New York residents carry a variety of insurance plans for protection against many unforeseen circumstances. In addition to health, life and auto insurance, some own insurance for their apartments, pets and even computers. Until recently, New Yorkers could also buy Carry Guard insurance, which was offered through the National Rifle Association. However, the New York Department of Financial Services recently launched an investigation into the product, resulting in the determination that Carry Guard is a violation of insurance law.
Carry Guard provides liability protection for NRA members who use their firearms in self-defense. Gun owners who use their weapons to defend their lives, homes and loved ones may still face legal issues as a result. Carry Guard personal liability insurance can offset those legal expenses.
However, the DFS determined that Lockton, the insurance company offering the coverage through the NRA, did not comply with state law. Specifically, monetary benefits Lockton allegedly offered to the NRA were illegal because the NRA is not licensed to broker insurance in New York. Additionally, the NRA unlawfully tied the purchase of Carry Guard to a free membership in the organization.
Perhaps most upsetting to NRA members and holders of Carry Guard insurance was the ruling that such policies themselves are illegal because they provide coverage for criminal acts. New York insurance law forbids the coverage of the cost of any legal proceeding related to criminal behavior. One gun control organization called the policies murder insurance.
Lockton is now facing some criticism, both for its participation in the NRA program and for its speedy withdrawal. The NRA is considering a breach of contract lawsuit against Lockton. In addition to the hefty fines imposed by the DFS for violating insurance law, the threat of more financial penalties is likely daunting. Insurance companies can turn to an experienced attorney for a strong defense in such matters.
Source: insurancejournal.com, "New York Fines Lockton Over NRA Insurance; Continues Probe of Other Players", Andrew G. Simpson, May 3, 2018