Background on: Gun Liability

Overview

The idea that insurance can help prevent deaths from firearms often rises to the forefront of the nation’s consciousness following mass shootings. Advocates believe that if gun owners were required to purchase insurance, the cost would provide an incentive to own fewer firearms and/or more carefully store those they own.

Most insurers do not offer separate, stand-alone gun liability coverage. In considering whether insurance is an appropriate mechanism to prevent mass shootings, it is important to note that no insurer – primary or excess – provides liability coverage for illegal acts. Looking ahead, there is very little likelihood that insurers would develop such coverage.

Excess personal liability coverage for firearms owners is available, though typically only through membership in a firearms association.

Acts intended or expected to cause harm are also generally excluded from coverage, though some policies will cover cases for which bodily injury or property damage results from the use of “reasonable force” by an insured to protect persons or property. “Self-defense” coverage for firearms owners is available, though rarely found.

Historic perspective

There is no universally recognized definition for mass shootings in the United States. The FBI uses a broad definition that includes shootings in which an individual kills people in a confined and populated area. This includes domestic incidents but excludes gang and drug violence and is not limited by number of victims.

The FBI’s list of fatalities does not include perpetrators, who often commit suicide at the end of their spree. According to the FBI, there were 277 active shooter Incidents in the United States from 2000 to 2018, resulting in 884 people killed and another 1,546 individuals wounded. Another classification includes four or more people shot or killed, including the perpetrator, and is commonly used by the press. USA Today reported that from 2006 to 2017 there were 361 mass shootings.

The Pulse Nightclub shooting on June 12, 2016, in Orlando, Fla., took 49 lives (excluding the perpetrator) and wounded 58 people. The December 14, 2012, shooting at the Sandy Hook Elementary School in Newtown, Conn., was the deadliest mass shooting at a U.S. school. Twenty children between the ages of six and seven, as well as six staff members, were killed. The perpetrator killed his mother at her home, as well as himself.

The Las Vegas concert shooting in 2017 was the deadliest mass shooting in contemporary U.S. history, with 59 fatalities, not including the perpetrator, according to the Gun Violence Archive (GVA), an independent data collection and research group with no affiliation with any advocacy organization. The online archive of gun violence incidents is collected from more than 7,500 law enforcement, media, government, and commercial sources daily in an effort to provide near-real time data about the results of gun violence.

The 10 deadliest shootings on record are shown below:

The regulatory environment

State: In 2013, a handful of states (California, Connecticut, Hawaii, Maryland, Massachusetts and New York) introduced legislation that would mandate the purchase of gun liability insurance after the Newtown, Connecticut, school shooting. These laws were designed to assure that gun owners had liability insurance. None was enacted.

Federal: In 2013 and 2017, Rep. Carolyn B. Maloney (D-NY) introduced the Firearms Risk Protection Act. The 2017 legislation, introduced in March 2017 and referred to the House Subcommittee on Crime, Terrorism, Homeland Security and investigations in April 2017, would amend the federal criminal code to prohibit a firearm purchase by or sale to a person who is not covered by a qualified liability insurance policy. Additionally, it would require the owner of a newly purchased firearm to be covered by a qualified liability insurance policy. A qualified liability insurance policy would cover the purchaser specifically for losses resulting from use of the firearm. The law would not apply to a firearm purchase or sale for the use of a federal, state, or local government. The bill also included a fine for violators. To date, the federal government and states have not enacted laws mandating gun liability.

The current state of gun liability

Personal insurance: Insurers rarely offer any separate gun liability insurance policy. Most individuals have some property and liability coverage for firearms in their standard homeowners’ policy. Additional liability coverage is available through a personal umbrella policy. A few policies cover losses from accidental shootings in excess of the homeowners’ coverage.

When there is liability insurance, it only covers accidental shootings and in some cases, acts of self-defense. There is no coverage for criminal or other intentional shootings.

Although every insurance company adopts its own policy, many companies use standard homeowners and personal umbrella policies written by Insurance Services Office (ISO). The standard homeowners policy is known as an HO-3. That policy specifically mentions firearms once, as property that is covered if stolen. Firearms are not mentioned in the liability section of the policy, implying that firearm liability would be covered. A homeowners’ policy covers all liabilities that are not specifically excluded.

Not all accidents are covered, per the terms of the policy. For example, if a relative living at the same home were accidentally shot, the accident would not appear to be covered.

The policy explicitly says it will not cover “expected or intended injury.” The policy is designed to cover accidents, not intentional, criminal actions, such as a homicide or an attempted homicide. A mass shooting would not appear to be covered. A critical point is that covering an intentional, illegal act like armed assault would violate standard underwriting principles.

Although acts that are intended or expected to cause harm are generally excluded, some policies restore coverage in cases where bodily injury or property damage results from the use of “reasonable force” by an insured to protect persons or property.

The personal umbrella liability policy, a close cousin of homeowners’ liability insurance, handles liability in much the same way as the homeowners policy. The policy covers liability above the limit of the homeowners’ policy, extending up to its own limit of liability, often $1 million. For example, if an insured is liable for a $1 million loss, the homeowners’ policy would pay its limit, say $100,000, and the personal umbrella policy would pay the remaining $900,000.

Group personal insurance: Personal firearms liability insurance was available from some organizations to cover acts of self-defense. It included personal protection plans with individual benefits administered by a national broker and underwritten by insurers. Membership in the sponsoring organization was mandatory. These policies had offered protection against civil liability, the cost to defend against civil and criminal legal actions and immediate access to attorney referrals. They also included supplementary payments as needed for bail, criminal defense legal retainer fees, and lawful firearm replacement, among other benefits.  However, in 2018, the major broker of these policies, along with insurers, were compelled to pay settlement charges brought by the New York State Department of Financial Services, which stated that the gunowners liability programs violated state law. As a result, the broker and most insurers have stopped administering the programs.

Commercial insurance: Active shooter events occur in confined or populated areas where the perpetrators intend to kill many people. A number of coverages can be triggered by active shooting incidents, including general liability, business interruption and property insurance. Workers comp insurance is implicated in shootings in the workplace while commercial general liability insurance coverage might also be implicated in shooting in a shopping center or a movie theatre.

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