Firearms Insurance Agent Blog

Why Being Underinsured Is a Major Risk for Firearms Businesses

In the firearms and ammunition industry, your risks go far beyond manufacturing defects or storefront theft. From liability lawsuits to regulatory audits, the stakes are high—and if your insurance coverage isn’t built to meet those risks head-on, your entire business could be in jeopardy.

Yet many companies in the industry operate with insufficient insurance, either unaware of the gaps or hoping to cut costs. Unfortunately, the cost of being underinsured often far outweighs the premiums saved. Here’s why getting your coverage right isn’t optional—it’s essential.

In This Industry, the Margin for Error Is Thin

Firearms and ammunition businesses face an elevated level of scrutiny, and one claim or compliance failure can trigger a wave of financial and legal trouble. Being underinsured means you’re vulnerable when—not if—something goes wrong.

Let’s look at what’s at stake when your coverage falls short.

1. Low Liability Limits Leave You Open to Lawsuits

Product liability claims in the firearms space are no small matter. If a customer is injured due to a manufacturing defect or ammunition malfunction, your business could be the target of a multi-million-dollar lawsuit.

With inadequate product liability coverage, your policy may not cover:

• Attorney fees
• Settlements or judgments
• Recall costs
• PR or crisis management

Once your coverage caps out, you’re on the hook for the rest—often with devastating financial consequences.

2. Skipping Umbrella Coverage Is a Costly Mistake

Think of umbrella insurance as your second line of defense. When general liability or product liability limits are exhausted, an umbrella policy steps in to extend your coverage.

Too many firearms companies rely on base-level policies, leaving no buffer for:

• Accidents involving third parties
• Catastrophic lawsuits
• Multiple concurrent claims

Without umbrella coverage, a single severe incident could push your business over the edge.

3. Your Property Coverage Might Not Match Your Assets

Manufacturing equipment, specialty tools, and firearm inventory are expensive to replace. Underinsuring your physical assets can backfire if disaster strikes—fire, flooding, or theft could leave you scrambling to recover.

Many businesses fail to:

• Update their property values annually
• Insure new equipment or inventory increases
• Include business interruption insurance

This leads to out-of-pocket costs that quickly add up, stalling operations or even forcing permanent closure.

4. Insurance Gaps Could Breach Contracts or Regulations

If you’re working with government agencies, distributors, or large retailers, they likely require proof of specific coverage levels. Falling short could mean:

• Lost contracts
• Legal disputes
• Delayed shipments
• Damaged professional relationships

Worse still, some states and federal regulations mandate minimum insurance standards for firearm businesses. Underinsurance could put your licenses—and your livelihood—at risk.

5. Legal Costs Alone Can Sink an Unprepared Business

Even if you’re not at fault, defending your company in court isn’t cheap. Without proper insurance, you may be responsible for:

• Hourly legal fees
• Expert witness costs
• Depositions and investigations
• Travel and court filing expenses

Insurance should give you peace of mind—not expose you to financial ruin during a legal battle.

How to Tell If You’re Underinsured

Ask yourself:

• Do I rely on generic business insurance policies?
• Has it been over a year since my last policy review?
• Are my liability limits set at the minimum to save money?
• Am I lacking product liability or umbrella coverage?
• Have I added new services or expanded but not updated my coverage?

If you answered “yes” to any of the above, it’s time for a reassessment.

Protect Your Business with the Right Partner

At Associated Services in Insurance (ASI), we understand the unique risks of the firearms and ammunition industry—because it’s our specialty. Since 2007, we’ve helped hundreds of companies just like yours find tailored insurance solutions that fit their exact operations.

We represent nearly every insurance carrier in the industry and put them in competition to secure the best rates and most comprehensive coverage. Our mission? Making sure you’re covered from every angle.

Don’t Let Underinsurance Be Your Weak Point

Cutting corners on coverage may seem like a smart short-term move, but it’s a long-term liability. Don’t wait for a claim, compliance issue, or catastrophe to expose your vulnerabilities.

Contact ASI today at (855) 486-2667 to schedule a no-obligation insurance review. We’ll help you uncover gaps and build a protection plan that keeps your business secure, competitive, and compliant—no matter what comes your way.