Projected Costs for Gun Insurance are Low!

People who are opposed to gun insurance will often make arguments that the cost will be prohibitive.  They make guesses that it would cost typical gun owners thousands of dollars and work as a backdoor way to prohibit guns.  This is not actually what would happen if insurance was required.  We have enough information to make estimates that would put a ceiling on the average cost and it turns out to be quite reasonable.  Of course, insurers would take particular situations into account and dangerous owners and situations would pay more than average, perhaps much more; but, that’s realistic and can be handled by the owners taking measures to reduce the dangers.

There are two basic reasons that mandatory gun insurance would not be expensive, first there are a huge number of guns and gun owners in the United States to share the cost and, secondly, guns while deadly and causing many deaths do not cause nearly as many injuries as motor vehicles or workplace accidents.  Injuries (and smashed cars) are the great cost for insurers.  The Insurance Information Institute reports 2.5 million auto liability insurance claims per year compared to only about 73,000 non-fatal gun injuries reported by the CDC’s WISQAR’s system.  The report linked below shows that over 8 million persons received compensation for workplace injuries in a single year.

The kind of comprehensive insurance for gun violence victims advocated by this blog would pay three kinds of benefits–medical costs, lost wages and a death benefit.  This is what is covered by existing no-fault insurance in other areas such as motor vehicles and worker’s compensation.

Looking at medical costs, PIRE estimates the total medical cost of firearm injury at $2.88 Billion for 2010 including costs for fatalities.  We will assume that all of these costs are covered by gun insurance for our calculations.

To get an estimate of lost wages we can look at a report by the National Academy of Social Insurance on costs for Worker’s Compensation.  This shows for 2005 that total medical benefits paid as Worker’s Compensation were $25.3 Billion and Cash Benefits were $26.6 Billion.  This ratio of approximately 1-1 if applied to gun insurance benefits would probably greatly overestimate the lost wages because gun victims are often unemployed or paid lower than average wages.  For the purposes of this estimate, it will be assumed that the lost wage benefits will equal the medical benefits.

To estimate death benefits we can assume a payment of $50,000 per non-suicide death.  This is higher than the automobile insurance limits in almost all states.  Multiplied by the annual figure for 2010 of non-suicide gun deaths from the CDC of 12,028 this gives a total suicide benefit cost of $601 million.

Claims for covering all gun injuries would be about $6 billion per year

.Adding the $2.88 billion in medical costs to an equal amount for lost wages and $601 million for death benefits means that insurers could pay all of the economic costs for a total of $6.06 billion in claim payments per year.

Premiums for this insurance would be about $9 billion per year.

The Insurance Information Institute fact sheet shows that in 2010 the total incurred losses to insurers for private passenger automobiles from liability insurance was $64.1 billion.  The total premiums collected for corresponding insurance was $97.6 billion.  If the same claims ratio applies to gun insurance then the total premium for insuring all guns would be $9.2 billion dollars.  We have about the same number of guns as cars but insuring the cars is 10 times the cost or 17 times the cost if we include collision/comprehensive insurance.

This is about $30 per gun and most gun owners would pay less.

Because there are about 300,000,000 guns in private hands in the United States the average cost per gun for this widespread generous insurance would be about $30 per gun per year.  Hardly a prohibitive figure.  But this is only an average.  For responsible gun owners who have a few guns for hunting or a pistol at home for self defense, it would be much lower.  For those who carry guns around it would probably be higher.  For very dangerous persons and situation such as illegal drug dealers it would be much higher.  I think that for the majority of guns which represent very low dangers, it could be handled as a low cost or even a no additional cost provision added to homeowners or renters insurance.

There are a number of factors which could make the cost even lower:

  • The insurers loss control measures such as education and research may work to reduce gun injuries and deaths.
  • The guns which evade a requirement for having insurance would be those with the greatest risks perhaps by being in the hands of criminals.  This would mean the the guns having insurance would on the average be safer
  • This insurance is assumed to have really generous benefits which go to all persons injured.  The benefits actually paid would be some subset of this.
  • Any improvement in gun safety due to other causes would result in a reduced cost to insurers.

