Lund and Gilles on Mandatory Liability Insurance for Firearms Owners

April 18th, 2013

I have previously blogged about several proposals that would require firearm owners to purchase liability insurance. My initial inclinations was that this was a bad thing, and potentially unconstitutional (see here, here, here, and here). Over two decades ago, Nelson Lund proposed mandatory insurance as a means to limit the harms of firearm ownership. In a recent piece in Engage, Lund, along with Stephen Gillers, updates that idea.

From the introduction:

The most important advantage of using an insurance requirement as an alternative to direct government regulation arises from the incentives that insurance companies face in a competitive market. Competitive pressures would lead insurance carriers to keep the premiums for low‐risk gun owners low, while charging higher premiums to those who are more likely to cause injuries to other people. At the margin, such a system can be expected to reduce the possession and use of firearms by high‐risk individuals, and the threat of increased premiums might induce greater care in using and storing firearms by those who were previously uninsured. Mandatory insurance would also increase the likelihood that victims of firearms‐ related injuries would be able to recover damages through the tort system. Insurance companies have better incentives than the government to acquire and use the information needed for distinguishing high‐risk from low‐risk individuals. For that reason, a mandatory insurance system is likely to make more reasonable trade‐offs between public safety and individual rights than a system in which legislatures make politically driven decisions about who may possess what kinds of firearms.

My concern, however, is what Nelson and Stephen address later:

More importantly, a mandatory insurance regime could easily be designed (either deliberately or inadvertently) in a way that would unnecessarily compromise the Second Amendment rights of individuals.

This would be a feature, not a bug.

How high may a state set the minimum coverage under the mandated policies without running afoul of the Second Amendment? For guidance, we propose looking to the most analogous type of regulation – mandatory automobile liability insurance. The cost of injuries from automobile accidents exceeds that from firearms accidents by orders of magnitude. The state’s burden of justification should be a heavy one when it places greater burdens on the exercise of a constitutional right than on the exercise of a non‐constitutional right that involves very similar trade‐offs between individual and social interests. Consequently, we think the Second Amendment presumptively requires states to tailor minimum coverage limits so they do not exceed the analogous auto liability limits.