Property insurers can’t deny coverage because of tenants’ rent subsidies

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Property insurers can't deny coverage because of tenants' rent subsidies insurance

Question: I own a small residential rental property and recently renewed my liability insurance. As part of this process, the broker asked for information about my tenants, including whether I accept tenants who have Section 8 housing choice vouchers. I do. A few weeks later, I received a letter from the insurance company declining to renew my policy because they don’t insure owners who rent to voucher holders. Is this legal?

Answer: Insurance companies may deny coverage for a variety of reasons, such as when a property is not well-maintained or there is a history of lawsuits against the owner. However, insurance companies may not deny coverage for reasons that violate federal or state housing discrimination laws. For example, it’s illegal for an insurance company to deny coverage because the property owner rents to a protected group of people, such as families with children or persons with disabilities.

Though it’s not obvious, refusing to insure a property owner who rents to Section 8 tenants violates fair housing laws. A large portion of voucher holders, who receive monthly rent subsidies, are members of protected classes. For example, many voucher holders are disabled or elderly, have children or belong to racial and ethnic groups that have been traditionally marginalized.

For this reason, refusing to insure a property owner who accepts vouchers is effectively refusing to insure a property owner who rents to protected groups of people. Although this may not be intentional discrimination, the insurance company’s action results in a discriminatory effect that still violates the law.

In addition, a recent California law makes it expressly unlawful for insurance companies to even ask property owners whether they rent to tenants with rental subsidies, as well as unlawful to deny, suspend or otherwise refuse insurance coverage because the property owner rents to tenants with rental subsidies, including Section 8.

Current is fair housing director for Project Sentinel, a Bay Area nonprofit. For more information, contact Project Sentinel at 1-888-324-7468, info@housing.org, visit www.housing.org or contact your attorney or local housing agency.

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