In what may signal a flurry of multimillion-dollar Y2K suits against the insurance industry, Stamford-based Xerox Corp. and its insurer are clashing over the copier company’s bid to recoup the costs of ridding the so-called millennium bug from its technology.

The battle is over whether Xerox’s $183 million in Y2K expenditures should be covered under the “sue and labor” provision of its policy with American Guarantee & Liability Insurance Co.