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.