The year 2000 millennium bug is all about computers and business, and avoiding flying on the night of December 31st, 1999, right? Wrong!
From the beginning of this month, household insurance renewal documents are specifying that should your electrical goods fail on the night in question you won't be able to claim for replacements.
The insurance industry is taking the view that since the year 2000 problem is foreseeable, the direct damage it causes to equipment is not covered by policies. However, indirect damage is covered. Thus if, for example, a year 2000 failure causes your washing machine to pop open, dumping several gallons of water onto your kitchen floor, any existing cover for water damage would still apply, but you will not be able to claim for a new washing machine.
The millennium bug arises because devices with microprocessors may fail when their date clocks tick over from '99 to '00, causing the processor to think the date is 1900, not 2000. Although computer software can be checked and debugged in advance, using four-digit dates instead of two, processor-based hardware may also fail. In some cases this could cause outright failure on the stroke of midnight as the new millennium starts, or in other cases could lead to erratic behaviour after that date. Many devices will probably carry on as normal.
A spokeswoman for the Irish Insurance Federation (IIF), Ms Nessa O'Mahony, said from now on customers are being alerted in policy renewal documents that damage to machinery arising directly from the millennium bug is excluded. She stressed indirect damage is not excluded, but urged householders to check with manufacturers if their goods will survive the date change. "The year 2000 is a foreseeable problem," she said. "We all have time to do something about it."
Mr Pat Creighan, development manager for underwriting at Hibernian Insurance, said responsibility for sorting out the issue must be shared. "The insurance industry can't be responsible for all the costs involved in relation to the year 2000. There is an onus on manufacturers and the customer to ascertain positions in relation to compliance. The customer should contact the supplier of equipment," he said.
Hibernian is inserting an endorsement in renewal documentation, which clarifies the scope of cover available, said Mr Creighan. Like other companies, this excludes cover for direct damage arising from non-year-2000 compliance, but it doesn't stop there. It also includes a number of other problem dates, including September 9th, 1999. Computers may store this as a series of nines which is used to represent "no date" or "never" in some software.
Another potential date problem will arise because 2000 is a leap year. Years ending in 00 are only leap years if they are divisible by 400, but software applications may overlook this. This increases the risk of date-related bugs as systems misinterpret February 29th for March 1st.
Norwich Union's notice to policyholders states: "As the year 2000 is foreseeable, we cannot provide universal cover against loss or damage caused by the date change. This would discriminate unfairly against customers who have invested considerable time and money in solving their own problems, and remove some of the incentive to eliminate the year 2000 problem." Ms Anne Matthews of Norwich Union said the exclusion of direct cover for 2000 failure is akin to existing motor policies, where mechanical and electrical breakdown are excluded. Computer breakdown will be added to these exclusions, she said.
But if the failure of a microprocessor in, say, a vehicle immobiliser or central-locking system leads to the theft of a car, any existing policy would still cover the theft itself, the IIF confirmed. Likewise, should a failure of a microprocessor-based engine management system lead to a car crash, an existing accident policy would still apply. "In all these cases subsequent damage is covered," said Ms O'Mahony.
Similarly, should a household alarm system fail due to the bug, a subsequent burglary would still be covered as usual. However, Ms O'Mahony said, the cost of replacement of the alarm is not covered, and she advised customers to contact their alarm companies now to ensure systems are compliant.
In the event that a policy states that cover depends on a working burglar alarm system, both the IIF and Mr Creighan said cover would likely still apply in the event of a year 2000 failure, but Mr Creighan said customers should find out whether their alarms are compliant and should come to some agreement with their insurance companies.
When it comes to purchasing household goods, it is a good idea to ask suppliers for written guarantees of 2000 compliance. Whatever excuses there may have been for non-compliance up until now, there are none anymore. Products which fail due to the millennium bug are defective.