Those who think that mandated gun insurance would be so costly as to unfairly burden gun owners or is intended as a covert way to prohibit guns are simply wrong.  It’s a way to aid victims and encourage safe practices.  Insurance facilitates many activities that have risks and can do this for guns as well.

Gun Insurance for Willful, Intentional & Criminal Acts.

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.

Insurance that pays to innocent victims for willful, intentional or even criminal acts is common when the purpose of the insurance is to protect third parties. Despite the statements from insurance industry representatives– “if you use your car as a weapon to intentionally run down a pedestrian or another motorist, there is no coverage”, motor vehicle insurance in many states would in fact cover exactly that case. The case commonly cited in legal discussions to illustrate this point is Wheeler v. O’Connell, 297 Mass. 549 , 553 (1937) This case held that compulsory insurance was very different than voluntary insurance, that public policy considerations did not prevent coverage of intentional acts, and that the insurance terms should be interpreted in light of the intention of the compulsory insurance law. Many later cases in various states have taken the same position even in situations where insured persons committed serious crimes including murder.

It was also often stated that insurance would not pay if a homeowner intentionally burned down his or her house. Banks and mortgage holders were not willing to take on this risk and demanded coverage.  There are two types of mortgage clauses in homeowner’s insurance. The most common type today is the “union” or “standard” or “New York” mortgage clause, which would pay a mortgagee such a case. My own homeowners insurance (USAA) has such a clause stating:

If we deny your claim because you or any other “insured” has failed to comply with the terms and conditions of this policy that denial shall not apply to a valid claim of the mortgagee.

Standard insurance text books discuss this mortgage clause and point out that it is included specifically to pay lenders in cases of arson or other misbehavior on the part of the insured homeowner.  Because homeowners insurance is not mandatory, policies vary on whether they will pay to one owner when a co-owner burns down the house occupied by a spouse in a domestic violence incident.  This can hinge on details of the policy language such as whether it says “an insured” or “the insured” and illustrates the importance of requiring the right terms.

Other examples of insurance that pay to victims for criminal acts of policyholders or otherwise insured persons include worker’s compensation for acts of co-workers and often by employers, businesses for acts of employees and bonds by Locksmiths or fiduciaries.

The point of these examples is that liability and other kinds of insurance can pay innocent third parties for intentional acts of otherwise insured parties.   Mandatory firearm insurance should be designed like the examples above to protect the victims. Public policy, which is often said to prohibit such insurance, only prevents the malefactor from benefiting.  In light of these and of many other kinds of insurance that pay innocent parties regardless of the intent of others, there is no problem with public policy for providing insurance covering willful acts. It may, however, be appropriate for insurance regulators to allow insurers to have subrogation clauses to recover their money working against the misfeasors themselves.

Enacting a Concealed Carry Insurance Mandate

While it would be ideal to have a gun insurance adopted at a single time as one well designed national mandate, it’s likely that political reality will force it to come into being in stages.  The logical place to start is for the more amenable states to require insurance for holders of permits to carry firearms in public.  If this can be extended to general coverage of guns in some of these states, the stage is set for a federal mandate for top-down insurance which extends into any state requiring insurance.  This in turn will encourage other states to have their own requirements in order not to have their citizens paying for insurance without their state receiving benefits for victims.

1. Concealed Carry as a Start and End in Itself

Mandating gun insurance for holders of permits to carry weapons in public is much simpler than mandating gun insurance in general.  Permit holders are already registered with state government agencies; there is no need for an additional registration system.  They are generally responsible people who have already shown their willingness to cooperate with reasonable regulations.  Insurers will find these people to be desirable customers.  Most measures to deal with gun violence have to deal with the flood of illegal weapons that come from states with weak regulation of gun trafficking.  But, states requiring insurance for permits can simply refuse to recognize permits from other states without insurance requirements or require proof of insurance in addition to such a permit.

