Coverage Analysis: Personal Gun Liability Insurance

Executive Summary

While specific personal liability insurance for firearms owners is available through gun owner associations and through specialty insurers, the liability component of homeowners and renters insurance policies also offers some protection, coverage experts say. [executive_summary} While coverage is available through gun owner associations and through specialty insurers, the liability component of homeowners and renters insurance policies offers some protection for gun owners. Most standard homeowners and renters policies would offer liability coverage for property damage or injuries that occur from accidental discharges of firearms, says Robert P. Hartwig, president of the Insurance Information Institute. However, he said, "Insurers don't cover illegal acts, ever, period." That's the problem with proposed legislation being filed in many states, he says. By and large the measures are "proposing gun liability coverage that would be mandatory [and] would also cover acts that were, in effect, illegal in nature." Aside from illegal acts, most homeowners policies should provide coverage up to the liability limits. "There is no gun-related exclusion in ISO's homeowners policy," says Christopher J. Boggs, director of education at Insurance Journal's Academy of Insurance. "Carriers may try to use the 'Expected or Intended Injury Exclusion,' but even it has an exception for the use of reasonable force to protect people or property. The use of a gun may be reasonable based on the circumstances. And since 'reasonable' is not a defined term, a carrier would be hard pressed to tell me my actions were not reasonable." In other words, defending one's self may be an intentional act, but it's probably covered. "In most policies there's an exception for what amounts to self-defense," Hartwig says. "That may not be the term that's used, but that's what it amounts to," he says, giving the example of using a weapon intentionally to protect yourself from bodily harm from an intruder in your home. "There's generally an exception there" to the intentional acts exclusion. However, Boggs says, in some states the reasonable force exception may have been removed from the homeowners policy, in which case a separate gun liability policy may be advisable.

Another View

Not everyone agrees that insurance never covers illegal acts and some believe that policies could be designed protect innocent victims of an illegal act of gun violence. It is true that the standard homeowners policy excludes most intentional acts, says Tom Harvey, a blogger who advocates for insurance specially and efficiently designed to protect gun violence victims. However, he says, there are cases where insurance does cover intentional illegal acts committed by an insured, even when the insured does not benefit from the coverage. For example, Harvey points out that:

• In some states, required liability insurance pays innocent parties harmed intentionally by insured drivers.
• Standard homeowners insurance usually has an "open mortgage clause" that would pay a lender for a house burned down by the owner.
• Business liability insurance often has a "separation of interests clause" that protects the company in the case of intentional acts of employees.
• Performance bonds often pay if the contractor absconds with the funds.

"Some of these might not technically be 'liability' insurance but they are often called that. This is the kind of insurance needed for guns," Harvey says.

Available Coverages

For gun owners who see a need for specialty or customized firearms liability coverage it is available, and business is picking up, says Parker Lindsey, a field underwriter for Utah-based Evolution Insurance Brokers (EIB). "More people are now interested in an insurance product for their concealed weapon," says Lindsey, whose company offers personal liability coverage for concealed carry weapons permit holders, whether they carry on-the-job or just for personal protection. Lindsey says the concealed weapons permit coverage EIB offers is customized to the individual's need. "With a concealed weapons permit coverage they would just give us that basic info—if they carry on the job or if they just carry during their personal life, we need to know and rate for what they're doing," Lindsey says. The applicant will need to provide information such as: what training they have; if they carry for personal use or whether they'll be carrying on the job, and if so, what kind of job do they have; what percentage of the time do they carry on the job; and similarly, what percentage of the time do they carry personally. "It just goes through those basic things," Lindsey says. "And they give us a schedule of firearms that they carry and we go from there." Most people who own guns legally "haven't gone out and robbed any stores or anything. If you can own a gun, we will insure you unless you've had some drastic claims," Lindsey says. "We ask if they've ever had any claims or anything and if they put 'yes,' depending on the claim and what it is that may throw us a red flag. Other than that…we'll insure anyone, we just need to know what it is they're doing," he says. While people who carry firearms at the workplace should be covered by their company's liability insurance policy, many people prefer to buy their own coverage as well, Lindsey says. For instance, someone on a ski patrol might carry just because they feel safer with coverage. "[I]f anything happens you never know if the resort is going to cover you or not. If you're a security guard, if the company has arms coverage and you're listed as one of the security guards that's armed, that policy would probably cover you," he says. But it's wise to get a personal liability policy as a supplement. "Not everyone's going to deal with a loss. Not everyone's going to have to use their gun," Lindsey says. But, he added, "if you have to use your concealed weapon defending yourself, it could still be a case that you used it the wrong way and you could have to defend yourself in court." Without appropriate coverage, defense costs would have to come out of the defendant's pocket. On the other hand, the specialized personal liability policy would offer a defense, so it's just a matter of "being proactive and thinking ahead of the ball," he says. The base policy for personal concealed carry weapons coverage offered through EIB starts at about $200 to $250 a year. It has a $25,000 person limit, a $50,000 per accident limit and a $100,000 aggregate limit. "It's kind of like a car. It starts about $200 a year and then as you add things to it the premium increases … so all that depends," Lindsey says. The premium range also would fluctuate, depending on the circumstance. "If you're just carrying personally, there's a little bit less exposure than if you're carrying personally and on the job," he says. "If we're covering for you personally and you carry on the job, there's just a little bit more exposure on our side of it. So the premium for that situation would be a little bit more than just someone carrying during personal time." Location, too, matters. Pricing might fluctuate according to state or even zip code. For instance, Lindsey says, a $200 base policy might jump to "$400 in some states and maybe drop 5 percent in some states at most." California, Florida, Hawaii and Texas are some of the states that might see higher policy pricing, based mostly on the legal climate and litigation history in those jurisdictions. EIB does not sell the coverage in New York. EIB is an excess and surplus lines brokerage, Lindsey says, "so we have the capability of insuring gun ranges, shops that sell or manufacture guns, reloading of ammunition, any of that as well." Gun owners also have access to insurance programs affiliated with various firearms associations. For instance, the National Rifle Association offers an insurance program administered by Lockton and insured by Lloyd's of London. A policy issued by Meadowbrook Insurance Group subsidiary, Savers Property and Casualty Insurance Co., is available to members of the United States Concealed Carry Association (USCCA). While it is not a comprehensive gun owner liability product, all USCCA members are eligible, according to Tim Harkins, vice president of business development for Meadowbrook. The policy is designed to provide protection for USCCA members for the use of a legally possessed weapon for self-defense. Other than the USCCA, for risks the company may elect to insure, we would use normal underwriting procedures to identify the exposure to loss represented by the insured, Harkins says. Meadowbrook carrier subsidiaries may also write commercial gun operations and has the ability to "individually underwrite each risk and make the appropriate determination whether to offer coverage. General risk characteristics, including loss history and any history of regulatory violations would be very important," Harkins says. (This article was orginally published by Insurance Journal, a Wells Media sister publication of Carrier Management. Reporter Stephanie K. Jones is the South Central/Midwest Editor of Insurance Journal.) [pullquote] For information on commercial gun liability exposures, see As Gun Sales Soar, Insurance Sales Follow Suit, by Insurance Journal Editor Stephanie K. Jones and MyNewMarkets.com Editor Amy O'Connor. For information on federal gun-related legislative proposals, see