New York State has recently fined Lockton Companies $7,000,000 for advertising and selling the NRA-branded firearm insurance program known as “Carry Guard” to state residents. The NRA program, which provides comprehensive personal firearms liability coverage for legal fees stemming from the use of a firearm in self-defense, is popular among law-abiding gun owners. The insurance promises to mitigate the financial and legal consequences that might arise from armed encounters, even if the member did everything right. This new interpretation of the insurance law by New York regulators is an abrupt change in policy and raises significant legal questions.

Beginning in 2013, several states considered mandating firearm insurance as a way to shift the cost of gun violence onto gun owners.  New York, on the other hand, is now moving in the opposite direction. The new policy position of state regulators is based upon a technicality in the State’s insurance law that forbids insurance coverage for intentionally committed wrongful and/or criminal acts.  According to regulators, the Carry Guard program “improperly provided” coverage in any criminal proceeding against the policyholder including coverage for bail money, premiums on bonds, attorney consultation fee and retainer expenses, expenses incurred for the investigation or defense of criminal charges, and costs taxed against the insured or the insured’s resident family member in a criminal proceeding arising out of a shooting. Of course, the entire purpose for firearm liability insurance is that legal self-defense shootings can and likely will still end up in criminal and civil courts.

Bob Hartwig, an insurance expert at the University of South Carolina, says, “If you happen to be speeding and you caused injury to another individual, your auto insurance will defend you even if you were speeding.”  Hartwig says without this insurance, gun owners acting legally in self-defense could end up paying tens of thousands of dollars in legal fees.

According to the Department of Financial Services (“DFS”), Lockton issued 680 Carry Guard policies to New York residents between April and November of last year. Furthermore, Lockton collected $12,000,000 in premiums and $785,460 in administrative fees related to the insurance program between 2000 and March of this year. No claims were made under any of the policies.
The investigation by the DFS found the program was actively advertised in New York by the NRA both online and through traditional mail. “The firearms lobby doesn’t have a license to conduct insurance business in New York,” according to the DFS, which oversees insurers and banks chartered in the state. The investigation continues, with the focus on the involvement in similar insurance programs by Chubb and Lloyd’s.

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