"Jettison the cargo! Jettison the cargo!" the captain screams as the ship rolls past 50 degrees, top-heavy in the heart of the worst hurricane of 1849, teetering on the edge of calamity.
Overboard go the heavy sacks of millet, and the ship tucks into the swells, riding out the storm.
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Back in port, the ship's insurer says, "Thank you for saving the ship, Captain," and cuts a check for the lost grain. A clause called "sue and labor" in the ship's insurance policy covers the comparatively small costs the skipper took to prevent an expensive disaster.
Cut to 1999. A corporate chief technology officer stares in disbelief at the calendar, shuddering as time marches inexorably into the path of Y2K.
"Jettison the two-digit code!" he barks. Out go the bug-ridden systems, ostensibly averting untold catastrophes.
"Thanks for saving us a fortune in claims," says the insurance agent and cuts a check for the overtime programmers, replacement software, and hardware.
Not.
Welcome to the eye of a new hurricane, the raging debate over whether the sue and labor clause, born of ancient maritime law but still included in most property policies, should cover the hundreds of billions of dollars that corporations have spent preparing to weather Y2K.
Companies say yes, insurers, no. Third-party experts say, maybe.
In a nutshell, the sue and labor clause says that insurers will pay for steps policyholders take to protect property in the face of imminent danger from an unforeseen peril. Insurers would rather shell out a few pennies for preventive measures than big bucks for damage.
Should sue and labor cover Y2K? "It's not a crazy claim for companies to make," said David Leebron, dean of Columbia University Law School.
With billions of dollars at stake, many companies figure that, if it's not crazy, it's worth a shot.
"This is big news," said Matthew Jacobs, a partner at Kirkpatrick & Lockhart, a law firm that in March filed suit on behalf of Xerox, which is trying to recoup US$183 million in Y2K remediation costs from its insurer, American Guarantee. "There are going to be billions and billions of dollars in claims."
Over the spring and summer, 20 other companies have filed suits against their insurers for a total of $10 billion in claims. Dozens of further suits are pending. Claims could ultimately top $150 billion, say lawyers for policyholders.
