Top Down

Almost all of the characteristics of insurance recommended on this blog are standard ways handling coverage in existing situations. Each feature can be illustrated and proved legal and feasible by pointing to a widespread use that is accepted by everyone. But, one important aspect here called ‘Top Down’ is different. It does not appear to be in use in any parallel context.

Top Down insurance is mandated to be held by the first owner in a potential chain of owners. The first owner, who might be the manufacturer of a gun, an importer or an owner of an existing gun being brought into the system, is required to buy insurance that covers injuries done by the covered weapon, no matter how it changes hands, until another insurer picks up the coverage. In that way continuous coverage is guaranteed.

Normally, when the gun is sold to a subsequent owner, the new owner will be required by the terms of the existing insurance to provide continuing coverage which will relieve the existing insurer of responsibility for future incidents. But if this doesn’t happen the old insurer is still on the hook. Therefore, insurers will take appropriate measures through the terms of the coverage they offer to require that new insurance, which must have a similar Top Down provision, is in effect. The critical element is that insurer responsibility remains even if the gun is lost or stolen so that guns, once in the system, will all continue to be covered.

One major reason to structure the insurance requirement this way is to deal with a common objection to mandatory gun insurance, “bad guys won’t buy it, how can you enforce that.” Insurance companies will be very careful that they do not have responsibility for guns that stray into illegal hands. They might insist on a telephone or online verification so that straw purchasers can’t get guns with fake insurance certificates. They may require secure storage to prevent guns from being stolen. They may periodically require owners to demonstrate continued possession and control of covered guns.

A very important advantage of Top Down insurance is that the government authority mandating the insurance does not have to regulate or even know about the owners of firearms. Once the insurance is is place, this is all done by the insurers. The government needs only to require manufacturers to get insurance and for insurers to be financially responsible and to pay claims fairly. Insurers will have a strong incentive to balance convenience to gun owners in order to sell insurance with prevention of gun injuries to minimize claim expenses. Long experience in offering insurance in many fields has given them expertise in doing that. Gun owners will feel their privacy is protected because they will deal with the insurers they trust the most and most insurance sold for guns today is sold by the NRA.

The concern that insurers will be reluctant to sell insurance that binds them to be responsible for hard to predict events that are far in the future should not actually be a barrier. Events such as theft of a gun and the use of that gun in later crimes are unpredictable in each case, but the risk of such events is statistically calculable. This is exactly the situation where insurance is a good solution. Insurance with ‘tails’ is sold in a number of fields to protect people such as doctors and builders against liability for injuries that happen long after the cause of the injury was but in place.

This insurance will be inexpensive for low risk owners who are careful to maintain control of their guns. Others will pay more. Manufacturers will not be responsible for everything that happens in the future associated with their products as long as they are careful to have their buyers take over that responsibility.

Another concern may be about gun owners who can’t or won’t continue to pay for insurance. Insurers will probably require proof of creditworthyness, deposits or other guarantees from insurance purchasers. To avoid a substantial charge from the insurer, the gun owner will have to comply with the contract with the insurer perhaps by selling the gun. Similarly, insurers are likely to want financial guarantees that other terms such ones for safe storage are respected.

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