Firearms and Ammunition Manufacturer Insurance

Firearms and ammunition manufacturer insurance is built around products liability: general liability with products-completed operations for a firearm, cartridge, or component alleged to have caused harm after it left your plant, with product recall, property, equipment breakdown, workers compensation, and an umbrella around it. We place these accounts for firearms makers, ammunition and reloading-component makers, and the machine shops that produce parts and accessories.

Three things set this class apart from general manufacturing. The first is how products claims are framed: a federal statute, the Protection of Lawful Commerce in Arms Act, bars one category of lawsuit and expressly leaves others open, and an insurance program has to be built for the claims that remain. The second is federal licensing, which is a condition of being in the business at all. The third is export control, which can reach a manufacturer that never ships abroad. This page takes each in turn, cited to the statute or regulation, and then sets out the coverage. For manufacturers generally, start with our page on manufacturing insurance.

Who we insure

The class covers several kinds of operation, and the program follows the one you run:

• Firearms manufacturers building complete rifles, pistols, or shotguns under their own name.
• Ammunition manufacturers loading cartridges and shotshells for sale.
• Reloading-component makers producing cases, bullets, and other components sold to reloaders and to other manufacturers.
• Parts and accessory machinists making barrels, slides, triggers, mounts, and other components to a customer’s drawing or under their own brand.

A contract shop machining firearm parts to someone else’s print sits between two of our pages: this one for the products and licensing picture, and our page on machine shop insurance for the equipment and work-to-print side. We write both parts of that operation in one program.

Products liability is the defining exposure

A firearm or cartridge is designed to contain and direct energy, so a defect in design, materials, or manufacture can cause serious injury. When a user or bystander alleges that a product you made caused harm, the claim runs to the products-completed operations part of general liability, which pays defense costs and covered damages up to its limits. Because those claims can be severe, the umbrella above general liability is a core part of the program, not an add-on.

The defense of a products claim rests on records. Design validation, proof and function testing, lot and serial traceability, inspection data, and the manuals and warnings shipped with each product show what left your plant and what users were told. Component makers should also keep the drawings and specifications they worked to, since a claim against a finished product often reaches back to the maker of the part involved.

What the PLCAA does and does not do

The Protection of Lawful Commerce in Arms Act states that one of its purposes is to prohibit causes of action against manufacturers, distributors, dealers, and importers of firearms or ammunition products for harm solely caused by the criminal or unlawful misuse of those products by others when the product functioned as designed and intended. Under 15 U.S.C. 7902, a qualified civil liability action may not be brought in any federal or state court.

The definitions in 15 U.S.C. 7903 set the limits of that protection. A qualified civil liability action is one resulting from the criminal or unlawful misuse of a qualified product by the person or a third party, and a qualified product includes a firearm, ammunition, or a component part of either. The same section lists exceptions, including an action for breach of contract or warranty in connection with the purchase of the product, and an action for death, physical injuries, or property damage resulting directly from a defect in design or manufacture, when the product was used as intended or in a reasonably foreseeable manner. The statute adds that where the discharge was caused by a volitional act that constituted a criminal offense, that act is treated as the sole proximate cause of the resulting harm.

For insurance, the conclusion is straightforward. The statute does not remove product-defect or warranty exposure, and it does not decide whether a particular lawsuit fits its definitions; courts do. A firearms or ammunition maker still needs full products liability coverage and the defense that comes with it.

Federal firearms licensing

Federal regulations make licensing a condition of being in the business. Under 27 CFR 478.41, each person intending to engage in business as a manufacturer of firearms or ammunition must, before commencing that business, obtain the license the regulations require. ATF’s guide to applying for a license describes the process: an application on ATF Form 7/7CR, a background check on every responsible person, meaning anyone with power to direct the management and policies of the business as it pertains to firearms, and an interview by an Industry Operations Investigator.

ATF lists failure to comply with state or local law, such as zoning, among the reasons an application can be denied. That matters for insurance as well as licensing: the location, the building, and the processes you describe to ATF should match what you describe to your insurers, because both will ask. Keep the license current and the records it requires in order; they are part of the operation an underwriter reviews.

