Active shooters and liability insurance misnomers
The rise in the number of active shooter incidents corresponds with the rise in demand for a relatively new product known as active shooter insurance.
There were 277 active shooter incidents in the United States between 2000 and 2018, according to the FBI. These incidents accounted for 884 deaths, 2,430 casualties and 1,546 wounded.
The gradual uptick in active shooter incidents during those years has coincided with calls for gun control or movements to arm more citizens. There also has been a push to require gun owners to carry liability insurance.
Unfortunately, addressing this risk is not that easy.
No insurance policy is going to provide coverage for intentional acts. Insurance is a transfer of risk, and the risk must be from a fortuitous loss, not a deliberate action. An insured cannot set his house on fire and expect insurance to cover the loss — although there are those who try. Such actions are arson and insurance fraud.
Coverage for firearms
If an insured’s gun is stolen, there is coverage in the standard homeowners form for $2,500 for theft of firearms and related equipment. This is physical damage coverage for the gun itself, not liability coverage.
The insured is not liable for the actions of the thief, even if the gun in a later crime can be traced back to the insured. The insured’s liability coverage is only for damages for which the insured is legally liable. While the gun is technically insured, the thief who stole it in order to, say, shoot people at a mall is not protected by the gun owner’s policy. (Nor should he be.)
Property damage that is expected or intended by the insured is excluded, even if the injury or damage is different than expected or occurs to a different person than intended. An exception to this exclusion applies to injury or damage that results from the use of reasonable force by an insured to protect persons or property. The exception does not specify that the insured must be protecting himself, other insureds, or his property.
So an armed teacher who shoots at an active shooter is covered for any damages or injuries caused to others. Even medical payments for the shooter would be covered; no exclusion exists for injuries caused to someone who is acting illegally.
Reasonable force
This is the reverse of what most people expect when they call for gun owners to have liability insurance. They expect the injured innocent parties to be covered if the insured becomes violent. But that is not going to happen if the insured intentionally shot people.
Now, if a bystander carries medical payments coverage on his policy and that individual shoots an active shooter, the active shooter can receive medical payments coverage from the bystander’s policy.
Note that the policy provides coverage for reasonable force to protect persons or property. What is reasonable force? If an insured shoots an unarmed person whom he perceives as a threat, is that reasonable force, or excessive force? It is going to make a difference to the coverage. Having coverage does not mean an insured can fire a gun whenever he feels threatened. If he uses excessive force, he will not be covered.
There are policies for individuals with concealed carry permits. Like the homeowners policy, they provide coverage either for an insured protecting people or property, or for truly accidental shootings. Some policies covering truly accidental shootings do not even cover the intentional act of firing a weapon in self-defense. An endorsement can be added to those policies for self-defense, but it must be specifically added and is not automatic coverage.
However, in light of the recent shootings, Chubb LTD stated that it would quit underwriting Carry Guard, the concealed carry coverage for the National Rifle Association, and Lockton Affinity stated that it would quit selling NRA endorsed products. Lockton administered the coverage for years. This removal of support from the insurance industry indicates that any gun coverage may become harder to obtain going forward.
Industry outlook
While insurance protects people from many types of losses, some things cannot be insured. The deliberate shooting of innocent people for whatever reason is one of those things. Even if the mental status of the active shooter was taken into account, it is unlikely that any carrier would provide coverage to the many wounded people under the standard homeowners or even a gun liability policy.
The rise in the number of shootings helps explain the rise in demand for a relatively new product known as active shooter insurance. These policies provide monetary coverage for lawsuits, but also preventative and post-event crisis management including victim services and brand fallout.
Christine G. Barlow, CPCU, (cbarlow@alm.com) is managing editor of FC&S Expert Coverage Interpretation, the recognized authority on insurance coverage analysis for the P&C industry.
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