Policy Considerations for Implementing Gun Liability Insurance in North Carolina

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Date

2014-04-18

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Cook, Philip J

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Abstract

EXECUTIVE SUMMARY

Policy Question

Would a gun liability insurance requirement reduce gun violence in North Carolina and ensure compensation for victims of gun violence? Specifically, how would a liability insurance requirement for concealed carry permit holders reduce gun violence and provide compensation for shooting victims?

Problem (p. 3)

Gun violence in the United States has declined in the last 20 years, but is still unacceptably high. In 2011 alone, over 32,000 people died as a result of firearms. That same year, over 3,500 North Carolinians were injured or killed in gun-related assaults and accidents.

In response to the tragic events at Newtown, Connecticut, that resulted in the death of twenty children and six school personnel, several proposals were introduced in legislatures across the nation to curb gun violence. Among them was the proposal to require gun owners to purchase gun liability insurance.

To date, nine states have considered mandatory gun liability insurance legislation. The primary goal of such legislation is to compensate victims of gun violence. Financial compensation for harm done is a well-established principle of our insurance law system. For decades, lawmakers have required drivers in their states to purchase automobile insurance to provide compensation for any damage or bodily injury their vehicles may cause. Gun liability insurance would work in a similar fashion.

Firearms, even in the hands of responsible and law-abiding gun owners, increase the risk of serious injury to others. An insurance mandate for firearms would help shift the economic costs of gun violence away from victims and taxpayers and onto those who possess firearms. Currently, some victims of gun violence have access to monetary compensation, such as the tort system, victims compensation programs, homeowners insurance, automobile insurance, and National Rifle Association (NRA) sponsored insurance. However, these programs are inadequate, as some do not cover intentional acts of gun violence while others provide minimal and insufficient compensation. In any event, in most cases, there is no compensation because the shooter is unknown, or if known, is judgment proof.

A secondary goal of a gun liability insurance mandate would be to reduce gun violence. By requiring gun owners to purchase liability insurance for their firearms, some high-risk people may be deterred from possessing an arsenal of dangerous weapons.

Alternatives (p. 18)

Lawmakers must consider the following policy options when considering a gun liability insurance mandate: • Should the mandate cover injuries and deaths resulting from (1) unintentional shootings only or (2) intentional and unintentional shootings? • Should the mandate apply to (1) concealed carry permit holders only or (2) to all gun owners in North Carolina? • Should the mandate apply to (1) new firearms purchased after the mandate is enacted or (2) to all firearms?

Criteria (p. 21)

• Cost-Benefit Analysis (Maximize compensation for victims and reduce gun violence, and minimize costs to insurers and gun owners) • Maximize Political Feasibility • Ensure Constitutionality

Analysis (p. 22)

The analysis seeks to balance compensation for victims and costs, political feasibility, and constitutionality of each policy option.  All policy options will likely be deemed constitutional since neither of the alternatives restricts an individual’s right to possess a firearm for lawful purposes. 

• Alternative 1: Should the mandate cover injuries and deaths resulting from (1) unintentional shootings only or (2) intentional and unintentional shootings?

In 2011, there were six times as many assaults as there were accidental shootings. The 20 unintentional firearm deaths accounted for only 1.1 percent of all manners and methods of violent death in North Carolina, whereas the 519 homicides accounted for nearly 29 percent. Thus, providing coverage for both intentional and unintentional shootings would maximize compensation for victims and would be most likely to reduce gun violence. Although the costs to insurers and gun owners would be higher under this option, they are likely to be small in comparison to the value of lives saved and the value of compensating innocent people injured by the misuse of firearms.

A mandate that covers injuries and deaths resulting from intentional injuries is not going to be popular among insurers and lawmakers. Insurance companies have vocally opposed any scheme that would provide coverage for intentional acts. Insurers fear that insuring intentional acts would give individuals an incentive to commit violent acts. However, because it is unlikely that a shooter would use his own resources to compensate a victim, insuring intentional acts would not raise a moral hazard problem.

• Alternative 2: Should the mandate apply to (1) concealed carry permit holders only or (2) to all gun owners in North Carolina?

By the end of 2011, there were more than 240,000 concealed carry permit holders in North Carolina. Although the precise number of gun owners in North Carolina is unknown, estimates indicate that, at a minimum, North Carolina has about 1.2 million gun owners. Evidence also suggests that a significant number of gun-related assaults are committed by gun owners who do not possess a concealed carry permit. Although a mandate that applies to all gun owners would provide coverage for a greater number of gun violence victims, the costs of providing coverage to all gun owners would be higher than providing coverage for concealed carry permit holders alone. Since gun owners who do not possess a concealed carry permit commit a greater number of weapons-related assaults, insurers would likely have fewer claims to pay out if the mandate only applied to concealed carry permit holders.

Concealed carry permit holders are already regulated by the state. Thus, mandating liability insurance for concealed carry permit holders is far more feasible than mandating insurance for all gun owners.

• Alternative 3: Should the mandate apply to (1) new firearms purchased after the mandate is enacted or (2) to all firearms?

A significantly small portion of gun injuries and deaths would be covered if the mandate were to apply to firearms purchased after the insurance scheme were implemented. The costs generated by insurers and gun owners would, however, be higher if the mandate applied to all firearms since insurance companies would be required to pay out significantly more claims.

If the mandate only applied to new purchases, fewer gun owners would be implicated.  Thus, an insurance scheme that applies to guns purchased after the date of enactment is likely to be more feasible. 

Recommendation (p. 30)

I recommend that the gun liability insurance scheme (1) cover injuries and deaths from intentional and unintentional shootings, (2) apply to concealed carry permit holders only, and (3) apply to all firearms, purchased before and after the date of enactment.

Moving Forward (p. 31)

Before any gun liability scheme can be implemented in North Carolina, several more issues need to be resolved. For example, should the mandate provide compensation for pain and suffering, or merely medical expenses and funeral costs? What factors should insurance providers take into account when setting premiums? Should the mandate be modeled after victims compensation programs or the tort system?

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Citation

Madan, Anuradha (2014). Policy Considerations for Implementing Gun Liability Insurance in North Carolina. Master's project, Duke University. Retrieved from https://hdl.handle.net/10161/8457.


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