New York warns insurers to stop discriminating against renters with housing aid

New York state’s insurance regulator is warning companies that they can’t deny coverage to property owners because they rent to low-income tenants or residents with government housing subsidies.

The state’s Department of Financial Services began sending letters today to property insurers, detailing a new state law that bans them from asking about tenants’ source or level of income and then refusing to cover apartment buildings based on those tenant characteristics.

The directive comes nearly a year after Gothamist revealed the extent of a practice that critics have called insurance “redlining” and said is a driver of rising housing costs for landlords and tenants alike.

State lawmakers included the new anti-discrimination law in the most recent state budget passed this spring, though they did not outline a specific penalty for violating the rules.

“With this new guidance, we are putting insurers on notice: New York will not tolerate bias against our affordable housing providers,” Gov. Kathy Hochul said in a statement. “Insurance discrimination drives up costs for property owners and renters and puts countless affordable homes at risk.”

A March report from the policy group New York Housing Conference found that average insurance premiums for affordable housing more than doubled since 2019 — jumping from about $869 per unit to about $1,770 per unit last year.

Landlords forced to pay more for insurance can pass the cost on to tenants or, in the case of rent-regulated housing, either divert it from their profits or from other expenses, such as routine maintenance.

Dozens of property owners have told Gothamist that they struggle to find insurers willing to cover their buildings if they accept tenants with rental assistance vouchers. They also said that, at times, they are forced to turn to a separate insurance marketplace with higher rates and less state oversight.

Both small landlords of aging buildings full of low-income tenants and large companies operating brand-new affordable housing sites that are subject to routine oversight all reported the common problem.

Last year, Gothamist reviewed 70 property and liability insurance applications from carriers authorized to provide coverage in New York and found that all but five asked property owners about tenant incomes or whether their tenants received government housing assistance.

A 2022 report from the Department of Financial Services and New York’s affordable housing agency also found that the practice appeared to be routine among insurers and contributed to skyrocketing insurance rates.

In its letter to insurance carriers, the department said some insurers disclosed that they use the information about tenant incomes and housing vouchers to make coverage decisions.

Adrienne Harris, the state's superintendent of financial services, said in a statement that the new law represents “a critical step” toward fight housing discrimination.

Insurers’ focus on tenant characteristics in their decision-making has coincided with the emergence of climate change-related risks that drive higher property insurance rates, including flooding and wildfires.

The Department of Financial Services said 682 property and liability insurance carriers were registered to provide coverage in New York in 2022.

Correction: A previous version of the story misstated when the Department of Financial Services began sending insurers letters. The agency started notifying insurers today.

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