Starting by requiring insurance for permit holders is not only easier to implement, but it will address quite a few additional dangers for guns carried in public that do not apply to guns kept for self-defense in the home:

  • Citizens who do not want to be exposed to the dangers of guns have no choice to avoid them.
  • People carrying guns often need to leave them in cars or other less protected places, encouraging theft and misuse.
  • The new “Stand Your Ground” laws often prevent innocent citizens injured in incidents from receiving compensation in shooting incidents.
  • Private property owners and businesses may be at legal risk from the guns brought by their visitors and customers.
  • The “bad guy” in a situation may respond with additional violence perhaps turning a robbery into a murder.

These additional dangers give the states an incentive to make this requirement.  Several states have instituted a provision for issuing these permits under great pressure from gun proponents or even in the case of Illinois from a federal court.  In other cases the state legislature has reluctantly expanded the permit system from a “may issue” system where local law enforcement officials may or may not approve the issuance of a permit based on the need in the particular case to a “shall issue” system where permits must be given to any person meeting defined requirements.  Those states which are uncomfortable with their system of issuing permits are likely to welcome required insurance as a way to provide a guarantee of responsibility on the part of permitees.

Enforcement of the insurance requirement can be made through the permitting process and because it is attached to the person holding the permit rather than directly to identified guns there is no limit to legally owned firearms.  Invalidation of the permit is a readily available way to enforce continuance.  The benefits can be defined by reference to a pre-existing system such as worker’s compensation in any state or no-fault motor vehicle insurance if available in that state.

Example of Possible Legislation for Carry Permit Insurance

 

AN ACT

Relating to requiring insurance for Concealed Carry Weapons Permits and establishing strict liability for injuries and death resulting from firearms used under such permits.

 

SECTION 1. As used in sections 2 to 5 of this Act:

(1) “Covered Firearm” means any firearm owned, controlled or used by a Covered Person.  Includes any otherwise included Firearm which is lost or stolen until the loss or theft is reported to a law enforcement agency in the area where the loss or theft occurred.[a]

(2)  “Covered Person” means any person holding a [Name of Permit].[b]

(3) “Evidence of Insurance” means a card issued by an insurer authorized to issue Firearm Permit Insurance which lists the name of the Covered Person and the dates of coverage and certifies the existence of Firearm Permit Insurance.

(4) “Firearm” has the meaning of any firearm or other weapon that is covered by [Name of Permit].[c]

(5)  “Firearm Permit Insurance” means insurance issued to comply with the requirements of this act by an insurer authorized to issue such insurance by the [State Insurance Regulatory Agency].

(6) “Issuing Agency” means [Name of state permit issuer]

(7) “Worker’s Compensation Equivalent Benefits” means all benefits that would be provided for a similar injury or death arising out of employment under [Workers Compensation Law].[d]

SECTION 2.  Worker’s Compensation Equivalent Benefits Requirement

(1) Firearm Permit Insurance must provide Worker’s Compensation Equivalent Benefits to any person injured in an incident involving a Covered Firearm.[e]

(2) A person injured after display, use or threatened use of a Covered Firearm is considered to be injured in an incident involving the Covered Firearm, regardless of the actual agency of injury.[f]

(3) A person injured in the act of a felony that started prior to the display, use or threatened use of the Covered Firearm may be denied Worker’s Compensation Equivalent Benefits by the insurer.[g]

(4) For the purposes of this section the average wage of any injured person whether or not actually employed or employable shall not be considered less than the average weekly wage of the state.[h]

(5) The minimum death benefit provided for a person killed in an incident involving a Covered Firearm is $100,000.[i]

(6) Nothing in this section will be construed to relieve the owner or user for liability incurred because of injury involving a Covered Firearm.[j]

SECTION 3. Liability Insurance Requirement

(1) Firearm Permit Insurance must provide liability coverage to each covered person in an amount of not less than $500,000.

(2) The liability insurance must cover liability for negligent injury caused by a Covered Firearm in any location.[k]

(3) The liability insurance must cover all liability incurred under section 5 of this act.

