Tire Bubble problems of the 2001 BMW 325

I discovered a 2-inch bubble in the side of the rear driver's side tire. The problem has been identified as a snapped belt that is allowing air to escape the inside of the tire. The tire has 3700 miles on it, and I have never run over so much as a large pothole. Nevertheless, the dealer and local tire companies who deal in continental tires have refused to honor any warranty, claiming that the problem is a road hazard. If the tire is so poorly designed or manufactured that normal, on-street driving causes a belt to snap with less than 5,000 miles on the tire, something is seriously wrong with its manufacture.