Firearms: What is Our Responsibility?

Last week, we spent a little time answering the questions about how our homeowners’ policies cover firearms. Now let’s handle a question that’s a little more touchy. What do we do about it as insurance professionals?

Question #3: What is the insurance industry’s place in this conversation?

People get emotional when they talk about this subject. It makes sense. People have gotten hurt in some horrible situations. Other people get emotional because they perceive any regulation of firearms as an infringement upon their personal liberty. I feel like you need to understand a little about me to understand my perspective. I grew up in a home where my father worked at a sporting goods store. Yep, the kind that sold firearms. Both of my parents were certified hunter safety instructors and I learned how to use firearms at my father’s feet. I also spent ten years in the US Army. I know what it looks like when firearms are cared for and used properly. I also know what it looks like when accidents happen and when people intend to use firearms against other people. All that behind us, let’s get to my answer.

I believe that the insurance industry doesn’t have much place in this conversation. I don’t think that a company should come out publicly and say anything. The only times that companies say anything publicly about issues are when they want to be seen and heard. If they want to actually do something, here’s what I recommend. Require some additional underwriting for firearm owners. Ask some reasonable and pointed questions.

• How are your firearms stored?
• Have you received any professional firearms training?
• Would you be willing to attend a training program?
• Do you have a state issued license?

These are reasonable underwriting questions. They indicate the care that the owner takes with their property. Yet they aren’t so specific about their firearms that an owner would feel like their liberties are being infringed upon. They also show that the owner is deemed competent with their firearms. This is like asking if a person can legally own a firearm without actually asking if they have been disqualified from firearms ownership.

I oppose companies advertising anything like this because some will look at these questions as draconian and others will think that the company isn’t doing enough. I also think that companies that openly write blogs on the subject before they’ve done anything are only looking for attention. Beside that, I think insurance companies often work best when we work in the background.

I also oppose insurance companies simply stating that they don’t think that people should have guns of any type. I’m not an attorney, but I interpret those restrictions as possibly unlawful discrimination. Customers with legally owned firearms may have an increased risk due to the values of the firearms and a company would be justified in getting premium for that increased risk. I don’t know of any other category of legally owned property that an insurance company would be able to decline coverage on. Please correct me if I’m missing something.

Question #4: What do you mean, misinformation?

After the Las Vegas incident last year, Lemonade wrote a blog post about firearms. I’d like to pull some quotes from their post and offer some commentary.

Quote #1: “But while we respect gun ownership, we’re not into gun worship.”

Response: This is just meant to be inflammatory. It doesn’t help and it really doesn’t fit into the context of the post. It is set aside and backlinked so that it can be tweeted and retweeted by fans of their product and fans of that sort of language use.

Quote #2: “[O]ur policies limit the amount we will pay out for the damage or theft of firearms to an entirely adequate $2,500. …They seem to all offer additional coverage. We don’t.

Response: That’s partially accurate. I’ve reviewed their filed policy forms. Their forms mimic other ISO-based forms and the ISO homeowners’ program. They do have a special coverage limit of $2,500 for firearms, but it is limited to theft, not damage. For other covered perils insured against, they have no limitation.

As to the idea that other carriers offer additional coverage and they don’t, that’s just not true. Again, in reviewing their filings (which anyone can do), I found that they have filed two forms worth noting here.

Form #1: Coverage C Increased Special Limits of Liability. This form amends the Special Limits of Liability, including the limit for firearms. This form doesn’t provide any restriction on the amount that these limits can be raised to. So, no Lemonade, it does appear that you will provide a higher limit.

Form #2: Scheduled Personal Property Endorsement. This form provides open perils coverage for any personal property that is scheduled on the form. Line 13 allows the insured to enter a specific type of property, a description, and an amount of insurance. So, it also appears that you will provide broader coverage, like your competitors will.

You might be wondering what their underwriting guidelines say. Good thinking. I looked there, too. All I found in their underwriting guidelines is the rate per $100 in value for increased limits on firearms. So it appears that they will allow higher limits, contrary to their public image. This doesn’t speak of transparency and trust to me.

Quote #3: “Our policy already excludes coverage for any illegal guns or gun use, but in our next version we plan to add more protections around firearms: …exclude assault rifles altogether, … add requirements that firearms be stored securely and used responsibly…”

Response: Yep. Homeowners’ policies exclude the illegal use of anything and illegal property can’t be insured on any policy. I’m concerned about the term assault rifles or military-grade weapons. I will hold off the rest of my judgment until I see how their policy defines those terms. As to the requirements that firearms be stored securely and used responsibly, I can’t argue with that. Here’s where my argument comes in. This blog post was written in October 2017 and we are in March 2018. I searched and haven’t found any filings with these updated requirements. Maybe they were busy getting filings for new states ready and they didn’t have time to create and file those revised rules and forms to exclude the firearms they stand against. I don’t know.

This isn’t the end of this conversation, but if I may I’d like to make one more observation. Let’s keep talking about it, but let’s do it in a civilized way. I \recommend the return to civil discourse, rather than the style of the day, where both sides yell at each other across widening ideological chasms. That’s the only way we are going to fix issues. It wouldn’t hurt if we stopped writing and speaking for tweets and sound bites, either but I doubt that’ll happen.

Topics Property Gun Liability