Tuesday, April 23, 2013

Have Gun, Will Insure?

I've been engaged in an interesting email conversation with a gentleman who believes that we can - and should - require some sort of liability insurance for legal gun owners. Aside from the Constitutional issues, there are a number of problems with this idea.

Mr Harvey has had an op-ed piece published in the online Insurance Journal (Mazel Tov!) which will be the subject of this post.

Mr Harvey begins by bemoaning that  "the level of death and injuries [caused by guns] is unbearable"

Based on...what, exactly? How many is "unbearable?" It would be nice to have some statistics which compare, say, gun deaths and automobile deaths in a given year. But Mr Harvey provides no such objective evidence.

So we will:

According to the CDC, there were 33,687 automobile-related deaths in 2010 (latest available), vs 31,672 firearm-related deaths (which includes firearm-related suicides, by the way). Why aren't the former just as (let alone more) unbearable? And believe it or not, there are folks who drive without insurance.

Who knew?

He goes on to say that "[p]roviding compensation for victims is important."

No argument there. That's why states have victims' compensation funds, which cover not only violence by guns, but knives, ropes and hammers, as well.

Why are the victims of the latter three less worthy?

He then opines that "[i]nsurance companies help reduce hazards from people’s actions."

Thereby displaying a brilliant lack of understanding. Insurance does no such thing. It simply mitigates the cost of those risks (or hazards).

"Required gun insurance will provide similar protection and safety."

Yes, because Chicago gang-bangers are all calling Flo and Mr Mayhem about buying coverage. The reality is that there's really no way to enforce this without registration (which takes it out of the realm of insurance).

"Insurers will demand safe practices and secure storage of guns as a condition of giving favorable rates."

Most legal gun-owners already do this. How many gun-related homicides or injuries are caused each year by legal gun-owners? Perhaps that information is available, but for now we must take Mr Harvey's word for it. Call me skeptical.

He then informs us that "proposed bills ... would require liability insurance with high limits for guns. This would be painful to gun owners without providing much relief for shooting victims, because ordinary liability insurance doesn’t cover intentional acts or what happens after a gun falls into the hands of a “bad guy.”

Ah, finally got something correct. So what do you propose to do about it?

"Gun insurance needs to be no-fault in nature and be applicable to situations where shootings often happen. Many shootings are not done by the legal owner of the gun involved"

That last bit is also correct. And so....?

"Studies by insurance providers and regulators are needed."

Ah, studies are needed.

No doubt.

Still waiting on what they're supposed to find, and how one develops "no-fault gun insurance."

One supposes that this will be the panacea we need to deal with the "unbearable" burden of gun-related violence.

Or maybe not. For some reason, Mr Harvey meanders off into the world of home and auto insurance, looking for answers.

Unfortunately, they seem to elude him. Here, he avers that homeowners insurance can indemnify innocent bystanders (aka lenders):

"Fire insurance with an “open mortgage clause” pays a lender when owners commit arson."

It does no such thing. If you burn down your house, the insurance company is not going to pay a dime, to you or the lender. The "open mortgage clause" simply means that, if/when there's a legitimate claim, the lender is indemnified to the extent of its loan. But burning down your own house isn't a "legitimate claim."


Having struck out there, he turns to auto insurance (with equal success):

"Motor vehicle insurance applies to “road rage” incidents in Massachusetts and some other states"

Now he's just making stuff up - there is no legal definition of road rage in Massachusetts, so any liability that might arise does so from some other predicate cause.

His 2nd Amendment "analysis" is equally spurious, but since it's irrelevant in this context we'll let it go.

The basic problem with the whole idea is that there are really (at least) two issues here: legal and practical.

From the legal standpoint, you can't insure against a liability you don't have. For example, your umbrella policy protects you when you get sued for someone slipping on your icy sidewalk. But you have no liability if it's out in the street in front of your home, so there's no coverage for that.

Now if you shoot the neighbor while he's down, that's a deliberate criminal act, and your insurance isn't going to help you. So we'd have to re-define liability insurance  to include deliberate criminal acts. That'd help with the road-rage, too, one supposes.

Good luck with that.

The second, more practical challenge is that this applies only to law abiding citizens, who by definition cause far fewer gun-related deaths and injuries. Mr Harvey may be a successful retired businessman, but he has a very poor grasp of basic insurance principles.
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