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
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?
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.
Many states have adopted stand your ground laws that protect shooters in public spaces that accidently(with or without negligence) either unintended bystanders or innocent persons who are wrongly believed to be a threat. This is the most uncontroversial situation where insurance should be required. These innocent people need to be protected and many of them are not insured themselves.
As this blog has argued people who have permits to carry weapons into streets and outside the home. These people are more likely to confront real and perceived threats with an audience of bystanders. They represent an additional risk over those who only have guns for protection in their homes. These risks and the relative ease of insuring against it are described in another post “Enacting a Concealed Carry Insurance Mandate”
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.
Representative Carolyn Maloney along with 8 cosponsors has introduced a bill, H.R. 1369 – Firearm Risk Protection Act of 2013, to require that gun buyers and sellers have “qualified” liability insurance when they make a transaction or continue to own the gun. They would be fined up to $10,000 if they do not have and maintain the insurance. The text of the bill does not define “qualified” and gives no further details. I spoke on the phone with Rep. Maloney’s press contact and was told that the bill will be filled out with more detail in the future. In this diary, I will lay out the principles and elements that should be considered when the bill language is developed.
Gun insurance should serve to protect victims and promote safe storage and use of firearms, without being an excessive burden on gun owners (for a description of possible insurance see here). Unfortunately, conventional liability insurance as sold, for example by the NRA, is designed only to protect the gun owner not third party victims. Gun insurance, like any insurance that is mandated by government or required as a condition of doing business, should be designed to protect those injured by an incident. Moreover, it needs to protect the public by encouraging safe practices. Currently, gun insurance only protects the gun owner from theft and lawsuits. Continue reading
An article in Bloomberg by Elizabeth Bunn titled “U.S. Insurers Resist Push to Make Gun Owners Get Coverage” has been picked up by various sites on the web. The American Insurance Association, a property-casualty trade association is quoted as saying that gun insurance could have an effect of more gun violence by owners who have less at stake and that “Property and casualty insurance does not and cannot cover gun crimes.” They must be talking about current liability insurance which is written for the benefit of the first party insurance (and gun) owners. They also quote Bob Hartwig president of the Insurance Information Institute as saying “Insurers will not insure illegal acts.”
Insurance which is required for the benefit of third parties injured by some kind of activity often works differently. For example, if in some incident of road rage an insured person intentionally smashes into your car can you collect from his (probably not her) insurance? It varies from state to state. In Texas you can’t, in Massachusetts you can as decided in Cannon v. Commerce Insurance Company, 18 Mass. App. Ct. 984 (1984). In other states there has not been any court decision on the matter and it may depend on the details of language concerning who is an insured party.
In many business situations an intentional act on the part of one insured (often an employee) may create a liability on the part of another insured (the business or corporation itself). Businesses want to protect against such situations and insist that insurers put a “separation of interests” clause in the insurance contract. For an example of a court decision applying that to intentional acts see Minkler v. Safeco Insurance Company of America, (Cal. Sup. Ct., S174016, June 16, 2010). The effect of this is to treat each insured party separately so the the business is insured even if the employee has done an illegal and intentional act which cannot be insured for the employees benefit because of a doctrine of public policy. A more wide ranging example might be a performance bond taken out by a construction company for the benefit of their customer. It protects the customer even if the contractor cheats and steals funds.
The point is that insurance to protect victims of gun violence can and should be structured for that purpose. The model of first party liability insurance is not very good here. No-Fault insurance is a better model. It’s not necessary to have all the characteristics of No-Fault such as the victim’s insurance(if any) paying first, but that would be OK. The use of a pool to cover unknown or uninsured gun owners is very desirable. The one in use many No-Fault states would work for guns.
