Category Archives: 4 Insurance

About a Law Review Article on Stolen Guns

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This post was published on Daily Kos.

I have been advocating a mandate for gun insurance for two years now.  In order for insurance to cover the majority of shootings, it must cover not only the original, proper or legal owner of a gun but anyone who might pick up the gun or steal it and later use it.  This is the most controversial part of my recommendation, which is:

Insurance should be required of manufacturers and importers of firearms that would cover all persons injured with a firearm having at least the benefits for an injured worker of average wages under workers compensation in the state where the injury occurs.  The insurance should remain in effect no matter how the gun is transferred to anyone else until it is replaced by similar insurance taken out by a new owner or the gun is certified destroyed.

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Firearms and the History of Workers’ Compensation

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This is the first of a series of posts which are designed to show that workers’ compensation systems, insurance and laws are an excellent–the best that we have–model for dealing with gun violence victim compensation and for reducing that victimization.

A little over one hundred years ago, our country faced a crisis that was quite similar to the gun violence problem that we now face.  Industrial and work related accidents were completely out of hand, producing deaths and injuries that reached almost every family.  Looking back on my own family history, a great uncle on my fathers side was killed and my mothers grandfather lost an arm–both in railroad accidents of that era.  It’s mostly forgotten today but it was a great issue at the beginning of the twentieth century.

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Cars v. Guns about Mandatory Insurance

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Many people, when asked about the possibility of requiring insurance that would protect victims of gun violence, compare guns to automobiles; and, knowing that we require drivers to have insurance, think that it’s a reasonable thing to do with guns.  It is a reasonable thing; but there are both similarities and differences.

Gun proponents, who often view compulsory insurance as simply an interference with rights they consider to be absolute, tend to offer a number of relatively unimportant differences by asserting things such as  “car insurance isn’t required on private property or unless the car is being driven.”  This isn’t always true; but, more importantly, it has little to do with how to handle a reasonable requirement for gun insurance.

The big difference is the way that we treat responsibility about the two classes of possessions and the politics of that responsibility.  People are used to car owners being responsible for their cars and expressing that responsibility through liability and insurance.  Gun proponents have worked to deflect responsibility away from owners and suppliers of guns and onto gun users; and then from gun users onto victims who can be perceived as responsible for their own injuries when the gun user thinks, rightly or wrongly, that shooting is justified.

The purpose of this post is to point out the similarities and differences that have substantial consequences in the design of appropriate insurance.

Similarities between Cars and Guns

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Precursors to Gun Insurance

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Ideally, we should adopt a system of insurance that protects and compensates all of the victims of gun violence as a single well thought-out package.  The various terms would weight the balance between minimizing the interference with responsible peoples use of firearms and the need to keep them away from irresponsible people.  There are many factors that should work together to give the best overall results.  But, that isn’t the way that most systems of control and regulation are developed.  They come about incrementally.  Even before we adopt any requirements for ordinary gun owners and users to be covered by insurance, there are are changes that could set the state.  Insurance is a means of maintaining a system and culture of responsibility.  Keeping and use of firearms, unlike any other activity in our society, has accrued a large number of provisions, legal and of other kinds, to promote a culture of irresponsibility.  If this is rolled back in stages, use of insurance will emerge as a natural step.  It will be so because it will be a way of facilitating the responsible use of firearms in a context of demanded responsibility.

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Is Self-Defense Insurance Legal in California?

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The National Rifle Association (NRA) and several other companies or organizations sell or sponsor the sale of insurance to defend and indemnify gun owners from liability in self defense situations.  They do this on a nationwide basis and promise protection in a wide range of situations where the purpose of the gun use is to defend ones person or property.  The point of this insurance is to have no restriction against covering self-defense as an intentional or willful act.  The question raised in this post is: How can this be possible under California’s Insurance Code?

