New York warns insurers to stop discriminating against tenants in housing assistance

New York State’s insurance regulator is warning companies that they cannot deny coverage to landlords because they rent to low-income tenants or residents receiving government housing assistance.

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

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

State lawmakers included the new anti-discrimination law in the latest state budget passed this spring, although they did not provide 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 homeowners and renters and puts countless affordable housing units at risk.”

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

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

Dozens of landlords told Gothamist they are having trouble finding insurers willing to cover their buildings if they accept tenants with rental assistance vouchers. They also said that sometimes they were forced to turn to a separate insurance market with higher rates and less state oversight.

Small owners of aging buildings filled with low-income tenants and large companies operating brand-new affordable housing sites subject to routine monitoring have all reported this common problem.

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

A 2022 report from New York’s Department of Financial Services and Affordable Housing Agency also found that this practice appeared to be common among insurers and was contributing to skyrocketing insurance rates.

In its letter to insurance companies, the department said some insurers disclosed that they used tenant income and housing voucher information 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” in combating housing discrimination.

Insurers’ attention to tenant characteristics in their decision-making has coincided with the emergence of climate change-related risks that are driving higher property insurance rates, including floods and wildfires.

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