Category Archives: Types of Insurance

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 →

Questions and Answers on Mandating Gun Insurance.

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Updated 12/22/2022

This post is a good place to start if you’re new to this blog. Scan the questions and follow the ‘Related:’ link(s) if you have an interest in a particular area.

Q: What is the purpose of mandating gun insurance?

Required insurance for guns or gun owners should be designed to provide benefits for victims of gun accidents or violence. Insurers will automatically take appropriate steps to encourage gun safety as part of their loss control and underwriting activities.

Related: Insurance-Good for Victims, Safety and Gun Owners

Q: What specifically would be the best insurance system for guns?

Each state should adopt a system of no-fault insurance with a system of delivering medical and cash benefits directly to victims. This insurance should be required to be in place for any firearm brought into or kept in the state in order for that firearm to be legal. It should provide all of the benefits available to victims of motor vehicle or workplace injuries.

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Gun Insurance for Willful, Intentional & Criminal Acts.

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One of the things that opponents of gun insurance or insurance trade representatives often say is that insurance cannot cover intentional or criminal acts.  This is simply false.

There are many kinds of insurance that cover such acts.  The key is that the insurance pays to the victim and not the wrongdoer.  It doesn’t have to matter if the deed is done by the purchaser of the insurance or another insured person.  It is important the the policy be written to make this clear; policies that exist at least partially for the benefit of third parties typically work that way.  Insurance that is compelled by law for an activity often applies in these cases even if it’s not spelled out in the policy, but courts differ on this point and an explicit requirement in the legislation and in policy language is a good idea.

Insurance textbooks teach that whether an act is accidental or willful is determined from the viewpoint of the insured.  Mandatory insurance should treat a victim as an also insured party. This is necessary because the purpose of many kinds of insurance is to protect the insured against the willful acts of outsiders. An example would be a day care center that is negligent in screening visitors who might commit an abuse against a child.  From that viewpoint, a act that is deliberate on the part of the abuser is an accident to the victim.

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Compulsory Firearm Insurance for Concealed Carry

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Concealed carry permits provide a situation where gun insurance is needed that is much simpler than guns in general.  Taking the guns out into the community provides an additional reason to provide guaranteed financial responsibility and many of the problems that have to be overcome to design good insurance are mitigated.  Some of the reasons that required insurance would be easier to implement are:

  • Most permit holders are generally responsible people and many have purchased or would purchase liability insurance to give legal protection to the insurance owner.  The insurance that will be recommended here is much broader than currently available liability insurance which is designed to protect victims, it will also provide better protection to the permit holder.
  • Permit holders are already registered with government entities.  Enforcement of this insurance requirement will not require a new registration system.
  • The problem that “criminals won’t buy insurance” is not applicable as they won’t have permits.
  • Insurers are likely to be more willing to provide the required insurance to this group.
  • The Supreme Court of the United States has declared that there is Constitutional protection for having self defense guns in the home; but it has not done so for guns in other places.

There are also good reasons over and above the reasons for guns in general to require this insurance for guns being carried in the community: Continue reading →

Self-Defense Gun Insurance

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Persons who carry guns for self defense or who keep guns in their homes often worry about the liability should they shoot someone.  This motivates the drive by the NRA and other pro-gun organizations to adopt laws that immunize shooters, but it is also makes a substantial market for legal protection. It’s likely that steady publicity given to dubious claims of millions of defensive uses of guns make many people think that such protection is needed.  There have sprung up a number of organizations which attempt to fill this market with products which may contain an insurance component or, if not claimed to be insurance, are similar to it in most respects.

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NYT OP/ED’s on Gun Manufacturer Responsibility—Insurance by Other Means

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This is hot stuff!!  A very heartening reminder that the drive to establish a responsible gun policy in our country is here to the finish.

A pair of important OP/ED’s to hold gun manufacturers responsible for the injuries they create has been published in the New York Times.  The first “Make Gun Companies Pay Blood Money” by Lucinda M. Finley and John G. Culhane advocates a compensation fund to pay victims of gun violence financed by a tax on gun manufacturers or importers.  The second “Let Shooting Victims Sue” by Robert M. Morgenthau calls for rolling back the special laws that protect gun manufacturers and others in the gun trade from liability for the damage their wares create.

Make Gun Companies Pay Blood Money

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A Progression of Kinds of Insurance for Guns

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The purpose of having insurance for victims of gun violence is to provide money for the many needs they have after they suffer from a shooting. The insurance should be structured to pay in the various situations that occur, for the various needs that are faced and in a timely manner. There are lots of kinds of insurance in use today and several ones will be examined in the chapters that follow. Starting with the most basic insurance designed only to protect the buyer of the insurance, we will add features until we see that it is possible to create a system that works to provide the needed protection. We’ll start with the simplest in the progression. Continue reading →

Opposition to Mandatory Insurance in 1929

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It’s becoming clear that the underlying reason for insurance industry opposition to requiring insurance for guns is the latest move in a very old battle to keep the government out of regulating insurance and leaving the path clear for insurers to maximize their interests and profits.  In a fascinating book from 1929 presenting both sides of the debate Edison L. Bowers, its editor from Ohio State University, wrote in an introduction:

No large group of persons stands as sponsors for compulsory automobile insurance in any of its forms, although an association has been formed to promote the compensation insurance idea. As already suggested, however, there is a strong undercurrent of public opinion to the effect that something needs to be done to curb the growing menace of the automobile, and that compulsory insurance of some sort will help in that direction. The opposition, on the other hand, is much better organized and considerably stronger. Both the United States Chamber of Commerce and the American Automobile Association have declared against compulsory insurance in its present contemplated form. The latter organization opposes it particularly on the ground that such insurance would not prevent accidents, which end is the basic issue in the problem.

 

The strongest opposition comes from a source least expected. The insurance companies have definitely declared against compulsory insurance. Their attitude has added new fuel to the controversy. It has raised the old issue of the “vested interests” versus the public. … the private interests present the argument that legislation should never invade the realm of private enterprise, that any change contrary to the welfare of private interests is un-American, socialistic, and perhaps unconstitutional.[i]

By the time compulsory insurance was being adopted in New York State in 1956 at least 85% of the motorists in that state had voluntary insurance with almost no regulation of terms and rates.  The insurers were loth to allow a mandate which they were sure (and correctly so) would lead to regulation and especially regulation of rates.  This history indicates that the insurance industry is no friend of the public but it will bend to the public will when it is finally expressed and then will serve the public.

[i] Edison L. Bowers, “Introductory Note,” in Selected Articles on Compulsory Automobile Insurance: Liability and Compensation for Personal Injury, ed. Edison L. Bowers (The H.W. Wilson Company, 1929), 16.

North Carolina Added to States with Gun Insurance Bills

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A bill HB976 has been introduced in the North Carolina Legislature.  It has several gun control provisions including $100,000 in mandatory gun liability insurance.  This insurance goes farther than in most other states by applying to willful acts and to unreported stolen guns.  The bill introduced by Rep’s Luebke, Insko, Harrison and Adams has 7 sponsors so far.  It was introduced on 4/17/13, showing that momentum to deal with gun violence is continuing and that insurance is seen as a part of the solution.  There have now been bills introduced in 9 states and the US House.