No Accident: Intentional Ghost Gun Sales and the Limits of “Occurrence” Coverage Under Texas Law

Commentary on Granite State Insurance Co. v. Primary Arms, LLC (2d Cir. Dec. 10, 2025)

I. Introduction

This decision from the United States Court of Appeals for the Second Circuit, Granite State Insurance Co. v. Primary Arms, LLC, applies Texas insurance law to a highly charged modern context: so-called “ghost gun” kits and parts. At stake was whether two commercial general liability (CGL) insurers owed a duty to defend and indemnify a Texas firearms retailer, Primary Arms, in three New York actions alleging that its intentional marketing and sale of ghost gun components created a public nuisance and fueled gun violence.

The court, in an opinion by Judge Chin (joined by Judges Nardini and Kahn), affirms the Southern District of New York’s judgment that the insurers—Granite State Insurance Company and National Union Fire Insurance Company of Pittsburgh, Pa.—owe no duty to defend or indemnify. Applying Texas’s “eight-corners rule” and its well-developed law on what constitutes an “accident,” the court concludes that the underlying complaints do not allege an “occurrence” within the meaning of the policies because the harms were the natural and expected results of Primary Arms’ intentional business strategy.

The opinion is significant for three main reasons:

It gives a detailed, fact-sensitive application of Texas’s definition of “accident” in the context of government suits against firearm (and ghost gun) sellers.
It explicitly rejects an insured’s attempt to carve out a special, more generous “accident” standard for product-based (“products-completed operations”) coverage.
It reinforces that artful use of negligence labels and legal theories cannot substitute for factual allegations of accidental harm in triggering the duty to defend.

II. Overview of the Case

A. Parties

Plaintiffs-Appellees (Insurers): Granite State Insurance Company and National Union Fire Insurance Company of Pittsburgh, Pa., issuers of liability policies to Primary Arms.
Defendant-Appellant (Insured): Primary Arms, LLC, a Texas-based firearms and firearms components retailer that sells across the United States, including into New York.
Underlying plaintiffs: The State of New York, the City of Buffalo, and the City of Rochester (collectively, the “Underlying Suits” plaintiffs).

B. Factual Background of the Underlying Suits

The State of New York and the two cities filed separate but parallel actions in federal court against Primary Arms and other gun companies. Their core factual allegations, which the Second Circuit treats as the operative allegations under Texas’s eight-corners rule, include:

Primary Arms sold and shipped “unfinished” frames and receivers, jigs, and related parts that can readily be converted into functioning firearms—“ghost guns”—without serial numbers or background checks.
It deliberately designed and marketed these products to fall just short of the federal statutory definition of a “firearm” (e.g., by leaving key holes undrilled or plastic unfiled), thereby evading serialization and background check requirements.
Its marketing emphasized the products’ untraceability and ease of conversion to functional weapons, and it provided instructions, jigs, and technical support to complete the process.
Primary Arms intentionally failed to implement meaningful sales controls, selling to individuals who could not legally obtain firearms (e.g., those with criminal histories, subject to restraining orders, mental health disqualifications, or lacking proper licensing and training).
The result, according to the complaints, was an influx of ghost guns into New York, which:
- Increased the number of firearms used in crimes;
- Undermined protections intended by firearms regulations, including measures addressing intimate-partner violence;
- Increased murders and suicides; and
- Created a new illicit primary and secondary market for untraceable guns.
New York State and the cities alleged resulting economic harms: increased law enforcement costs, expanded community services, added public hospital burdens, and related expenditures.

C. Claims in the Underlying Suits

The State of New York asserted:

Repeated or persistent illegality and fraud (N.Y. Exec. Law § 63(12));
Statutory public nuisance (N.Y. Gen. Bus. Law § 898-c, the New York gun industry public nuisance statute);
Deceptive acts and practices (N.Y. Gen. Bus. Law § 349);
False advertising (N.Y. Gen. Bus. Law § 350);
Negligence per se; and
Negligent entrustment.

