The drastic rise in the number of active shooter and mass shooting events has made coverage under commercial general liability lines harder to secure, experts say, leading to a rise in the availability of more custom policies designed to compensate victims and others.
Decreasing Commercial Coverage Options
Policyholder attorney Robert Horkovich of Anderson Kill PC told Law360 that the industry's shift to decrease coverage for gun-related injuries and fatalities is not new.
"Historically, as the insurance industry recognizes a risk as more significant, the industry excludes it, and then moves on to standalone coverage," he said. For instance, he explained, carriers began limiting environmental coverage in the 1980s by drafting pollution exclusions and then marketing pollution liability policies.
More recently, he said, the industry has tightened coverage under commercial liability policies for cyber events and created ones specifically designed to cover losses for data breaches. That same dynamic applies to insurers' response to the surge in gun violence.
Typically, commercial general liability policies could provide coverage to owners of property where an active shooter event or mass shootings occur, if the owners faced accusations of negligence, Horkovich said. He explained, however, that policyholders have a significant likelihood of obtaining a defense from their carriers against negligence suits, since an insurer's duty to defend is broader than its duty to indemnify.
As a result, securing coverage for bodily injuries and property damage caused by the events could prove more challenging, the Anderson Kill partner said, since oftentimes the losses associated with a shooting have both a physical and an emotional dimension. One unanswered question revolves around recovery for the costs of razing a property, such as a school, where an event took place.
"For the physical structural damage caused by the shooting there is an interesting question as to whether the trauma caused by that shooting then gives rise to a further property damage loss, when you have to rip the building down," he said.
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