New York Court Applies Narrow “Occurrence” Construction to Ghost Gun Claims
A New York federal court ruled Granite State Insurance Co. and Berkshire Hathaway Specialty Insurance Co. had no duty to defend or indemnify Missouri firearm retailer KM Tactical LCC (“KM”) against lawsuits alleging it contributed to gun violence through the sale of “ghost gun” components. Granite State Ins. Co. v. KM Tactical, LLC, No. 1:23-cv-07769 (ALC) (GS), *2026 U.S. Dist. LEXIS 480598, at 4 (S.D.N.Y. Sept. 1, 2026). New York alleged KM intentionally marketed and sold unfinished firearm receivers and frames to consumers seeking to evade firearm restrictions, contributing to increase gun violence and crime.
The insurers argued their commercial general liability policies only covered bodily injury or property damage caused by an “occurrence,” meaning an accident. U.S. District Judge Andrew L. Carter Jr. agreed, relying heavily on the Second Circuit’s recent decision involving Granite State Insurance Co. v. Primary Arms, LLC, 161 F.4th 160, 169–71 (2d Cir. 2025). Although that case applied Texas law, Judge Carter found Missouri’s definition of “accident” substantially similar to definition in Texas. The court reasoned that KM intentionally sold ghost gun components without meaningful sales controls and that the resulting harm was a foreseeable consequence of those acts. Ryan Boysen, Insurers Needn’t Cover Ghost Gun Seller’s NY Suits, Law360 (Sept. 2, 2026).
KM argued its conduct could be characterized as negligent rather than intentional, but the court rejected that position because the underlying complaint alleged intentional acts and misrepresentations designed to target customers who could not legally purchase firearms. Because no “occurrence” existed, the court declined to address whether the underlying lawsuits sought damages “because of” bodily injury as required by the policies. Id.
Nevertheless, the ruling demonstrates that the coverage consequences that can result when courts characterize alleged intentional business practices and their downstream injuries as a single non-accidental course of conduct.