Buffalo and Rochester asserted:

Statutory public nuisance under N.Y. Gen. Bus. Law §§ 898-a to 898-e;
Common-law public nuisance; and
Deceptive business practices (N.Y. Gen. Bus. Law §§ 349–350).

D. The Policies

The Granite State and National Union policies are standard occurrence-based CGL policies that:

Cover certain sums the insured must pay as damages because of “bodily injury” or “property damage” caused by an “occurrence.”
Define an “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”
Include “products-completed operations hazard” coverage, but still tie coverage to an “occurrence.”

The central interpretive dispute therefore turned on whether the factual allegations in the Underlying Suits describe an “accident” in the sense used by Texas law and incorporated into the policies via the term “occurrence.”

E. Procedural Posture

Primary Arms demanded a defense and indemnity from Granite State (it did not initially tender to National Union, but National Union also denied coverage).
The insurers filed a federal declaratory judgment action in the Southern District of New York, seeking a ruling of no duty to defend or indemnify.
Both sides moved for partial summary judgment on the duty to defend.
The district court (Judge Schofield) ruled for the insurers, holding that the complaints failed to allege an “accident” and thus failed to allege an “occurrence.”
The parties then stipulated that the ruling on the duty to defend disposed of the indemnity issues as well, and final judgment was entered for the insurers.
Primary Arms appealed; the Second Circuit affirms in full.

III. Summary of the Opinion

The Second Circuit, applying Texas law (by implied consent and via New York’s choice-of-law rules given Texas as the principal location of the insured risk), resolves the case under the duty to defend framework:

Eight-corners rule: The court compares the “four corners” of the underlying complaints to the “four corners” of the policies, disregarding the truth or falsity of the allegations.
Definition of accident: Relying on Texas Supreme Court precedent and the Fifth Circuit’s articulation in Discover Property & Casualty Insurance Co. v. Blue Bell Creameries USA, Inc., the court applies a two-step test:
1. Did the insured commit an intentional (i.e., voluntary) act?
2. Did the alleged injuries ordinarily follow from, or could they be reasonably anticipated as a result of, that intentional act?
If both are true, there is no “accident,” and thus no “occurrence.”
Application to the ghost gun allegations: The court holds that:
- Primary Arms’ conduct (marketing, selling, and shipping ghost gun kits, deliberately bypassing legal controls, and targeting prohibited or high-risk buyers) is alleged to be intentional, not accidental.
- The resulting economic harms to New York and the cities—arising from an increase in gun violence and erosion of firearm regulatory protections—are natural, expected, and reasonably anticipated consequences of that business model, not “fortuitous” events.
Negligence labels do not create coverage: Conclusory references to “negligent” conduct and the presence of negligence per se and negligent entrustment counts do not transform the underlying facts into an accident.
No special rule for products-completed operations coverage: The court rejects Primary Arms’ invitation to adopt a looser “accident” standard for product-based coverage, reasoning that Texas law applies the same occurrence requirement regardless.
Allegations of illegality are factual, not purely legal: The complaints’ characterization of Primary Arms’ conduct as illegal can be considered insofar as it reflects concrete factual assertions about intentional law-evasive behavior.
Duty to indemnify: Because Primary Arms conceded below that there can be no duty to indemnify absent a duty to defend, and no extraordinary circumstances justify deviating from party presentation, the court also affirms that the insurers have no duty to indemnify.

Because the panel resolves the case on the absence of an “accident,” it expressly declines to reach the separate question whether the suits seek “damages because of ‘bodily injury’” within the policies’ meaning.

IV. Detailed Analysis

A. Precedents and Doctrinal Background

1. Texas’s Eight-Corners Rule

Under Texas law, an insurer’s duty to defend is determined strictly by comparing:

the allegations in the underlying petition (complaint), and
the terms of the policy.