The proposed laws in various states, most recently in NY, which would mandate liability insurance as a condition of having a gun license do not give details in the type of insurance required other than “liability” and a specified limit. It’s probably for this reason that the Insurance Industry is not yet taking the possibility of requiring insurance to protect victims of gun violence seriously. The insurance industry has found a way to help with almost any risk in the past, except perhaps for flood insurance which would also be possible if universally mandated. There are many published lists of “Principles of Insurability.” Gun insurance measures up well to them. In particular, a general requirement for such insurance will prevent adverse selection. Bob Hartwig also stated “they can’t require companies to offer that coverage.” Insurance companies require a suitable market and insurance structure to provide coverage. That is quite possible for gun insurance. The insurance industry needs to be a part of designing that structure, so far they have not engaged.
A plan for No-Fault insurance for guns must take into account the fact that many of the shootings are likely to be in situations where the gun cannot be traced. Even if a large portion of the guns in existence are brought into the system, there will be many claims where no specific insurer is available to pay. In NY the Motor Vehicle Accident Indemnification Corporation (MVAIC) and in Michigan the Michigan Assigned Claims Plan (MACP) are available if there is no other insurer. The large costs in Michigan where there is unlimited coverage for medical expenses have generated a lot of political backlash. The Michigan Catastrophic Claims Association pays claims over $500,000 and assesses insurance companies $175 (2012) per vehicle. Funding works by having insurers pay on the basis of either a percentage of premiums collected or a fixed amount per vehicle. A system for guns could work in the same way.
Approximately half of the medical costs are now covered by Medicare or Medicaid. If gun insurance is the primary insurance only for identified guns and the Uninsured Pool is secondary to all other insurance the funds needed would be greatly reduced. Unidentified or uninsured guns do not contribute to the incentive for insurers to have loss reduction conditions or programs in any case, so making gun insurance secondary should not undercut the safety benefits of having insurance. It would also give states an incentive to identify the guns involved in injuries to save on Medicaid expenses.
It might also be desirable to have the Uninsured Gun Pool pay claims for incidents that occur after some fixed time has elapsed for guns that are reported lost or stolen. If the time is fairly long the cost would not be too great and would give an incentive for reporting losses in a timely manner. It would make things more predictable for insurers and may help establish a robust market for gun insurance.
When a proposal for requiring insurance for guns is put into a blog discussion, many of the strong pro-gun advocates reacting to the post base their objection on rights as they assume they have them from the second amendment to the US Constitution. These assumptions can be very broad. And I see statements such as “what other rights do you have to pay for?” and “paying for gun insurance is like a Poll Tax.”
Well, I see us paying taxes on the means necessary to exercise a right all the time. Look at your phone bill, it’s full of taxes on a means to communicate. You have a right to travel, but pay taxes on cars and on air and rail tickets.
Poll taxes are really obnoxious, especially the way they were historically used, but they were not found to be unconstitutional until a specific amendment (The 24th Amendment to the US Constitution) was adopted. There is no similar amendment for gun rights. It’s interesting that rather heavy taxes for automatic weapons have never been found to be unconstitutional.
District of Columbia v. Heller is a very narrow decision in itself. It only overturns an extremely restrictive law that totally prohibits gun ownership. Later the court extended it to state laws in another case, McDonald v. Chicago. Since then lots of restrictions on gun use and ownership have been upheld by state courts. Whether the Supreme Court will strike a broader range of gun restrictions in the future is unknown. While lots has been written by legal scholars about the subject, the future path of this law will probably be determined by political considerations. Heller was supported by 5 justices with a strong dissent by 4 justices. It’s possible that it could be rolled back to the old view that any right to bear arms did not apply to individuals or it’s possible that it could be broadened.
As far as insurance is concerned, the system supported by this blog only requires regulations applied to the manufacturer of guns. Any requirement that the insurance be transferred to the subsequent owner, as would be needed to let the manufacturer’s insurer relinquish responsibility, would be a private contract.
There are many similarities between motor vehicles and guns, because they both have a built in danger but are present in our society. There are also important differences in the way they are used and the situation surrounding that use. The specific top down, no-fault system of insurance being analyzed in this blog is intended to deal with these differences.
1. The vast majority of car deaths and injuries are accidents; intentional injury with a car is rare. The majority of shootings are intentional whether or not they constitute crimes.