SECTION 4. Requirement and Proof of Insurance

(1) Any Covered Person must maintain Firearm Permit Insurance in place at any time a [Name of Permit] is in effect.

(2) A [Name of Permit] is immediately invalidated upon lapse of Firearm Permit Insurance due to expiration, failure to pay premiums, failure to comply with requirements of the insurer or other cause.

(3) An insurer issuing Firearm Permit Insurance must notify the Issuing Agency prior to lapse of Firearm Permit Insurance.  The insurer is responsible for claims under the insurance for incidents that occur prior to 30 days after that notice.[l]

(4) Failure to return the [Name of Permit] to the Issuing Agency within 10 days of lapse of Firearm Permit Insurance is grounds for refusal to reissue the permit for a period of 2 years.

(5) At any time a [Name of Permit] is required the Covered Person must have Evidence of Insurance available for immediate inspection.[m]

SECTION 5. Strict Liability for injuries involving Covered Firearms

(1) The owner or user of a Covered Firearm is liable without consideration of negligence or intent and regardless of any other law granting immunity for any injury involving the Covered Firearm at any location other than that person’s home or a place of business under that person’s control.[n]

(2) This section does not apply to any injury where the injured person is in the act of committing a felony that started prior to any display, use or threat of use of the Covered Firearm.


[a] An important reason for including stolen firearms is that a gun may be taken from the Covered Person or from a place or vehicle where it was left by the Covered Person and used by another.  This is one of the major risks of carrying firearms in public places.

[b] A law enforcement officer is not generally required to have a permit and so would not be covered.

[c] In most states this means that the insurance will not cover long guns.

[d] All states have worker’s compensation insurance systems.  Use of these systems will allow effective insurance to be defined without setting up a new system.  Due the much smaller number of injuries due to guns than to employment accidents this is efficient.  It is also desirable to use an existing system so that the practicality of the system is demonstrated by the preexisting experience.  Most state worker’s compensation systems have rules for intentional acts by co-workers or third parties and for self-inflicted injuries that are workable when applied to gun injuries.    Opportunities for fraud by injured persons are much more limited than in worker’s compensation or in no-fault motor vehicle insurance because guns rarely cause the kinds of soft tissue injury that leads to uncertainties in the diagnosis or required treatment.

[e] Incidents that are covered by the insurance are not limited to those occurring in places where the permit is required.  This is appropriate because persons having permits are more likely to have injuries produced by the permitted firearms in their homes and places of business.  They may have additional weapons and keep these weapons outside of locked storage in readiness for taking them into the community.

[f] An example of another agency is that the use or threatened use of a Covered Firearm may elicit return gunfire or other hostile behavior from the person against whom the use or threat was directed.  A person may also be injured in attempting to flee the area where the Covered Firearm was used.

[g] The limitation of the denial to felonious acts started prior to the use of the Covered Firearm is because after the incident starts, there may be a response with an unclear or controversial nature.  It insurer should not be allowed to use this uncertainty to deny coverage.

[h] Average weekly wage is defined in most state worker’s compensation systems.  It is important that there be compensation to persons who are not employed currently or are unemployable due to being children, having the duty to care for another person or being disabled prior to the shooting incident.

[i] This is higher than for motor vehicle insurance in most states, but should not be excessive for the states likely to initially adopt this insurance requirement.  In most cases the limits for motor vehicles were adopted in the past and would be higher if set today.

[j] Worker’s compensation insurance usually relieves employers of other liability.  It is not the intention of defining benefits as Worker’s Compensation Equivalent Benefits include this limitation on gun owners responsibility.

[k] The Strict Liability in Section 5 is limited to places outside the Covered Persons home or business.  Negligent liability should apply everywhere as it not does.

[l] This gives the issuing agency time to invalidate the permit and take other enforcement action.

[m] A law enforcement officer who stops a person with a Covered Firearm will be able to check the card in order to take enforcement action.

[n] This language is intended to override any “Stand Your Ground” or other immunity law.  The limitation to places other than a home or place of business is to limit the strict liability to places where the permit is required.