Key authorities include:

Monroe Guaranty Insurance Co. v. BITCO General Insurance Co., 640 S.W.3d 195 (Tex. 2022): Reaffirms that courts must assess the duty to defend “without regard to the truth or falsity” of the allegations and without reference to extrinsic facts, subject to a narrow collusion exception.
GuideOne Elite Insurance Co. v. Fielder Road Baptist Church, 197 S.W.3d 305 (Tex. 2006); Don’s Building Supply, Inc. v. OneBeacon Insurance Co., 267 S.W.3d 20 (Tex. 2007): Clarify that if the factual allegations potentially support a covered claim, the insurer must defend.
Fifth Circuit applications:
- Gore Design Completions, Ltd. v. Hartford Fire Insurance Co., 538 F.3d 365 (5th Cir. 2008);
- Gonzalez v. Mid-Continent Casualty Co., 969 F.3d 554 (5th Cir. 2020);
- State Farm Lloyds v. Richards, 966 F.3d 389 (5th Cir. 2020).
These decisions emphasize that it is the facts alleged, not the labels, causes of action, or conclusory characterizations, that control.

The Second Circuit faithfully adopts this framework: it liberally construes the underlying allegations in favor of coverage, but it will not “read facts into the pleadings” or imagine hypothetical scenarios that might create coverage.

2. Meaning of “Accident” and “Occurrence” Under Texas Law

Because the policies define “occurrence” as “an accident,” but do not define “accident,” Texas courts supply the controlling meaning. The leading Texas Supreme Court and Fifth Circuit decisions include:

Lamar Homes, Inc. v. Mid-Continent Casualty Co., 242 S.W.3d 1 (Tex. 2007): Defines “accident” as a “fortuitous, unexpected, and unintended event” consistent with ordinary usage, and holds that an event can be accidental even if the underlying act was intentional, so long as the damage was not the natural and expected result of that act.
Trinity Universal Insurance Co. v. Cowan, 945 S.W.2d 819 (Tex. 1997): Distinguishes between doing exactly what one intended to do and accidentally causing an unintended result; if the insured “did exactly what he intended to do” and the injury naturally followed, there is no accident.
Harken Exploration Co. v. Sphere Drake Insurance PLC, 261 F.3d 466 (5th Cir. 2001): Explains that an intentional act can cause an accidental injury where the injury would not have occurred had the act been performed non-negligently; the focus is on whether the effect was unexpected or unintended.
National Union Fire Insurance Co. of Pittsburgh, Pa. v. Puget Plastics Corp., 532 F.3d 398 (5th Cir. 2008): Synthesizes Texas law: no “occurrence” exists if (1) the damage was “highly probable” because it was the natural and expected result of the insured’s actions; (2) the insured intended the injury; or (3) the act constitutes an intentional tort (in which case intent to injure is presumed).

The Second Circuit leans heavily on the Fifth Circuit’s recent formulation in Discover Property & Casualty Insurance Co. v. Blue Bell Creameries USA, Inc., 73 F.4th 322 (5th Cir. 2023):

An act “is not an accident when [1] [an individual] commits an intentional act that [2] results in injuries that ordinarily follow from or could be reasonably anticipated from the intentional act.”

Importantly:

The “intentional act” prong focuses on the voluntariness of the conduct, not on whether the insured desired the injurious outcome.
The second prong adopts an objective foreseeability/natural consequence standard; what the insured subjectively hoped or expected is irrelevant.

3. The Maupin and Orkin Lines of Cases

Texas coverage law sometimes refers to:

Maupin line: Intentional acts with natural, predictable damage (no occurrence). See Argonaut Southwest Insurance Co. v. Maupin, 500 S.W.2d 633 (Tex. 1973).
Orkin line: Negligent acts causing unintended, unexpected damage (potential occurrence). See Massachusetts Bonding & Insurance Co. v. Orkin Exterminating Co., 416 S.W.2d 396 (Tex. 1967).

The Fifth Circuit in Federated Mutual Insurance Co. v. Grapevine Excavation, Inc., 197 F.3d 720 (5th Cir. 1999), described the Maupin cases as involving “damage that is the natural result of voluntary and intentional acts” and the Orkin cases as involving “negligent acts of the insured causing damage which is undesigned and unexpected.”

