the Year 2000
• consider appropriate action if your current company is unable to respond to your concerns.

Again, the actual "problems" created by the Year 2000 may be minimal or they could be far more serious than imagined. You need to take reasonable precautions concerning your insurance protection. Oh, and along with a party hat and glass of champagne…maybe you should include a flashlight with the next New Year's celebration.

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