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Laws Enacted for Required Gun Insurance NJ and CA

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The first local laws have been passed to require gun insurance.  These are for liability insurance requiring fault by the gun owner or shooter and certainly don’t pay directly to victims or cover all guns.  But this is a start on a path that as it evolves will give good protection and promote safety. 

This has been posted on the Gun Insurance Blog YouTube site at: https://www.youtube.com/watch?v=cZrFX_aa0Xk

The script is below

                The first gun insurance requirements have been passed into law in the United States.  Let us celebrate the beginnings of a culture of responsibility around firearms.  Two separate jurisdictions at opposite ends of the country have launched on this long awaited return to sanity.       

This video looks at the new gun insurance laws in California and New Jersey.  What they cover, where they came from and where they’re going.

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                The first local laws to require insurance for gun owners will go into effect in 2023.  They have been passed and signed into law by the Mayor of San Jose, California and the Governor of New Jersey. 

San Jose requires gun permits but exempts those who have concealed carry permits, New Jersey’s new law only applies to those with concealed-carry permits. 

                You can see from this that it is only a step toward the insurance we need.  These laws take great care to avoid various kinds of potential interference with gun ownership.  The exceptions limit the usefulness and protection of the insurance, BUT this care proves that the objections of gun proponents are misguided.  As we learn from the new laws, we’ll find ways to make the insurance more effective. 

Insurance can be tailored to the requirements of a specific risky activity.  This is why it’s a powerful tool both to allow the activity and to mitigate the harm that results. 

                We need insurance that pays benefits to victims, applies without excessive delay and litigation, and which covers all guns.  This current baby step is important but it will need to followed by more steps that lead to the goals. 

                The ordinance in San Jose takes effect in January.   The Mayor, Sam Liccardo, thanked those who helped pass the ordinance  and “the many others who work tirelessly to help craft a constitutionally compliant path to mitigate the unnecessary suffering from gun harm in our community.”  The ordinance only covers accidents that involve firearms.  The city plan envisions that homeowner’s insurance will handle most cases with minimal changes.  That is, no-doubt, the reason excluding intentional shootings. 

Most homeowner’s policies have this exclusion and it would be a major disruption for insurers to require it to change.  Another factor is that there is no specific loss limit required, this would allow existing insurance to apply regardless of its limits.

                San Jose’s requirement does not apply to peace officers.  That is not unusual as police, even retired police, have been exempted from many gun laws.     Also exempted are holders of concealed carry permits. Both exemptions are somewhat illogical as the law isn’t aimed at preventing anyone from having a gun and it applies only to accidents.

                While the new ordinance in San Jose was passed in February 2022, its implementation was delayed by lawsuits from gun supporters.  Most of these have been dismissed and the law is to take effect.  Additional lawsuits are expected.

                The new law in New Jersey on the other hand covers those who have concealed-carry permits.  It was enacted in December 2022 and will take effect in July ‘23.  When he signed the bill Governor Phil Murphy said:

 “today’s law fully respects the Second Amendment while keeping guns out of the wrong hands and preventing them from proliferating in our communities.”       

As expected, lawsuits were immediately filed by gun proponents. 

New Jersey previously had a restrictive law allowing concealed-carry permits.  That law was struck down by the US Supreme Court.  Before in 2021 there were 870 concealed-carry applications, but the number is now expected to rise to about 11,000.  The insurance requirement is part of a new package which governs concealed carry in accordance with this decision.  Applicants for permits will have to demonstrate insurance compliance.

It calls for liability insurance and would only apply if the gun carrier is at fault.  The required insurance limit is $300,000.00  The governor’s statements show that he contemplates that homeowner’s insurance can meet the requirements; but, given the many limitations in typical policies, this will be complex.

These two new laws will launch a process that will require a substantial time to complete.  In addition to the inevitable court battles, there will be bills introduced and debated in other legislative bodies.  This process has happened in other areas before. 

For example, requirements for insurance for cars started in the early 1930’s and were not fully developed until the 1960’s.  In that case, the first laws in many states were “financial responsibility laws” which only required insurance for people who had already been unable to pay for the consequences of car accidents.  While the insurance industry has often claimed that a new requirement can’t be implemented, they have historically been able to adapt to whatever is needed.  They will do that now.