Primary Arms sought to fit its situation within the Orkin/negligence category. The Second Circuit, however, finds that the factual allegations firmly place it within Maupin territory—voluntary, deliberately chosen conduct with predictable consequences.

4. Products-Completed Operations and Nokia

Primary Arms argued for a different, more coverage-friendly standard in the context of products-completed operations coverage, citing:

Zurich American Insurance Co. v. Nokia, Inc., 268 S.W.3d 487 (Tex. 2008): A case involving alleged bodily injuries from cellphone radiation, where the court held that the insurers owed a duty to defend.

In Nokia, the Texas Supreme Court focused primarily on whether the alleged cellular radiation injuries qualified as “bodily injury.” It briefly noted that the pleadings alleged both intentional and negligent conduct, and on that basis seemed to accept that an “occurrence” was alleged. Crucially, it did not announce a separate “product-specific” notion of “accident” or discuss products-completed operations in particular.

The Second Circuit highlights that the more recent and direct guidance on the accident issue in a product context is Blue Bell, itself a product-based case about Listeria contamination in ice cream. Blue Bell applied the standard accident test without carving out a products-specific exception.

5. Duty to Defend vs. Duty to Indemnify

The court also relies on Texas authority distinguishing the two duties:

VRV Development, L.P. v. Mid-Continent Casualty Co., 630 F.3d 451 (5th Cir. 2011); Ooida Risk Retention Group, Inc. v. Williams, 579 F.3d 469 (5th Cir. 2009): The duty to defend is triggered by allegations; the duty to indemnify is ordinarily determined based on actual facts proven in the underlying suit or settlement.

Here, however, Primary Arms effectively collapsed the two duties by stipulating that a ruling on no duty to defend would also resolve the indemnity question.

The court’s adherence to the “party presentation” principle is grounded in:

United States v. Sineneng-Smith, 590 U.S. 371 (2020): Federal courts are to rely on the parties’ framing of the issues absent extraordinary circumstances justifying independent re-framing by the court.

B. The Court’s Legal Reasoning

1. Choice of Law and Methodology

The parties agreed that Texas law governs interpretation of the policies. The court independently notes that this choice is appropriate under New York choice-of-law principles: for multi-state liability policies, New York generally looks to the principal location of the insured risk, which, when the risk is spread across multiple states, is deemed the insured’s domicile—in this case, Texas, where Primary Arms is headquartered.

Having settled on Texas law, the court applies:

The eight-corners rule to determine the duty to defend; and
Texas’s definition of “accident” to interpret “occurrence.”

2. Step One: Intentional Acts by Primary Arms

The court’s first task under the Blue Bell two-part test is to decide whether the underlying complaints allege that Primary Arms engaged in intentional (voluntary) conduct.

The court points to multiple factual allegations that:

Primary Arms “concocted a business model” to exploit demand for unfinished frames and receivers for its own financial benefit.
It purposefully designed its products to “skirt the definition of a ‘firearm’” by leaving them slightly incomplete.
It then intentionally marketed those products as ways around background checks and public safety laws, with particular appeal to those who could not buy guns legally and who wanted untraceable weapons.
It “intended to sell and knowingly sold” these components to individuals who are “likely to create an unreasonable risk of harm,” including those with criminal convictions, subject to restraining orders, or otherwise disqualified from gun ownership.
It provided the tools and instructions needed to convert the unfinished parts into working “ghost guns.”
It deliberately “fail[ed] to exercise any controls on its sales” and “ma[de] no effort to determine” whether buyers were engaged in trafficking or were legally ineligible to own guns.

Under Texas law, this satisfies the “intentional act” prong because:

The acts were voluntary and deliberate business decisions;
The question whether Primary Arms subjectively desired the resulting injuries (e.g., increased crimes or municipal expenditures) is legally irrelevant at this stage.

Thus, the first prong of the Blue Bell test is clearly met: the complaints allege purposeful conduct, not inadvertent missteps.