Export controls: ITAR registration and the USML and CCL

Export control can reach a manufacturer that never ships abroad. Under 22 CFR 122.1, anyone in the United States in the business of manufacturing or exporting defense articles must register with the Directorate of Defense Trade Controls, and the regulation states that a manufacturer who does not engage in exporting must nevertheless register.

Which firearms and ammunition are defense articles is a question of classification. Category I of the U.S. Munitions List covers items including fully automatic firearms and silencers, mufflers, and sound suppressors, while the Commerce Control List under the Export Administration Regulations carries entries for firearms and ammunition, ECCN 0A501 and ECCN 0A505. Confirm your products’ classification with export-control counsel before you register, quote foreign buyers, or take defense subcontracts.

Ammunition and the federal explosives rules

Ammunition makers work with propellants and primers, so the federal explosives regulations are a natural question. Those regulations, at 27 CFR 555.141, list small arms ammunition and components of small arms ammunition among the things the explosives part does not apply to, apart from two sections the exemption names. The exemption covers the ammunition and its components as that section describes them; how your specific materials, storage, and processes are regulated is a question for ATF and your counsel.

Whatever the regulatory answer, propellant and primer storage is a property question. Separation, storage practices, and fire protection shape the property terms an insurer offers, and documenting them in the submission gives the underwriter facts rather than assumptions.

Product recall

A defective lot of ammunition or a design problem in a firearm can require retrieving product from distributors, dealers, and owners. Products liability pays for injury and damage claims; it does not pay the cost of the recall itself. Product recall coverage pays for notification, retrieval, and replacement, and the cost of a recall depends on how widely a lot or model has been distributed. Lot and serial traceability is what keeps a recall narrow, so it deserves the same attention as the coverage.

Component and parts suppliers

A shop that machines barrels, slides, triggers, or other parts for a firearm manufacturer carries products exposure for parts inside someone else’s finished product, along with the terms of that manufacturer’s supply agreement. A manufacturer’s supply agreement can set specific liability limits, require additional insured status for the manufacturer, and ask for a waiver of subrogation. Those terms are met with endorsements, and we read the agreement before the first shipment. Where your engineering contributes to a design, manufacturers errors and omissions answers a part that meets the drawing but fails to perform as promised.

Property, equipment, and workers compensation

Firearms and ammunition plants run machining centers, lathes, rifling and finishing equipment, and loading and testing lines. Commercial property protects the building, stock, and materials against fire and other outside perils, and manufacturing machine and equipment coverage, through equipment breakdown, answers the internal failure of the machines that standard property wording excludes. Business income should reflect how long a key machine or line would take to replace.

Workers compensation covers employees on machining, finishing, loading, and testing work, with employers liability for suits that arise from a workplace injury. Machine guarding and lockout under federal OSHA rules apply to the machining floor, and your written programs are part of what a comp underwriter reviews.

Coverage breakdown

• General Liability Insurance — products-completed operations for injury or damage alleged to arise from a product you made, plus premises liability.
• Umbrella Liability Insurance — limits above general liability and employers liability for severe claims.
• Product Recall Insurance — the cost of retrieving and replacing a defective product.
• Commercial Property Insurance — the building, materials, and finished stock.
• Manufacturing Machine & Equipment Insurance — machines and equipment breakdown.
• Workers Compensation Insurance — employee injuries, with employers liability.
• Manufacturers Errors & Omissions Insurance — financial loss when a product or part fails to perform as specified.

What drives the cost

Premium follows the products and how they reach users: what you make, the volume and channels you sell through, the testing and traceability behind each lot or serial number, your claims history, the values of your plant and machines, and your payroll by class. Firearms, ammunition, and components are rated differently, and a contract parts shop is rated differently from a maker selling under its own name. Our guide to machine shop and manufacturing insurance costs explains the general factors, and we quote from your actual operation.

Why Machine Guard Insurance

We write metalworking and manufacturing risks, and we place firearms and ammunition manufacturers as part of that book. We ask the questions that decide the program before a carrier does: what you make and for whom, how products are tested and traced, where your license, export-control, and customer contract obligations stand, and how the plant is protected. Start with a quote, or call and talk it through first.