Ghost Guns, Big Lawsuits, and Insurance Drama
What happens when New York sues firearm manufacturers, claiming their products are fueling violence? You’d expect a legal showdown between the state’s attorney general and the gun companies. But what if insurance companies are suddenly dragged into the mess? Yep, it gets complicated. And that’s exactly what’s happening in the ongoing lawsuit over ghost guns, with major players like AIG and an insurance trade group stepping into the ring.
Where do insurance companies fit into this?
Here’s the deal. New York filed this lawsuit back in 2022, accusing firearm makers and retailers of enabling the spread of ghost guns. These untraceable weapons are made from kits and parts without serial numbers. They’re fueling violence, according to New York, and causing havoc in communities. Naturally, lawsuits like these carry massive financial risks for the gun companies. Fines, settlements, legal defense fees—it adds up fast.
That’s where commercial insurance policies come in. These policies are supposed to provide coverage for liability. But… does coverage stretch to claims like this? The gun companies sure hope so. They’re tapping into their policies, saying insurers should help cover the costs of the lawsuit.
Insurance companies—including giants like AIG? Not so thrilled. They’re pushing back.
Why are insurers pushing back?
Think about it from the insurers’ perspective. The policies they’ve issued were designed to cover specific kinds of liabilities, like accidental injuries or property damage caused by the insured’s products. But covering a “public nuisance” claim tied to societal harm caused by ghost guns? That’s not what these contracts were built for.
Groups like the Complex Insurance Claims Litigation Association (CICLA) are jumping in to support this argument. They recently asked a federal appeals court for permission to file a brief in support of AIG. Why? To explain exactly how dangerous it would be for the insurance industry if courts force them to cover claims like these.
Here’s a key question they argue in court filings: Should commercial liability insurance be turned into a fund for public services, like offsetting the costs of combating gun violence? CICLA says no. They argue these kinds of unpaid-for exposures could hobble insurers and undermine their ability to serve other clients. That’s a big deal, especially for an industry that thrives on predictability.
What’s all this about public nuisance?
First, a bit of background. The New York lawsuit argues that ghost guns create a public nuisance. What does that mean? Public nuisance laws are meant to address activities or products that harm the health, safety, or comfort of a community. Think hazardous chemical spills or pollution. Now, New York is saying ghost guns fall into this category because they’re untraceable, easy to assemble, and often show up in crimes. The state claims these weapons increase violence and place an unfair burden on public resources, like law enforcement and healthcare.
What would happen if insurers lose this fight?
If courts decide insurance policies must cover claims like these, it would set a huge precedent. Today it’s ghost guns. Tomorrow, it could be climate change lawsuits against big oil. Or public health suits against food companies. The insurance industry fears a flood of claims tied to broader societal harm instead of straightforward liability.
What does that mean for business owners overall? Higher premiums for everyone. Insurers would have to evolve policies to prevent this type of coverage from being the norm. And trust us, those tweaks won’t come cheap.
What’s the latest?
This legal battle isn’t close to over. New York’s lawsuit has made it past important hurdles, like attempts by manufacturers to dismiss it entirely. And now, at the federal appellate level, the insurance disputes are getting more attention. With CICLA throwing its weight behind AIG, the stakes are getting higher. Both for the gun companies and their insurers.
What happens next? We’ll see if the courts side with the firearm makers on their hunt for coverage or if they draw the line, agreeing with the insurers’ stance that public nuisance lawsuits don’t belong under typical liability policies. Until then, the ripple effects of this case are keeping everyone—from insurers to businesses in every field—watching closely.