3. Step Two: Natural and Expected Consequences, Not a Fortuitous Accident

The second prong asks whether the alleged harms “ordinarily follow from” or are reasonably anticipated consequences of that intentionally chosen conduct.

Here, the chain of causation alleged in the complaints is straightforward:

Primary Arms marketed and sold ghost gun kits to individuals who wanted to evade law enforcement or were legally barred from possessing firearms.
Those products were easy to convert into fully functioning, untraceable firearms.
An influx of such weapons into New York predictably:
- Increased the number of guns used in crimes;
- Undermined background-check and serial-number regimes designed to curb precisely such misuse;
- Increased murders and suicides; and
- Spawned illicit gun markets.
In response, New York State and the municipalities incurred substantial additional costs for law enforcement, emergency response, public hospitals, and community services.

The court’s reasoning is that these harms are, in the language of Lamar Homes and Blue Bell, “the natural and expected result” of Primary Arms’ intentional business model. Once ghost guns are designed and marketed specifically to defeat serial-number tracing and background checks, and intentionally sold without meaningful controls to people likely to misuse them, it is not “fortuitous” or “unexpected” that:

Gun violence will increase, and
Governments will bear the attendant economic burdens.

Thus:

Because Primary Arms “[1] commit[ted] . . . intentional act[s] that [2] result[ed] in injuries that ordinarily follow from or could be reasonably anticipated from the intentional act[s],” the asserted injuries do not arise from an “accident.”

In other words, this is a classic Maupin-type scenario under Texas law: damage is alleged to have flowed naturally from the insured’s voluntary decisions.

4. Negligence Labels vs. Factual Allegations

Primary Arms attempted to recharacterize the underlying conduct as “negligent” rather than intentional, pointing to:

A complaint sentence stating that the manufacturers “are knowingly, negligently, and/or recklessly causing harm” to New York’s public health and safety; and
The State’s causes of action for negligence per se and negligent entrustment.

The court rejects this argument by emphasizing the distinction, long recognized in Texas and Fifth Circuit law, between:

Conclusory legal labels and theories (e.g., calling conduct “negligent”), and
Underlying factual allegations (what the insured actually did, how, and why).

The court cites Gore Design, Coleman, and XL Specialty for the proposition that “artful pleading” cannot create coverage and that unsupported conclusions do not trigger a duty to defend. American States Insurance Co. v. Bailey, 133 F.3d 363 (5th Cir. 1998), is particularly instructive: even if a complaint “suggest[s]” negligence or recklessness, coverage is governed by the “basic facts underlying the claims.”

Applying that principle, the court notes:

The negligence per se and negligent entrustment counts rest on factual allegations that Primary Arms “intended to sell and knowingly sold” to buyers likely to misuse the products and that it emphasized untraceability in its marketing.
These allegations show that Primary Arms “did exactly what [it] intended to do,” to use the Cowan formulation.
Even if one could characterize some aspects as negligent, Lamar Homes makes clear that “whether the insured was negligent or not” is immaterial if the damage was the natural and expected result of the insured’s acts.

Thus, the negligence labels do not change the core coverage analysis: the complaints do not describe an “accidental” occurrence; they describe an intentional business plan with predictable fallout.

5. Rejection of a Special “Products-Completed Operations” Accident Test

Primary Arms advanced a more ambitious doctrinal argument: that in the context of products-completed operations coverage, courts should reinterpret “accident” more broadly, focusing on whether the insured “necessarily expected or intended the alleged injuries,” rather than on whether the injuries were objectively natural and expected.

The court decisively rejects this invitation for several reasons:

Textual point: The policies themselves define “occurrence” simply as “an accident,” with no carve-out or alternate definition for products-completed operations hazards.
Doctrinal point: Texas Supreme Court cases (including Lamar Homes and Nokia) and Fifth Circuit cases (Blue Bell, Puget Plastics) do not differentiate between product and non-product contexts when defining “occurrence.”
Blue Bell as a product case: Blue Bell itself involved a product—ice cream—causing Listeria outbreaks and derivative financial harms. The court in Blue Bell applied the standard accident test, not a more lenient, product-specific rule.
Nokia doesn’t create a separate test: While Nokia recognized that the underlying complaints alleged an occurrence, the decision treated that point briefly, mentioned both intentional and negligent allegations, and did not distinguish products-completed operations coverage or alter the definition of “accident.”