The Need for State Regulated Gun Insurance with a Federal Mandate.

The answer to the question of whether we need to mandate gun insurance at the federal or the state level is to have the mandate at the federal level and the regulation of the insurance at a state level.  The special problems that guns have of illegally traveling across state lines to do their damage and of states varying so much in their willingness to regulate guns can be solved by this structure.  The federal mandate should implement the top-down process for continuing insurer responsibility advocated by this blog.  It should require that the insurance pay benefits to victims in accordance with the gun insurance requirement in the state where the shooting occurs.

One of the special difficulties that makes guns different than almost any other risk, is that move around from state to state so easily once they are in illegal hands.  Much of the country has a relatively small problem with illegal guns and people there see no need to make access difficult.  In other parts of the country, there is a major problem with death and injuries from illegal guns.  No matter how carefully places like New York, Chicago and Washington, DC work to stop the transfer of firearms to dangerous people they cannot control the flood of weapons that come in from areas with more permissive policies. The process has been named the Iron Pipeline.

This blog believes that requiring insurance is a practical way to deal with the problem.  Insurers that remain responsible for deaths and injuries from guns after they pass into illegal hands will set up conditions to prevent that passage.  They will find ways to do this that are minimal inconveniences to legitimate gun owners.  The question is how to get a requirement for such insurance into place in this environment.  The states that sell the most guns are least likely to make such a mandate.

Insurance in this country is normally regulated by the states.  The McCarran-Ferguson Act requires that if Congress wants to regulate insurance on a federal level, it must do so  explicitly.  The two major models for gun insurance, worker’s compensation and motor vehicles, are handled by the states.  It’s likely that gun insurance will also be state based but will require a federal mandate to make certain it is in place.  The certainty should come from a “top-down” requirement that makes a insurer retain responsibility for a particular gun until and unless responsibility is picked up by another insurer, regardless of any intervening events such as loss, theft or illegal sale.

The way to handle the need of some states for strong protection from the consequences of firearm injuries and of the desire of other states to put no expenses or limitation on the acquisition of firearms is to have the federal requirement specify that the benefits paid by the mandated insurance be set by the insurance requirement of the state in which the gun causes the injury.  If an insurer does not want to be exposed to the more generous requirements of some states then that insurer will take steps in the terms of the insurance to insure that the gun does not travel to those states.  For example, if Virginia has small benefits and New York State has generous benefits, then insurers will have an incentive to make sure that guns are not illegally sold to people who will take them to New York and sell them on the streets.

Once Congress is considering such a requirement the states will have an incentive to adopt a gun insurance requirement for guns sold in their own states in order to protect their citizens from illegal guns that come from outside their borders.

Registration of guns and confirmation of insurance

In order to have a system of insurance the covers the dangers of having guns in our society, it is necessary to have a way to be sure that insurance exists that covers each victimization. The simplest system is to mandate the insurance and have the government check that it is in place. This requires that the government be aware of the identity of the gun owners in order to enforce the mandate. This means registration of guns or gun owners. The political objection to this is very great. If it is necessary to override this objection or wait for it to dissipate, then implementation of insurance for gun victims will be greatly delayed.

The Objection To Registration

Many people who are concerned about gun safety are not aware of the depth of the fear of government held by some of the gun rights defenders. There are a considerable number who have deep and broad paranoia which has been focused on this issue with severe personal mental health issues but an even larger number are simply trained to express this distrust by gun organizations, the media and those who want even more guns in circulation. Even more are aware that some form of tracking guns is essential for application of many measures to control or limit their circulation. They may fight registration of firearms as a way to prevent control of firearms.

A good bit of this concern has been embedded in current federal laws. There is law in place forbidding a federal registry of ordinary guns (not including NFA items such as machine guns). The Brady Act and the Firearm Owners Protection Act both have such provisions.

