It might seem to herald big change for those gun owners and in coverage. But the effects may be more limited than you’d first expect.
Yet many people already are covered; the coverage may be less than you’d anticipate; and the prospects of discounts may be slim or far off, insurance experts say.
Still, supporters say this is just one part of a needed wider approach to countering the human and monetary costs of gun violence.
Here’s a look at what the insurance requirement would do — and what it wouldn’t.
What the requirement says
The ordinance exempts those in law enforcement, those with concealed carry permits and those for whom the fee would be a financial burden. Most San Jose gun owners don’t have concealed carry permits — only 36 permit holders live in the city, the Santa Clara County Sheriff’s Office said in mid-February.
What kind of insurance will suffice
A product that many people already have — homeowners or renters insurance — generally will satisfy the ordinance, the mayor and insurance experts CNN spoke with agree.
Homeowners and renters insurance generally will cover accidental discharges under the policies’ liability section, said Michael Soller, deputy commissioner of the California Department of Insurance.
Though guns generally aren’t specifically mentioned in standard homeowners and renters policies’ liability sections, liability coverage for them would exist, since guns usually aren’t specifically excluded, Soller said. People should check their policies to ensure guns aren’t excluded, the experts CNN spoke with advised.
Still, San Jose leaders mean for the new ordinance to drive people to available policies.
“We’re not looking to create a new insurance product,” Mayor Sam Liccardo told CNN. “We don’t have any reason to believe there should be any changes in the nature of existing policies that are routinely offered by dozens of insurers in California.”
At least one company advertises standalone gun liability insurance. The company declined to answer CNN’s questions about whether its product could be sold in the state or fit San Jose’s ordinance.
So, precisely what would be covered?
Probably not just any accidental use of a firearm.
Homeowners and renters insurance generally will cover losses and damages only to third parties — like a visitor to the insured’s home — and not to the policyholder or anyone living in the household, said Karen Collins, assistant vice president of personal lines at the American Property Casualty Insurance Association.
“A child (living in the home) that accidentally shoots a sibling — that would not (typically) be covered” under homeowners and renters insurance, Collins said. Medical insurance, in that case, might be amenable instead.
The liability coverage could extend off property, worldwide, as long as the gun is being carried legally, said Janet Ruiz, spokesperson for the Insurance Information Institute. Still, that depends on the policy’s language, and holders should check, Collins said.
San Jose’s ordinance, however, does not prescribe how much coverage the insured should have, so gun owners are not compelled to increase limits.
The summary does not break down how many of the 86 per year were unintentional. It also doesn’t say how many of the shootings injured third parties (whose injuries would be covered by a homeowners insurance policy), and how many of the shootings hurt insurance holders or a family member living in the home (whose injuries wouldn’t be covered by the homeowners policy).
Lots of people already have this insurance
Most homeowners already have the sort of liability insurance the new ordinance requires — in part because banks require it of mortgage holders.
Renters may need to scramble more to be insured. Perhaps 30% to 40% of renters nationally have renters insurance, though that can vary by setting, Hoyt said. So, one of the ordinance’s biggest effects may be that it drives up the number of San Jose renters who have renters insurance.
The California insurance department did not immediately provide the percentages of San Jose homeowners or renters that had the policies.
Incentives don’t seem to be available — or near
“I want the insurance companies to engage in reducing risks, and that’s what they do (better than) anyone else,” Liccardo told CNN.
But except for a very limited circumstance, these incentives aren’t in play for gun owners — and don’t seem to be on the horizon.
“The requirement in a particular city that (gun owners) provide evidence of a coverage, in my mind, wouldn’t in and of itself lead to insurers saying we need to start rating based on this or adjust our premiums on this,” said Hoyt, the University of Georgia professor.
Why? To start with, gun owners don’t need to reveal they own a gun for gunfire accidents to be covered under the liability section of a homeowners or renters policy, experts said.
“If there’s not a (prior) disclosure of a gun,” that doesn’t create a problem for claims, said Collins, the APCIA vice president.
Also, “generally, owning a firearm does not affect homeowners insurance premiums,” Collins said, adding she couldn’t comment on individual company pricing policies.
“It’s not a typical underwriting question, ‘How many guns do you have?'” Hoyt said.
Any change to that practice likely wouldn’t be driven by mandates but by an increase in claims, he said. He pointed to dog ownership as an example of an evolution in premiums.
“It’s ultimately losses and exposure that drive insurers to adjust premiums. It’s not really clear that there’s anything that would change here that would cause that to be the case,” he said.
San Jose’s mandate “is not going to cover a whole lot of situations where people are being injured by guns,” Hoyt said, and “the coverage has existed.”
Even if insurers wanted to offer new discounts, it would be a process. In California, insurers must get approval from the state department of insurance for rate and policy changes, experts said.
Hoyt said he’s seen no evidence of insurers giving discounts for having trigger locks or taking gun safety classes.
The one exception that now might yield a discount is under the personal property portion — the part that pays for loss such as theft — of a homeowners or renters insurance policy.
Typically, gun owners do not have to tell insurers ahead of time that they own guns for the weapons to be covered against theft, up to a certain limit, Soller said. However, an owner can choose to pay more to have a gun scheduled for higher coverage limits.
In that case, the owner would identify the gun to the insurer, Soller said. And then the additional cost to insure it may be reduced if the owner reveals they’re putting the gun in a safe, Hoyt said.
Why the mayor says he needed to act
The mayor has felt a burden to take action, he said, even as he acknowledged the new ordinance is unlikely to change much in the insurance industry.
“This (insurance requirement) is something cities should absolutely consider, all across the country,” in addition to trying to secure funding for intervention programs, requiring secure storage for firearms and prohibiting guns in sensitive locations such as polling places, Watts said.
San Jose’s new annual “gun harm reduction” fee of roughly $25 would fund a “community-based, evidence-based programs to reduce gun violence, such as domestic violence and suicide prevention, mental health counseling, addiction treatment, and gun-safe storage and training,” the mayor’s office says.
“I am very inspired by the mayor there,” Watts said, adding the nation needs “more leaders like Mayor Liccardo to create innovative solutions to this crisis.”