In effect, the Second Circuit treats Nokia as a case where, under the eight-corners rule, the presence of both intentional and negligence-based factual allegations permitted a finding that an “occurrence” was alleged. It does not view Nokia as creating new coverage doctrine carving out products from the usual accident/occurrence standard.

6. Use of Allegations of Illegality

Primary Arms next objected to the district court’s reliance on allegations that it violated gun control laws, arguing that these were legal theories, not factual assertions relevant under the eight-corners rule.

The Second Circuit draws an important distinction:

Whether a particular statute was in fact violated is a legal conclusion not relevant to whether the duty to defend is triggered.
However, allegations that the insured deliberately structured its conduct to evade the law—e.g., intentionally designing products just short of the statutory definition of “firearm,” intentionally omitting background checks and serialization—are factual allegations about what the insured did and why.

The court underscores that the district court properly relied on facts showing that Primary Arms:

“flout[ed] gun control laws and regulations that have been repeatedly demonstrated to lower gun violence,” and
“enable[d] the anonymous acquisition of uncontrolled firearms with the predictable outcome of increasing gun violence.”

These facts directly inform the second prong of the accident test: whether the resulting harms were natural and expected outcomes of the insured’s chosen conduct.

The court additionally dismisses as irrelevant, for duty-to-defend purposes, Primary Arms’ suggestion that some claims may ultimately fail if its products are not legally considered “firearms” under federal law. Under Monroe Guaranty, the duty to defend analysis:

Ignores the eventual truth or falsity of the allegations; and
Does not depend on the ultimate success of the plaintiff’s legal theories.

7. Duty to Indemnify: Bound by the Parties’ Stipulation

Ordinarily, Texas law treats the duty to indemnify as a separate question, often not ripe until the underlying litigation is resolved on the merits. Here, however, the parties stipulated that:

If the court found no duty to defend, there would likewise be no duty to indemnify.

Under Sineneng-Smith’s party-presentation rule, the Second Circuit adheres to that framing. Finding no extraordinary circumstances that would justify independently revisiting indemnity, the court simply holds that, for the same reasons there is no duty to defend, there is no duty to indemnify.

V. Impact and Implications

A. Insurance Coverage for Firearms and Ghost Gun Litigation

This decision has immediate implications for insurers and insureds in the firearms and ghost gun supply chains:

Government public nuisance suits: Where governmental plaintiffs frame their claims as arising from a defendant’s deliberate business model to evade regulation and target prohibited or high-risk buyers, the allegations will likely be characterized as intentional and as having expected consequences. Under Texas law, such allegations typically will not describe an “accident” or “occurrence,” undermining CGL coverage.
Ghost gun vendors and gun industry participants: Companies that market untraceable or lightly regulated products, particularly with messaging that emphasizes evasion of legal controls, may find it difficult to obtain defense under standard CGL policies governed by Texas (or similar) law when sued for downstream harms from gun violence.
Need for bespoke coverage: This reinforces the reality that CGL policies, whose core trigger is accidental occurrences causing bodily injury or property damage, are ill-suited to cover intentional marketing schemes with foreseeable harmful consequences. Firms in these sectors may need specialized coverage (e.g., errors & omissions, certain forms of D&O, or explicitly negotiated endorsements) if they seek insurance for such litigation.

B. Pleading Strategies in Public Nuisance and Gun Industry Cases

The case sits at the intersection of insurance law and emergent public nuisance litigation against the gun industry, especially post-enactment of statutes like New York’s N.Y. Gen. Bus. Law § 898 (the “gun industry public nuisance” statute).