Both of the laws assume that most cases will be handled by some extension of homeowners insurance.  As gun insurance matures and adapts to the needs of supporting victims and providing gun safety, homeowners insurance may continue to play an important part.  The terms will need to be specifically defined to give coverage of all the possibilities and to allow the insurer to be protected from particularly dangerous persons and weapons.  In the less dangerous cases, it should not raise costs greatly.  There will be many situations outside the willingness of home insurance carriers to absorb the risks, and in these cases special insurance will need to be developed and priced. 

                Requiring insurance need not interfere with the safe use of an insured activity or thing.  We continue to drive with an insurance requirement, we work at jobs with workers compensation and we require insurance for many commercial activities.  In all of these cases the protection provided by the insurance mitigates the risks and reduces the need for tight regulation.  Insurance is both a means and a symbol of responsibility.  We need responsibility around firearms if we are to allow their existence and reduce their dangers.

Uninsured Cars, Employers and Guns

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There are three big categories of activities that result in deaths and injuries—vehicles, employment and gun ownership. In two of these there is general agreement that the at-risk public should be protected by insurance provided by those who engage in the activities. This results in both in financial benefits to offset some of the losses and in reduction of the harm. The harm reduction comes through insurer loss prevention strategies and in a societal commitment to a culture of responsibility.

Not so with guns. Gun violence produces a quantity of deaths about the same as those from vehicles and several times those from employment accidents. This is in spite of the fact that gun ownership is a much smaller part of the economy than employment or vehicle use.

Even more, most states recognize the need for public protection and provide for benefits to persons harmed when the responsible party cannot be identified or does not provide the required insurance. Contributions to an uninsured vehicle or employer fund in a state are generally required from insurers and ultimately paid by all drivers or employers. The uninsured tend to be less responsible and the cost is substantial when their numbers are significant. This provides an incentive for effective enforcement of the insurance requirement.

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Insurance vs. Laws and Regulations

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Insurance vs. Laws and Regulations

The laws and regulations we use for gun safety in our country have provided only limited relief from the high level of gun injury and death. While they need to be extended and improved, other ways of protecting people are also important. One that would be extremely helpful is to require insurance that protects victims of gun violence.

Laws and Regulations

For decades there has been a war between those who want reasonable regulation of gun ownership and use and those who feel that any restrictions applied to guns are the start of a slippery slope leading to total gun confiscation. The result has been a patchwork that provides substantial impediments to responsible gun ownership as the pool of irresponsible owners and dangerous guns has increased exponentially.

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Insurance for Victims Not Shooters

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The most important characteristic of the insurance needed for owning or carrying firearms is the basic structure of who is protected and paid by the insurance.  Voluntary insurance is always designed to protect the insurance buyer or owner first and pays third party victims only when necessary to protect the policy holder.  Required or mandatory insurance is intended to protect the public and persons other than the policy holder, and should promptly pay insured persons.

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A Straightforward Recommendation for Gun Insurance

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FIVE REASONS TO MANDATE GUN INSURANCE

To require additional individual responsibility such as locking up firearms

To provide victims with needed funds for medical and other costs

To make those causing the deaths and injuries pay, rather than the public through Medicaid or the victims through private health insurance

To supplement public regulatory oversight with private insurance company oversight

To encourage new technologies such as “safe guns” that would reduce accidents

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CAR INSURANCE AS AN ILLUSTRATION Continue reading →

The Workers’ Compensation Bargain. A Model for Gun Insurance?

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This is the second post in a series about workers’ compensation insurance as a model for mandating gun insurance.  The series starts with Firearms and the History of Workers’ Compensation.

The two sides of the bargain

The Great Bargain of Workers’ Compensation is called that because employers gain immunity from lawsuits for negligence from their workers and the workers gain certainty that they will be compensated for work injuries by compulsory insurance purchased by the employers.   As the first post in this series described; the system came out of an intense reform effort from many people determined to protect and benefit workers; but employers, especially the larger firms, also pressed hard for enactment of the system.  The result was adoption of compulsory insurance in many states before 1920.  Even in states where an employer could elect not to participate (still allowed in Texas) nearly all employers opted in to get protection from liability.