The concern about registration of guns leading to confiscation also forms a part of much of the writing that’s done about the guns in the current material circulating on the Internet. For example in an article dated February 27, 2013 titled “Debunking the ‘no one wants to take your guns’ myth” which is featured on the website The Truth About Guns and is about New York’s new law which outlaws or limits certain types of weapons the author first states:

And given New York’s history, its not unlikely that such registration is simply a precursor to a complete and total door-to-door confiscation down the road. Since they now have a convenient list of gun owners.

And then later in the article:

And the removal of a grandfather clause from the proposed legislation can only mean that full-scale confiscation is in the offing. They are, indeed, coming to take away our guns. Even the “hunting rifles.” And those who are still trying to pass off that old lie are either too ignorant of the proposed legislation or too entrenched in the party rhetoric to understand the lie they’re spouting.

In another article on that same site titled “Chicago Firearms Confiscation Begins” the first sentence is “There’s a good reason that law-abiding gun owners don’t want their names on a national gun registry – namely registration leads to confiscation ….” This is taken for granted by a salient group of writers and advocates for guns. They generally don’t make any arguments as to why registration would necessarily be a first step to taking guns away from current gun owners but assume that their readers are already convinced that that will happen. They are glad, however, to point out any situation that they can interpret as a confiscation following on some form of registration. They also assume that the government will take any steps that are possible to forward that process. For example, one of the primary objections to requiring insurance for guns is that the government could, at least theoretically, force the insurance companies to turnover their lists of customers. I have not found any objection to the National Rifle Association compiling a huge list of gun owners going well beyond their membership.

An Insurance Requirement without Additional Registration

Permits to carry guns are a form of registration in themselves, but they exist in many states. As has been pointed out on this blog, carrying a firearm in public creates an array of additional dangers to the public. Additional registration of gun owners would not be necessary, but it would be highly desirable to have insurers aware of the serial numbers of the guns covered and have guns reported if the owner loses control of the gun. That way insurance could cover cases where the gun was lost or stolen and then resulted in a shooting.

For a general insurance system, this blog is recommending that “Top Down” or chained insurer responsibility be employed to guarantee coverage. Insurance would be required of manufacturers with a provision that the insurer only relinquishes responsibility for a given gun when another insurer take it up. Making that absolute no matter how the gun changes hands will make sure than once a gun is insured it will stay insured, without requiring that anyone other than insurers track the gun. Let the gun owners buy their insurance through the NRA if they don’t trust other insurers.

John Wasik Calls for Gun Insurance Again.

In a new article published Sept. 20, 2013 on the Forbes website and titled “Five Reasons Why Gun Insurance Can Survive Political Indifference”, he advocated for insurance as the most effective and practical solution to gun violence in more detail than ever before.  Wasik is a pioneer in pointing out the need for gun insurance starting well before the tragic incident at Sandy Hook.  His prior articles include:

February 15, 2011 in Reuters: “Why gun insurance should be mandatory

December 17, 2012:  “Newtown’s New Reality: Using Liability Insurance to Reduce Gun Deaths

December 29, 2012: “Gun Liability Insurance: Still a Viable Proposal

April 4, 2013: “Gun Insurance: An Economic Argument

His five reasons are:

1. Liability Coverage Addresses the Issue of Potential Future Harm Better than Any Gun-Control Legislation.

Wasik says the liability laws evaluate harm well and insurers will have an incentive to pressure gun owners for safety.  He does not mention no-fault principles which would be needed for effective general coverage.

2. Liability insurance should be required of all sellers and manufacturers.

He points out the importance of their responsibilities in selling and distributing guns.  He alludes to but does not explicitly state that their responsibility might continue to guns that were improperly sold and not insured by purchasers.  This chain of continuing responsibility is the core of this blogs advocacy for getting insurance in place to cover all gun injuries.

3. Liability Insurance is good business.

Wasik points out that the additional business should be welcomed by insurers and agents.  He does not point out that the insurance industry adamantly opposes any mandates for insurance in any area.  As this blog has often stated, this is because insurers think that mandates will bring regulation and especially regulation of prices.

