In January 2019, Washington became the second state to deem the National Rifle Association’s (“NRA”) Carry Guard Insurance Program illegal. Designed to attract its primary market of concealed-carry permit holders, the NRA’s policies offer gun owners personal liability protection against legal costs should the owner become involved in a shooting. While advertised as protection for owners who discharge their guns in acts of self-defense, the policies effectively provide coverage for actions originating with criminal intent. For this reason, and based upon the prohibition of the protection of criminal activity through insurance coverage, Insurance Commissioner Michael Kreidler determined the NRA’s policies to run counter to Washington law.
In his cease and desist letter, Kriedler instructed the insurance company underwriting the policies to stop selling to Washington residents, calling the sales “deceptive.” Since the policies were first available in April, 2017, over 811 were purchased by residents with a value of over $260,000. 255 customers have cancelled their policies, and no claims have ever been made in the state. Kriedler is pursuing $107,000.00 in fines against the insurance company as well as $75,000 against the broker for advertising the policies.
What is the Carry Guard Insurance Program?
The NRA’s Carry Guard Program offers four policy options through its website: bronze, silver, gold, and gold plus. The plan with the most coverage offers $1.5 million in civil protection and $250,000 in criminal defense for roughly $500 a year. Regardless of whether the insured is eventually convicted or pleads guilty to a crime, money is given up front to provide policy holders with immediate access to attorneys, supplementary payment as needed for bail, criminal defense legal retainer fees, lawful firearm replacement, compensation while in court, psychological support, and cleanup costs for any covered claim resulting from the use of a legally possessed firearm.
The Checkered History Between “Carry-Guard” and the States
In April, 2018, Kriedler ordered a cease and desist from the sale of four Carry Guard insurance policy products through its website after receiving a consumer complaint in Washington. The solicitation of insurance policies in the state without an insurance producer license is a violation of Washington law.
In May, 2018, all policies in New York were cancelled after the Department of Financial Services found the policies to be illegal since coverage was offered even if the insured was found to have broken the law, used unreasonable force, or engaged in intentional wrongdoing when discharging the gun. The agency fined the administrating brokerage group $7 million and $1.3 against the underwriter.
In August, 2018, New York Governor Andrew Cuomo wrote a letter to other governors encouraging them to drop the Carry Guard program. The New Jersey Department of Banking and Insurance announced an investigation into the policies the same month. In September, 2018, the California Department of Insurance released a cease and desist letter stating the NRA is not licensed to sell its insurance product in the state, although it has not determined whether the policies are in violation of any laws.
A Proposed Alternative to Monitor
A 2020 candidate for Washington State Representative has offered an alternative, whereby, the first purchaser of the gun pays a one-time “insurance” payment upon purchase. The insurance would stay with the gun, not the owner, so even if the gun is sold, victims would be able to make claims against the gun’s insurance. This approach to “insuring the victim” has yet to gain popularity as an alternative to the NRA’s Carry Guard program, but discussion is taking place.
Trends in Insurance Law often follow close behind the in-vogue, and often contentious, political and social issues of the day. As is the case here, states should be prepared to examine for legality and appropriately tailor insurance laws to accommodate rising trends such as personal liability coverage for gun owners. It is only the beginning of the conversation regarding the proper place and reach of insurance coverage as the industry overlaps with the country’s most pressing concerns. In light of recent discussion, the power of the states to regulate insurance laws will prove to be more critical now than ever in determining the nation’s social and political climates.