I’m not a fan of mandatory liability insurance for gun owners; Megan McArdle picks some good holes in the proposal, without even mentioning the big problem about how to attribute liability when the firearm used in an assault or homicide is never recovered by law enforcement. But even a flawed concept ought to be considered in its most nearly plausible form.
For gun-liability insurance, it seems to me the most plausible form would be strict liability on the manufacturer (or importer) for any damage to third parties done with the gun, and a requirement that the liable party either carry insurance or post a bond (to avoid the “judgement-proofness” problem.) Damage from unrecovered weapons could be allocated on the market-share principle.
That system would give the gun industry a strong incentive to be careful about not selling to people who might misuse the weapon or re-transfer it to someone who would. In effect, such a law would force the gun industry to act as a regulatory authority.
Now go back to Megan’s piece to read about all the issues that would raise. And then think about how hard it would be for anyone living in a poor African-American neighborhood to buy a gun.