From a plaintiff’s perspective:

To maintain insurer participation (and thus settlement leverage), plaintiffs may wish to plead factual scenarios that truly sound in negligence—such as failure to implement reasonable screening measures that the defendants attempted to use but did so carelessly—rather than centering their theories exclusively on intentional schemes to flood criminal markets.
However, mere use of terms like “negligent” or “reckless” is not sufficient under Texas law; plaintiffs must allege specific, nonconclusory facts that, if true, describe genuinely accidental or unexpected harm.

For defendants:

This case offers a roadmap for arguing that complaints alleging deliberate, profit-driven strategies to circumvent regulatory schemes and target unlawful markets fall squarely outside the scope of “occurrence” coverage.
It also illustrates that when defendants concede below that a no-duty-to-defend finding will resolve indemnity, they may foreclose any later arguments that actual trial facts (which might differ from the pleadings) could trigger a duty to indemnify.

C. Clarifying Texas Law on “Accident” in Multi-Step, Indirect Harm Cases

Granite State v. Primary Arms extends and applies Texas “accident” jurisprudence in a context where:

The insured’s intentional conduct (marketing/sales) is several steps removed from the alleged ultimate harms (municipal expenditures reacting to crimes); and
The injuries are economic and governmental, not direct bodily injuries claimed by individual victims.

Yet the court applies exactly the same test: whether, objectively, those harms were natural and expected consequences of the insured’s voluntary acts. The opinion reinforces that:

The accidental/occurrence analysis does not narrow simply because the chain of causation is longer or the injuries are indirect and economic.
The focus remains on the foreseeability and naturalness of the harm in light of the insured’s deliberate business choices.

D. No Special Rule for Product-Based Coverage

The court’s explicit rejection of a distinct standard for products-completed operations coverage has broader significance:

Insureds cannot argue that because products coverage is “designed” to address liability from intentionally sold products, the definition of “accident” should be relaxed or assessed under a more subjective standard.
Texas law treats the “occurrence” requirement consistently across coverage parts; the presence of a products-completed operations hazard endorsement does not alter the fundamental requirement of an accident.
Insurers will be able to rely on this reasoning to resist attempts to convert what are essentially intentional marketing or distribution strategies into insurable “occurrences” solely because the context involves products.

E. Reinforcing the Limits of Artful Pleading and the Power of Factual Allegations

Finally, the opinion underscores a doctrinal theme that recurs in Texas coverage law: the primacy of concrete factual allegations over legal characterization.

Plaintiffs cannot create coverage simply by appending “negligently” to descriptions of plainly purposeful conduct.
Courts will read the complaints as a whole, focusing on the story they tell about what the insured was doing, what it knew, and what it aimed to accomplish.
Where that story is one of a deliberate scheme to exploit a known risk (here, the demand by prohibited and high-risk users for untraceable guns) with exactly the harms one would expect (more gun violence and government costs), there is no “accident” in the insurance sense.

VI. Simplifying Key Legal Concepts

1. Eight-Corners Rule

Under Texas’s eight-corners rule, the court compares:

The four corners of the underlying complaint (what the plaintiff alleges), and
The four corners of the insurance policy (what the contract covers).

The court:

Does not consider outside evidence or how the facts may actually turn out;
Assumes the allegations are true for purposes of deciding the duty to defend; and
Resolves reasonable doubts in favor of the insured, but will not invent facts not alleged.

2. Duty to Defend vs. Duty to Indemnify

Duty to defend: The insurer’s obligation to pay for the policyholder’s defense (lawyers, litigation costs) in a lawsuit that alleges claims potentially within coverage, even if those claims are groundless or false.
Duty to indemnify: The insurer’s obligation to pay judgments or settlements for covered claims that are actually proven or resolved, typically evaluated at or after the conclusion of the underlying case based on the actual facts.

Often:

The duty to defend is broader than the duty to indemnify;
If there is no duty to defend under the policy and governing law, there will typically be no duty to indemnify, unless the parties or facts create an exception.

