N.J.: Federal court puts a hold on insurance mandate to carry firearms 

The United States District Court for The District of New Jersey issued a decision on May 16, 2023, that will—at least temporarily—suspend enforcement of an insurance requirement for those applying for a firearm-carry permit for in the state.  

The case of Koons v. Platkin involved lawsuits brought by two different plaintiffs who argued that large portions of a state law passed last year designed, in part, to restrict where individuals can and cannot carry firearms in public is unconstitutional. The law, 2022 N.J. Laws, Ch. 131, was a response to the United States Supreme Court decision in New York State Rifle & Pistol Ass’n v. Bruen. That decision extended the constitutional Second Amendment right to bear arms to protect the carrying of firearms in public for self-defense and indirectly invalidated the “justifiable need” regulatory scheme that New Jersey had used to limit the carrying of firearms in public. The state attempted through Chapter 131 to create a series of “sensitive places” in which a firearm could not be carried, regardless of whether the gun carrier has a permit. 

Part of Chapter 131 is a requirement that in order to obtain a carry permit in the state, an applicant must provide proof that he or she has a liability insurance policy insuring against loss for any bodily injury, death, or property damage sustained by any person arising out of the ownership, maintenance, operation or use of a firearm in public, in an amount or limit of no less than $300,000. The plaintiffs in this case challenge whether the insurance mandate was in fact constitutional. 

The court’s decision in Koons is a sprawling analysis of the constitutionality of many parts of Chapter 131, considering the U.S. Supreme Court decision in Bruen. This article only will feature a summary and analysis of the portions of the decision dealing with the insurance mandate. For those with interest—or insomnia—the entire 235-page decision can be found in the link in the first paragraph of this article. I would encourage everyone to at least read the introduction of the case for the judicial finger wagging the Court gives the State for basically failing to do its homework.  

The part that discusses the insurance mandate 

Within the more than 17,000 words of Chapter 131 is a mandate that those applying for a firearm carry permit, as well as current carry permit holders are required to maintain liability insurance. Specifically, those individuals must maintain a liability insurance policy in the amounts of $300,000 insuring against loss resulting from liability imposed by law for bodily injury, death, and property damage sustained by any person arising out of the ownership, maintenance, operation or use of a firearm carried in public. The insurance mandate was set to go into effect on Saturday, July 1, 2023. IIn this case, the plaintiffs challenged the constitutionality of the insurance mandate. They argued the insurance mandate unreasonably infringed their Second Amendment right to carry a handgun in public for self-defense, and that the regulation was unsupported by historical evidence—a key component in determining the constitutionality of firearm regulation in the wake of the Bruen decision. The plaintiffs requested that the court issue a declaratory judgment finding that the mandate is unconstitutional. 

The part where the court doesn’t buy the state’s arguments 

The state, which is serving as the defendant in this case, made a series of technical arguments challenging the plaintiffs’ ability to bring this lawsuit. The state alleged that the plaintiffs lacked standing, (i.e., were not harmed by Chapter 131), as they likely already satisfied the insurance mandate. The state also argued that since the insurance mandate did not go into effect until July 1, the issue was premature, or not “ripe” to use legal parlance. The court was not convinced by either of these arguments.  

The court stated that in order to demonstrate standing the plaintiffs in this case had to show they intended to engage in the conduct impacted by the law (i.e., carrying a firearm in public), that the law prohibited some form of that conduct, and that the plaintiffs could be prosecuted. The court found the plaintiffs satisfied each of these requirements. The court found the plaintiffs planned to carry a firearm in public, that the insurance mandate limited the plaintiffs’ ability to carry in public—if they did not have insurance, they could not carry. And finally, that the plaintiffs could face prosecution as the law carries with it a criminal penalty for failing to comply with the insurance mandate. The court gave very little credence to the state’s argument that the plaintiff likely already satisfied the insurance mandate. To quote the court: “The State’s bald argument that the … Plaintiffs lack standing because they likely satisfy the Insurance Mandate given their homeowners and renters insurance policies is pure speculation.” It’s never great when a court uses the terms “bald” and “speculation” in the same sentence to referring to party’s legal arguments. 

On the issue of ripeness, the court delivered a similar holding. Here the court applied a three-part test: 

 1. the adversity of the parties’ interests,  

2. the conclusiveness of the judgment, and  

3. the utility of the judgment. 

