Insurers’ Exposure to Guns and Homeowners’ Associations

NU Online News Service, April 6, 11:36 a.m. EDT

The sad shooting death of Trayvon Martin in Sanford, Fla. is at the center of a controversy that has no end in sight, and could bring other parties into question over liability, including insurers. However, proof of liability will be key to determining any damage awards, say insurance-industry experts.

In late February, 17-year-old Martin was shot by George Zimmerman, the captain of a neighborhood crime watch program in the gated community of the Retreat at Twin Lakes.

According to reports, Zimmerman thought Martin looked suspicious and called police. Despite being told not to follow Martin, Zimmerman apparently did.

Zimmerman says he shot Martin in self-defense when the young man attacked him. Under the Florida’s Stand Your Ground law, Zimmerman had the right to defend himself if he felt his life was in danger. He also had a concealed gun permit.

Others contend the unarmed boy was a victim, and say Zimmerman should be arrested and charged with murder.

In a recent article by the Los Angeles Times, the paper says homeowners who are part of the gated community’s homeowners’ association could ultimately be held liable for Zimmerman’s actions.

When the issue turns to liability, the question for the insurance industry becomes what could be its ultimate involvement, and might insurers be paying out some damage awards?

Christine Barlow, associate editor for FC&S Bulletins, a member of Summit Business Media, which also owns National Underwriter, says that, first, liability needs to be established. Under a homeowners policy, Zimmerman must first be found legally liable in the shooting.

There are no exclusions in a homeowners policy concerning guns, but there is an exclusion—which would apply to both liability and medical payments—for “expected or intended injury.”

Barlow says that means if the insured intended to injure someone, then the exclusion kicks in “unless the injury is from the use of reasonable force by an ‘insured’ to protect persons or property.”

The next question, she says, is what is reasonable force? That is an issue that would probably have to be settled by the courts, she suggests.

As far as the homeowners’ association, David Thamann, managing editor of FC&S Bulletins, says liability is not clear cut. “They did not give him the gun or condone his actions,” says Thamann, but the ultimate question of liability would probably be left in the hands of a jury to decide.

However, if the association is sued under the commercial-property and commercial-liability policy the association should have, the insurer would have a duty to defend against the claim.

“The duty to defend is greater than to indemnify,” Thamann notes.

And if there is a judgment, Thamann says the insurer would probably have to pay up to the policy limits, which generally could range from $300,000 to $5 million.

As for the more general question about whether an incident like this could have an impact on underwriting homeowners policies, Barlow says while guns are lethal “there’s not much underwriting you can do.”

Dogs, pools and trampolines are obvious hazards that are easily seen in an inspection and underwriters can take action, she says. Guns are typically not in plain sight and would require the kind of inspection of the premises homeowners would not allow. And homeowners don’t readily admit to owning guns.

Underwriters, she says, can write for a gun’s value and ask if safety precautions are being taken to deny access of the weapons to children, but outside of that “most insurers don’t generally ask about guns,” adding, “it is hard to underwrite for the psychology of the insured.”

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