3. “Occurrence” and “Accident”

Occurrence: In many liability policies, an “occurrence” is defined as an “accident,” sometimes including repeated or continuous exposure to substantially the same conditions.
Accident (under Texas law): A “fortuitous, unexpected, and unintended event.”

Key points:

An event can be an “accident” even if the insured acted intentionally, so long as the damage was unexpected and not the natural result of the act (e.g., someone intentionally drives a car but unintentionally loses control due to negligence, causing a crash).
But if the insured’s voluntary conduct naturally and foreseeably causes the alleged injuries, those injuries are not “accidental,” even if the insured did not want anyone to be hurt.

4. Intentional Act vs. Intent to Injure

Texas law separates:

Intentional act: The insured meant to do the act (e.g., selling ghost gun kits, marketing to certain customers); and
Intent to injure: The insured desired or purposefully sought to cause the resulting harm (e.g., specific killings, specific municipal expenditures).

For the first prong of the accident test, only intentional acts (voluntary conduct) are needed; whether the insured subjectively intended the harm is not controlling. For the second prong, the court looks to whether the harms were objectively natural and expected consequences, not whether the insured wanted them.

5. Products-Completed Operations Hazard

In a CGL policy, “products-completed operations hazard” generally refers to liability arising from:

The insured’s product after it has left the insured’s premises and is no longer under the insured’s control (e.g., a defective product injuring a consumer); or
The insured’s “completed work” (e.g., a construction defect that causes damage after completion).

This hazard is still subject to the same core coverage requirements, including the need for an “occurrence” (an accident causing covered “bodily injury” or “property damage” during the policy period).

6. Negligence Per Se and Negligent Entrustment

Negligence per se: A doctrine where violating a statute designed to protect a certain class of people from a certain type of harm can establish the breach-of-duty element of negligence, if the plaintiff is in that class and suffered that type of harm.
Negligent entrustment: A tort where a person or business is liable for entrusting a dangerous instrument (like a firearm) to someone they know or should know is likely to use it in an unsafe way (e.g., because of intoxication, youth, inexperience, or dangerous propensities).

In the coverage context, these legal labels matter less than the facts alleged: if the supposed “negligent entrustment” is actually a deliberate decision to supply weapons to people the seller knows are dangerous, and the harm is expected, coverage can still be denied for lack of an accident.

7. Party Presentation Principle

Under the party presentation principle, courts typically decide only the issues that the parties have raised and argued. Sineneng-Smith warns against a court re-framing a case on its own initiative absent exceptional circumstances.

In this case, because the parties agreed that a ruling on the duty to defend would resolve the duty to indemnify, the court did not independently explore whether different, trial-proven facts might trigger indemnity.

VII. Conclusion

Granite State Insurance Co. v. Primary Arms, LLC is a careful application of Texas insurance law to a novel factual setting involving ghost guns and public nuisance–style suits by government entities. It reinforces several core principles:

The meaning of “accident” in Texas remains anchored in objective foreseeability and natural consequences; injuries that ordinarily follow from voluntary business decisions, even if those decisions are lucrative, are not “fortuitous.”
Artful pleading and the recitation of negligence labels cannot override the actual facts alleged. Courts will look through the labels to see whether what is described is truly accidental conduct or a deliberate strategy.
Products-completed operations coverage does not introduce a different occurrence standard. The same accident/occurrence framework applies to product-caused harms as to any other.
Allegations that an insured purposely evaded legal regimes and supplied inherently dangerous products to those likely to misuse them will typically be treated as describing intentional acts with expected consequences, falling outside standard CGL occurrence coverage.

In the broader legal landscape, the decision will likely be cited in future coverage disputes involving firearm and ghost gun sellers, but its reasoning extends beyond that industry. Any business that deliberately builds a profitable model around regulatory evasion or risky markets—and then faces government or third-party suits over the predictable harms that ensue—should expect insurers to invoke Granite State v. Primary Arms to argue that such harms do not arise from an “accident” and therefore are not covered “occurrences” under Texas law.