4. Insurance is an accepted economic vehicle that’s been around for more than 200 years.

This is certainly true. Over that long time every new form of risk that has appeared has resulted in innovative solutions from the insurance industry.  Guns are the only important activity that has a substantial danger unaddressed by insurers.

5. The social costs are staggering and insurance can cover some of them.

Wasik mentions the medical costs which are only a part of what insurance should cover.  Worker’s Compensation and some Motor Vehicle insurance covers many economic damages—loss of work and support of dependents.  Even with these costs spreading them of the the huge number of guns to be covered would make insurance affordable.  The existence of an insurance requirement would reduce the number of incidents through it effects on safety and reduce the cost further.  It would also reduce the even greater costs of gun violence that are spread throughout society rather than concentrated on victims of shootings.  Costs such as reduction of property value, avoidance of activity through fear and the cost of protective measures.

John Wasik recognizes that dealing with guns is a difficult task for our society and will take a long time, but that insurance is one of the best tools we have.

Paths to Adopting Gun Insurance, General and Concealed Carry

While it would be best to adopt gun insurance in the United States by national legislation that puts into place a full blown no-fault plan with the “Top-Down” provisions to guarantee that it covers all of the millions of guns in the country, it is not necessary to wait until that is politically feasible to make progress in protecting victims.  There are several paths where an important part of this protection can be implemented both for it’s own value and to demonstrate the practicality of more complete plans.

The first and the one that already in the public eye is to adopt compulsory liability insurance for gun owners who are registered in particular states.  This is the plan that is being offered in state legislatures.  It would apply to a fairly small subset of the injuries and killings because it has no way to be in effect for illegal guns.  But, as the proportion of gun injuries from legally possessed guns is going up due to a downward trend of crime in general and a greatly increased spread of legal guns, it would have a substantial value.  It may very will be accomplished in some places in the next few years.  This is the type of adoption that is seen by most writers who suggest insurance in the mass media.

The most promising step by step path at this point starts with requiring insurance for concealed carry permit holders.  Because they are already registered in all but a very few states, there is not the privacy concern that applies in other cases.  It is also likely to be more acceptable because it only burdens gun owners with a clear and increased interaction with the community.  Because many state legislatures have adopted laws legalizing concealed carrying of weapons in recent years and because the problems widespread guns in public places have been made more clear by the killing of Trayvon Martin and the acquittal of George Zimmerman, this may be the most political feasible path. It is also an approach which will work well on a state by state basis.

This blog is planning to advocate for concealed carry insurance in this and the coming state legislative seasons.  To repeat the recommended provisions in the recommended legislation from the blog above, they will include:

  1. It should pay injured persons without the need for establishing negligence.  i.e. it should be no-fault insurance.
  2. It should cover economic losses, survivor’s needs, disability and pain and suffering and have a substantial death benefit.
  3. It should apply not only to the injuries caused by the legal carrier’s gun but to injuries caused by others including a criminal attacker during an incident involving the use of the covered persons gun.
  4. It should cover legal liabilities of third parties that arise from gun use incidents.
  5. Insurers should be required to report discountenance of the insurance to the permitting authorities 30 days before the insurance goes out of effect.
  6. Insurers offering homeowners insurance will be required to offer concealed carry insurance riders with exclusions and qualifications regulated by state insurance commissioners.

The way most analyzed in this blog is adoption of insurance with a sequence of structures that make it apply a larger and larger set incidents and victims.  This sequence which is detailed in other posts in this blog goes as follows:

  • Step 0 – Adopt laws clarifying the legal liability of shooters and gun owners.  This is needed for itself and for the effectiveness of liability insurance.
  • Step 1 – Liability insurance for guns.  Because this depends on fault by gun owners and the tort law system, it gives limited protection to victims.
  • Step 2 – Liability insurance with direct payment to victims.  This allows easy coverage of intentional acts and guns that are used by others than the owner.
  • Step 3 – No-fault insurance to protect victims.  This eliminates the need to use the tort law system and to establish negligence.  It can cover all of the injuries from legal guns but has no way to get the large number of incidents that are produced by illegal guns.
  • Step 4 – Insurance that covers guns with a “Top-Down” guarantee that is in place for lost, stolen or diverted guns.

