On Jan. 25, 2022, San Jose fired a shot heard ‘round the country. By an overwhelming majority, the city council mandated that homeowners and renters in this wealthy California community who own firearms must have gun liability insurance. It is the first in the nation to do so, according to the Los Angeles Times.
The San Jose law reads:
“A person who resides in the City and owns or possesses a Firearm in the City shall obtain and continuously maintain in full force and effect a homeowner’s, renter’s or gun liability insurance policy from an admitted insurer or insurer as defined by the California Insurance Code, specifically covering losses or damages resulting from any negligent or accidental use of the Firearm, including but not limited to death, injury or property damage.”
The ordinance faces a court challenge.
There’s a potential problem, however, for gun owners who don’t already have firearm liability insurance through their homeowners or renters insurance policies: “No major national or regional insurer offers separate gun liability coverage,” says Mark Friedlander of the Insurance Information Institute, which represents the property-casualty insurance industry.
There was a 30% increase in murders between 2019 and 2020, according to the Centers for Disease Control and Protection—the highest increase in a century. Gun sales reached an estimated 20 million in 2021, according to Small Arms Analytics & Forecasting.
The San Jose gun ordinance appears to be a reaction to that trend. “Firearms injuries have a significant public health and safety impact,” claims the ordinance, which includes 15 clauses detailing the dangers of gun ownership.
Violation of Second Amendment Right
Gun owners oppose the San Jose ordinance, not only because of the insurance requirement—which may not be enforceable—but because it imposes a “gun, harm reduction fee” on them. Fees will go into a nonprofit organization and be spent on suicide prevention programs, domestic violence services, mental health services related to gun violence, and firearms safety education and training.
The leading lobby for gun owners, the National Rifle Association (NRA), claims the ordinance is a violation of the Second Amendment right to “keep and bear arms.”
This ordinance also requires firearm owners to fill out a “city-designated attestation” to show they have this insurance and to keep the form with the firearm at all times—even when traveling with the weapon. Failure to do so would result in an administrative hearing and the gun could be impounded.
The San Jose city council claims the ordinance is similar to the liability clause found in insurance policies. But only a few small insurers, such as Lockton Affinity, have a specific gun liability policy.
Insurance companies argue that the ordinance may not be needed, anyway. “Most individuals have property and liability coverage for firearms in their standard homeowners policy,” says Janet Ruiz, another spokesperson for the Insurance Information Institute.
No Insurance for Intentional Criminal Acts
Many insurers use the standard “HO-3 policy,” which specifically mentions firearms as covered property if stolen. Liability insurance also covers accidental shootings and, in some instances, self-defense if “reasonable force” is used, adds Ruiz. The only thing it won’t cover: an intentional criminal act, such as homicide.
“Liability insurance will never cover criminal acts, and those who break the law are already liable through our justice system,” says NRA spokesperson Amy Hunter. “And criminals will never get the insurance or pay the annual fees. “
But what if the gun is stolen and then used in a crime? While studies indicate that stolen guns account for only 10% to 15% of gun-related crimes, standard liability coverage available under a homeowners insurance policy “will pay for the costs to defend you in court, in addition to any court awards, up to the policy limits,” says Karen Collins of the American Property Casualty Insurance Association.
And if a homeowner or renter believes their firearms coverage under a standard insurance policy isn’t enough, they can also buy an umbrella insurance policy for extra liability coverage. So, while a standard home insurance policy might offer liability protection up to, say, $300,000, the umbrella policy could extend that to $1 million or more, Ruiz says.
You can buy umbrella insurance in the many millions of dollars if your net worth warrants a very high amount.
Insurance Companies Avoid the Issue
Insurers were reluctant to comment on this hot-button gun insurance issue and referred calls to their lobbyists, who in turn urged gun owners to talk to their local insurance agents.
However, it’s clear that insurers aren’t in a hurry to create specific gun liability insurance policies because of one local ordinance. After the Newtown, Connecticut, elementary school shooting in 2012, a handful of states introduced legislation to mandate gun liability insurance. Nine Sandy Hook victim families recently agreed to a $73 million settlement of a lawsuit against Remington, which was the maker of the rifle used in the murders.
In 2013, and in future sessions as recently as 2021, a proposed “Firearm Risk Protection Act” has been introduced in Congress. It would prohibit the purchase of a gun by a person not covered by a liability insurance policy that protected from loss resulting from the firearm. To date, none of these proposals have been enacted.