Regarding the first part, the court found that the plaintiffs’ interests were adverse as if the declaratory judgment was not issued, they would face real harm. If the plaintiffs failed to purchase the required insurance, they would be prevented from carrying a handgun in public without facing possible criminal charges.  

For the second part, the court found that issuing a declaratory judgment would affect the “legal status of the parties” by determining whether the state may require individuals seeking to carry a handgun in public for self-defense to be insured.  

Finally, the court found that a declaratory judgment here would be useful to the parties and others as it would help not only the plaintiffs but other interested parties in determining whether the insurance mandate applied to them. 

The part that discusses the insurance 

Having found that the plaintiffs’ argument had standing, and the issue was ripe for a ruling, the court turned to the constitutionality of the insurance mandate itself. 

In defending the insurance mandate, the state makes two principal arguments: 

First, that the mandate falls outside of Second Amendment protections because it is not regulating who can bear arms. In this regard the state argues the insurance mandate is similar to requirements for background checks, fingerprinting and training.  

Second, the state contends that there is a historical precedent to the insurance mandate in the form of 19th century surety laws related to gun ownership. The court rejects both of the state’s arguments. 

Before addressing the plaintiff’s arguments, the court acknowledges the Bruen case and that the holding in that case guaranteed an individual’s right to carry firearms in public for self-defense. Starting with that understanding, the court looks at if the insurance mandate limits that constitutional right. It found that it did because if an individual did not comply with the insurance mandate, he or she would be prevented from carrying firearms in public for self-defense.  

In addressing the state’s claim that insurance mandate is no different than background check and training requirement, the court relied heavily on the Bruen ruling that the Second Amendment protects law-abiding, responsible citizens to use arms for self-defense. The court found that while background checks and firearms training courses do ensure that those bearing arms are law-abiding, responsible citizens, the insurance mandate does little to ensure the same. The court states that an individual with a felony, who would be disqualified from carrying a handgun, could obtain the required insurance easily. As such, the mandate has no relationship to ensuring that only law-abiding, responsible citizens are carrying handguns. 

The court next turned to the state’s argument that there is a historical tradition of regulating firearms through the use of an insurance mandate. To support this argument, the state pointed to 19th century surety laws that allowed a magistrate to require any person bearing arms to post a surety bond to keep the peace if another individual complained that that individual had “reasonable cause to fear an injury” or “breach of the peace” by the arms bearer. Here the court looked at the how and why of both laws. How did both laws infringe on the right to bear arms and why did they do so.  

The court found significant differences between the insurance mandate and surety laws. On the issue of how, the surety laws only required a bond after there was a showing of reasonable cause by a complainant who feared injury or a breach of the peace by the arms bearer. Even then, the arms bearer could overcome the complaint by demonstrating a special need to carry. Further, the bond requirement lasted no more than six months and the arms bearer still was permitted to use a firearm in self-defense without forfeiting the bond. In short, the surety requirements were conditional, partial restrictions specific to an identified arms bearer found to be dangerous. As to the why, the court found that the surety laws were aimed to prevent criminal offenses by an identified arms bearer who presented a specific danger to a specific person.  

When the court looked at the insurance mandate, it found the requirement applied to all applicants seeking to carry a handgun in public, whether the applicant might be dangerous or not. Further, unlike the surety laws and their six-month bond, the insurance mandate is perpetual. Applicants are required to keep insurance in place as long as they are carrying a firearm in public. Finally, the mandate contains no exceptions for self-defense. Overall, the court found that the insurance mandate is too dissimilar and imposes a greater burden on the right to self-defense than the historical laws the state presented.  

With that, the court rejected the state’s argument and issued a declaratory judgment in favor of the defendants putting the insurance mandates on hold. 

The part where we outline what this means for agents 

Those who are applying for a carry permit or wish to carry a handgun in public will no longer be required to purchase or show proof of liability insurance.  

For insurance producers getting questions on this requirement, they can tell their clients that while insurance is always a sound idea it is no longer mandatory. If you have questions about coverage, you can see Q&A: What you need to know about N.J.’s new handgun liability insurance law.  

While the state could—and likely will file to appeal this decision—it is unlikely that the insurance mandate will be resurrected prior to July 1, 2023. More than likely this decision will force the New Jersey Legislature to revisit the issue and create a new regulatory framework for the open carry of firearms.