Insurance at the Step 3 level exists in various states for motor vehicles and worker’s compensation insurance is designed to work at this level.  The need for the the last step is much less for these activities because regulation and registration of car owners and employers is nearly always available.

Compulsory Firearm Insurance for Concealed Carry

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

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.

An example of this is Second Defense Alliance which is a membership organization.  It specifically states that it is not an insurance company and it’s benefits are not insurance, but the benefits and terms offered are so similar to insurance that most members would consider it to be insurance.  It only covers use of firearms in the home against a person who has made an illegal entry.  There are benefits up to $50,000 but most of this is in the form of legal defense costs.  The cost is about ten dollars a month.  Since there are about 30 million homes with guns and only a couple of hundred justified non-law enforcement homicides a year most of which are not based on unlawful entry, the number of times this organization will have to pay must be very small.  It’s a profit making business, but it may give a feeling of protection to its customers.

Another example which, while it’s actually a for-profit business, is organized with member protection as a primary goal is the United States Concealed Carry Association.  Its insurance is as a membership organization with a group policy from an actual Insurance company.  With the basic membership with an insurance limit of $75,000 it costs $12 a month or less and comes with their magazine.   Its terms cover self-defense and are not limited to in-home incidents.  It seems to be a bit broader and cheaper that the NRA sponsored self-defense insurance.

A few additional sources of self-defense insurance include SecondCall Defense, Texas Law Shield Program and the NRA sponsored Lockton Affinity Insurance.

None of these insurance plans are designed to give any help to victims, but they may provide a source of funds and a possibility of settlement in some cases.  They do work to show that insuring guns is feasible.  Their costs are not large but they cover such a minority of shootings and have such small loss ratios that they cannot be a model for potential costs of insurance designed to protect victims.

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

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

Finley and Culhane’s compensation fund would be similar to no-fault insurance in the benefits it would provide for victims.  They envision:

For every gun sold, those who manufacture or import it should pay a tax. The money should then be used to create a compensation fund for innocent victims of gun violence.

This proposal is based on a fundamentally conservative principle — that those who cause injury should be made to “internalize” the cost of their activity by paying for it.

This is a very straight forward proposal.  They make the comparison to the existing system for protecting people injured by vaccines with a tax on the manufacturers.  That system has worked for years to facilitate vaccine manufacture and use, to compensate those injured, and to give greater confidence to the public.

As a form of insurance, it would accomplish one of the main goals advocated by this blog in compensating victims.  Because it is attached to neither the specific guns or the specific gun owners, it can avoid the major problem of covering guns in the hands of persons outside the law–who could not be compelled to purchase insurance.  It would not, however, contribute greatly to the second goal advocated by this blog—encouraging gun owners and users to have practices which reduce the level of injuries.  That’s were the second plan meshes perfectly.

Let Shooting Victims Sue

Robert Morgenthau’s proposal is to roll back the 2005 federal law the Protection of Lawful Commerce in Arms Act which protects arms manufacturers and sellers from almost all responsibility for their products after they are sold.  He states:

This kind of legislation encourages arms dealers to turn a blind eye to the lethal consequences of what they peddle, and rewards their breathtaking irresponsibility.

An executive at one top gun company admitted that it didn’t try to learn whether the dealers who sold its firearms were involved in the black market. “I don’t even know what a gun trafficker is,” he said in a court deposition reviewed by The New York Times.

Morgenthau goes on to describe the out of control gun violence that we currently have in this country.  He points out the deprivation of the rights of states to protect their citizens and states “a basic principle of law that imposes liability when someone’s unreasonable act results in foreseeable harm to someone else.”  He also gives historical parallels with the tobacco and motor vehicle industries being brought from a condition of causing many deaths to a much greater safety today.

Insurance by Another Means

This blog exists to advocate insurance to compensate shooting victims, encourage safe practices and not be an excessive burden on gun owners.  These proposals if both were implemented would accomplish the greater part of that mission.