Letter from Insurance Co.

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Recieved a letter from our Insurance Co. ......

"Clearly, the date change problem is a business reality and a business risk -- not an insurance issue. As a business risk it requires a business solution. Insurance is designed to respond in specific circumstances to unexpected or unforeseen events. It is not the answer when all manner of things simply go wrong as a result of defective design which is known or discoverable in advance. For this reason, we strongly encourage you to develop an action plan now, which is aimed at ensuring that your business is able to function unimpaired at and beyond critical dates.

The coverages provided by your North Waterloo Farmers Mutual Insurance Co. policy will NOT cover business losses related to the Y2K problem unless the resulting damage is caused by Named Perils listed in the policy. Computer breakdown or malfunction arising solely out of the Y2K problem, causing direct or indirect loss or damage, IS NOT COVERED."

I had read of insurance co's sending this type of notice, but deep down, I wondered if these were just rumors....

Well, its not just a rumor......

-- Sheila (bugzy@bellsouth.net), October 25, 1998


I've read that insurance companies have been legally absolved from covering Y2K-related losses in (I think) about 40 states so far...

-- Karen Cook (browsercat@hotmail.com), October 25, 1998.

Karen IS correct, 48 states so far have passed into law y2k exclusion pertaining to business interruption. WATCH OUT,NEXT WILL BE your home, auto policies. You'll see, keep an eye out on your upcoming renewals of home/auto policies.

-- Insurance Agent (private@aol.com), October 26, 1998.

Perhaps this is splitting hairs, but I would appreciate a cite to ANY state statute that has "passed into law" year 2000 exclusions for insurance companies. It's probably true that 48 states have allowed exclusions to be inserted into policies, but the way you have characterized what has occured is misleading and inflamatory. What the exclusions actually mean is on a company-by-company basis and will undboubtedly be settled by the courts.

As you re-read the policy language, it says that the COMPANY is responsible for figuring out and solving its Y2K problems. Isn't that what we expect? Do you want businesses that haven't prepared to bankrupt your insurance company?

As far as I know, the exclusions have only been allowed in business policies. If anyone knows of which states have allowed exclusions in personal policies (homeowners, auto)I would like to know about it.

-- Jim Smith (JDSmith1@Hotmail.com), October 26, 1998.

My humble apologizes Jim. But, IF you re read what I have stated you shall see I said that 48 states have passed into law y2k exclusions for business interruption. Pertaining to home/auto policies I stated, WATCH & see. Personal view is that THERE will be FORTHCOMING exclusion on home policies. As you maybe aware already home pocies exclude riots, which will in worst case occur. I do NOT wish to see any such thing happen. But being a realist and perhaps negative I would also like to point out that you said something to the effect of NOT wanting to break the industry with claims. So be it. I agree. But, in a worse case IF power goes down, food spoilage etc will most likely occur. In other cases, power back up = perhaps power surges. Should company be made to pay for this due to y2k? No. And YOU CAN BEST BET, (this is what I stated before!!) Watch and see if they dont do such exclusions at some point in near future. I have done claims also and am aware of the costs. In addition to all of this NOT ONE, hear me??? Not ONE agency I've worked for yet is compliant.

-- Insurance Agent (private@aol.com), October 26, 1998.

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