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Cars v. Guns about Mandatory Insurance

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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

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Comments on a Blog Post about Mandating Gun Insurance

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It’s hard to get thoughtful responses to the ideas published on this blog.  Most comments are from people who simply assert their, usually negative, conclusions.  When I get a response such as The Truth About Maryland’s recent post “Mandatory gun insurance: an interesting smart idea that won’t really work. A primer, from a finance and insurance geek,” I welcome the chance to look for new information or approaches to the problem of dealing with gun deaths and injuries.  Insurance is a tool and gun injuries are a problem that to be addressed by that tool require that it be specifically adapted to the problem.  For example, the parallels between automobiles and guns are striking because both are widely used instrumentalities that result in a substantial amount of death and injury; but this blog outlines differences in the best implementations of insurance.

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Amar Kaleka for Congress with Gun Insurance in Platform

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Amar Kaleka is a candidate for Congress from Wisconsin running for the seat now occupied by Paul Ryan.  He is the son of one of the persons killed by a Neo Nazi white extremist at the Sikh Temple in Oak Creek Wisconsin on August 5, 2012.  He has gun safety as a key issue in his platform.  Of particular interest to this blog is the third point on the “American Peace Plan for Gun Responsibility.”

3. Mandatory accidental discharge insurance on all gun sales and ammo.  When there is an accidental discharge and someone is harmed or victimized by an irresponsible gun owner, the burden of fiscal responsibility is left in limbo.  Private insurance carriers have the ability to determine the gun buyer’s biography, health, and criminal record.  Insurance companies and the market would decide reasonable premiums based on the type of gun purchased, carrying in public, or what type of training or the expertise of the gun owner.  The Federal government does not have this ability.

 

The announcement was made on August 30, 2014 in Santa Monica, CA with Richard Martinez, father of 2014 Santa Barbara shooting victim Christopher Michaels-Martinez; and Patricia Maisch, survivor of the 2011 Tucson, Arizona shooting.  It was picked up by Insurance News Net.

Limiting the mandate to accidental discharge makes the coverage much more narrow than the insurance advocated by this blog, but it is in line with many plans introduced in several states.  The argument that any insurance will cause insurers to take an interest in gun owners level of responsibility is probably a reasonable start.  The actual number of cases that insurers would have to pay would be small enough that it would end up being a very affordable coverage and is probably already covered by most homeowners insurance.

The fact that mandatory (but not so easily voluntary) insurance can cover intentional and criminal acts is not recognized; but in light of the widespread disinformation spread by insurers, it can be handled more effectively in full legislative hearing process than in an election campaign.

The point that insurers can do evaluations that the Federal government cannot is a good one.  The “Top Down” system advocated by this blog is based on that idea with a method of guaranteeing insurance for all guns without general governmental gun registration.

Gun Insurance Blog salutes Amar Kaleka for his courage and foresight in placing gun insurance in his platform in a clear and open manner.

The Question of Pricing Mandatory Gun Insurance

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In addition to policy arguments such as those against putting costs and responsibilities on the public or burdens on gun owners, the insurance industry has offered two major substantive arguments against mandating gun insurance.  The first, which is the claim that insurance does not and cannot cover, intentional or criminal arguments is simply false.  This has been extensively explored by this blog at the post entitled  “Gun Insurance for Willful, Intentional & Criminal Acts.”  The second argument is basically a “Chicken and Egg” objection.  They claim that insurers have no experience to price such insurance and that without ratings experience such insurance cannot be sold.  This post is to show the reasons that this objection is of greatly diminished importance in the case of mandatory gun insurance.

Why can’t insurers simply add up the losses that are occurring as they are reported by emergency rooms, as part of claims for various other kinds of insurance, media reports and government statistics and assign them different weights in an estimate?  The basic reason is that, with voluntary insurance, the people who will actually buy the insurance are not a representative sample of the risk exposed public.  Sometimes that works for the insurers advantage because people can buy insurance because they are more than typically responsible in many ways and produce fewer than average claims.  But those who know that they have an elevated risk can buy insurance for that reason as well. Continue reading →