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.
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.
Many people who can see the need to protect persons injured by guns and can see the parallels for responsibility to motor vehicles have a problem with involving insurance companies. Writing recently in a diary about possible system for requiring insurance on guns, one of the most common concerns was a distrust or even hatred of insurers. This is understandable because insurance companies often deny claims or access to insurance; and denial is likely to be harmful and very upsetting to the person denied. In so many areas, insurance coverage is required in one way or another and is a barrier to people getting on with their lives. Nevertheless, insurance is necessary and it matters greatly how it is implemented.
So the question is how would the insurance experience for gun owners work out?
The system I am envisioning in my writing requires insurance to be purchased by manufacturers or importers in such a way that, to relieve an insurer of responsibility, each successive owner must take over or provide new insurance. If the gun is lost, stolen or diverted the responsibility stays with the current insurer. This is critical because the primary danger lawful owners make to the public is they may lose control of a gun. An important advantage of this system is that the government only has to regulate or even know about manufacturers, importers and insurers. There is no need to register privately owned guns for this to work.
The legislation needed to mandate insurance would prescribe the types of incidents that would be covered and the requirements for payment. It is very important that it be a no-fault system for two reasons, the situation in many shootings is so unclear that, even if it’s obvious there must be some kind of fault, proving it can be very difficult and protecting the privacy of gun owners is very important. This gives insurers much less room is denying claims than in other kinds of insurance. No-fault insurance for automobiles works well in many states, but the comparison of cars to guns is to the Personal Injury Protection (PIP) coverage that’s part of many state systems as it applies to pedestrians, who often don’t have their own insurance. For examples, see Florida and New York.
For the purchasers of gun insurance, it’s likely that there would be substantial competition about rates. Gun selling businesses would work hard to make good and economical carriers available to their customers. Because the rates would probably vary significantly for customers in different situations, with different styles of storage and use and for different types of firearms, the insurers would be competing on convenience and privacy as well as price.
The big costs for automobile liability insurance claims are injuries and property damage rather than fatalities. Because guns are involved in only about 2.5% as many injuries as motor vehicles, the average cost would be low. Very generous benefits would have an average annual cost to insurers of less than $40 per gun. Limits similar to a less generous plan such as Florida’s PIP would be less than one quarter of that. These are averages; and particular situations would have higher or lower costs. In particular, guns that have been in the possession of owners for substantial periods have a much smaller chance of turning up in shootings later.
The NRA offers liability insurance for gun owners. With the $100,000 limit and self-defence coverage the cost is $180.00 per year. It only covers liability after the injured person wins a law suit and has many exclusions. The self-defense part is by a separate endorsement. It is excess liability so if the gun owners homeowners insurance pay NRA insurance will not. It does, however, cover the individual owner and any number of guns owned or used by that person.
The calculation in the post on this Blog Gun Insurance Would Not Be Expensive shows Continue reading
Getting an approximate estimate of the cost of Gun Insurance that would protect everyone is important even though the parameters of an insurance system have not been developed. In many ways, the wide experience with automobile insurance will serve as a model for the system to come. There are available sources for the numbers needed to make an estimate if one assumes a certain level of coverage and benefits.
The Insurance Information Institute publishes overall numbers for automobile insurance. The particular items that interest us are for private passenger automobile insurance (excludes commercial):