Mandalay sues insurer over preparation costs for Y2K

Mandalay Resort Group of Las Vegas is seeking an order to force Factory Mutual Insurance Co. to indemnify the hotel-casino operator for up to $6 million -- the cost of making its computers and systems Year 2000 compliant.

In a Clark County District Court lawsuit, Mandalay Resort alleged Factory Mutual's all risk primary property policy provided coverage to the company from Aug. 1, 1996, through Aug. 1, 1999, including damage caused by the so-called Y2K bug to its "data, programs, or any other software stored on electronic, electro mechanical, electromagnetic data processing or production equipment."

Mandalay Resort Group, which said its computer systems relied on a double-digit dating system to distinguish one year from another, said it identified and renovated critical systems that could have been affected by the Y2K bug to ensure they wouldn't malfunction and cause safety hazards during the New Year celebrations.

The lawsuit alleged Factory Mutual disputed coverage of up to $6 million to make the casino operator's systems Y2K-compliant.

It said the insurance company had offered Mandalay Resort in November 1998 a loss prevention plan called "Year 2000 Project Management" that provided a practical overview of the Year 2000 problem.

This plan was made available to insured parties on the FMIC website and provided information concerning self-audits, articles on the subject and surveys that detailed specific areas, systems and equipment that could potentially have had Year 2000 problems that may have led up to or contributed directly to property damage.

Factory Mutual's attorney wasn't immediately available for comment.

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