In a high-profile insurance dispute before the Second Circuit, a firearm retailer demands insurance for governmental suits imposing liability for the policyholder’s marketing of untraceable “ghost guns.” 

In a recent news interview, BatesCarey partner Adam H. Fleischer explained that the case foreshadows broader legal developments shaping both tort and insurance law.  “Ghost gun” suits demonstrate the strategy of plaintiffs’ counsel to use public nuisance theories to collect economic damages for social harm, while also demonstrating the urgency for insurers to fight coverage for such newly developing societal claims. 

Adam explained that such suits tie liability to a policyholder’s business plan, when sales and marketing unfold exactly as was anticipated. These business risks, whether presented by gun cases, opioid cases or tech torts, do not present the accidental “occurrences” covered by liability insurance, he explained.  

The Second Circuit insurance dispute will put squarely at issue the tension between a policyholder’s pressure to self-adjust the impact and social costs of its business plans, versus the insurance industry’s efforts to support and protect unexpected accidental liability befalling their policyholders. 

Policyholder advocates counter that if insurers intend to avoid covering public nuisance litigation, they should revise policy language to exclude such claims or decline coverage for high-risk industries altogether.

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