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The Question of Pricing Mandatory Gun Insurance

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In addition to policy arguments such as those against putting costs and responsibilities on the public or burdens on gun owners, the insurance industry has offered two major substantive arguments against mandating gun insurance.  The first, which is the claim that insurance does not and cannot cover, intentional or criminal arguments is simply false.  This has been extensively explored by this blog at the post entitled  “Gun Insurance for Willful, Intentional & Criminal Acts.”  The second argument is basically a “Chicken and Egg” objection.  They claim that insurers have no experience to price such insurance and that without ratings experience such insurance cannot be sold.  This post is to show the reasons that this objection is of greatly diminished importance in the case of mandatory gun insurance.

Why can’t insurers simply add up the losses that are occurring as they are reported by emergency rooms, as part of claims for various other kinds of insurance, media reports and government statistics and assign them different weights in an estimate?  The basic reason is that, with voluntary insurance, the people who will actually buy the insurance are not a representative sample of the risk exposed public.  Sometimes that works for the insurers advantage because people can buy insurance because they are more than typically responsible in many ways and produce fewer than average claims.  But those who know that they have an elevated risk can buy insurance for that reason as well. Continue reading →

Mandatory Insurance for Armed Professions is Normal

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We see armed people working around us on a daily basis.  Some of these private professionals are highly visible such as guards for banks and armored car services and some are less obvious to the eye such as private investigators or detectives.  In almost all states there are requirements for them to have licenses and in most states they must have insurance or bonds that function as insurance.  But there is tremendous variation in the requirements and in the definitions and terminology of the various roles.

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New Bill SB2646 for Gun Insurance in Illinois Covers Intentional

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Illinois Majority Caucus Chairman Ira I. Silverstein has introduced a new bill (SB2656) in the Illinois General Assembly to require that gun owners have liability insurance.  This bill covers willful as well as accidental shootings by the owner or others.  It covers lost or stolen guns until they are reported.

This would be very helpful legislation if adopted as introduced and could form the basis of a more detailed and developed requirement to cover more victims.  Because it designates continued responsibility for unreported stolen guns it recognized the important of gun theft for supply to illegal gun possession.

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The Role of Reinsurance in Mandated Gun Insurance

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A gun insurance system designed to encourage safe practices will need to maintain insurer responsibility for lost, stolen or improperly transferred guns. This is essential also to using continuing insurer responsibility as the means of guaranteeing coverage of all guns once they enter the system. Insurers will face risks that continue into the indefinite future for guns whose location is unknown. Specialists in assessing these risks will be needed to encourage the sale of this insurance. This is often done by specialty reinsurance companies in various areas in our economy.

Reinsurance is the practice of insurers buying their own insurance from other companies and thereby transferring part of the risk out of their hands.

Separation of risk after loss or theft

The primary insurer will be able to treat their risk as that of having to buy reinsurance in the event that the gun owner loses control of the insured gun. As the specialty reinsurers establish a market with prices and terms for assuming the risks, the primary insurers will become able to view themselves as selling insurance for the risk of having such a loss of control of the gun. This attitude on the part of insurers is just what is needed to have them take the best role in demanding safe practices. They will put terms in their policies that are designed to stop guns from straying and, thereby, protect the public from the effects of stolen and diverted guns.

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Federal Mandate for Top-Down Insurance

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A federal requirement that all manufacturers and importers have insurance that protects victims of their products with a top-down provision requiring it to continue until replaced is the core of a successful system for guns. Ideally this requirement would specify the terms and benefits laid out in the next level for state legislation that seriously provides for victims, but this will describe the minimum requirements that should be specified on a national level.

A bill (H.R.1369) proposing mandated gun insurance was introduced in the United States Congress in 2013, but it did not specify details of the insurance required in the language of its introduced.

The legislation should require that, before manufacturing or importing a firearm, insurance must be accepted by an insurance company specifically authorized to issue such insurance by some state. In order to make certain that the required financial stability is available, all such insurers should be required to join a pool backed by all such insurers guaranteeing each insurers ability to pay valid claims. Once an insurer accepts responsibility for a certain gun, that responsibility is only relinquished when another qualified insurer takes it on. Continue reading →