New York lawmakers approved new measures prohibiting property insurers from discriminating against low-income tenants, roughly nine months after a Gothamist investigation revealed the extent of what critics call “insurance redlining” in the five boroughs.
The new state budget passed over the weekend includes a measure specifically banning insurance companies that provide property and liability insurance in New York from denying coverage to a landlord because they rent to tenants with government-backed rental assistance vouchers, like the federal Section 8 program, or because rents in their apartments are capped for low-income tenants. The new law also makes it illegal for insurers to ask about tenant source of income or total earnings.
The provisions contained in the state’s $237 billion spending plan come after Gothamist found that dozens of insurance companies doing business in New York were asking building owners if they rent to tenants with housing subsidies and declined to cover their properties.
Housing advocates say those denials force landlords to find mandatory insurance coverage in unregulated markets, often at higher prices. Property owners either pass those additional costs onto tenants through higher rents or eat the added expenses in the case of rent-stabilized apartments, where prices are capped.
A report issued last month by the policy group New York Housing Conference found average insurance premiums have more than doubled for affordable housing owners in just the past four years, from about $869 per unit in 2019 to about $1,770 per unit in 2023.
New York Housing Conference Executive Director Rachel Fee praised the state for banning insurers from making decisions based on tenant characteristics and called on regulators to create penalties for companies that violate the new rules.
“We feel strongly that this should be an illegal practice,” Fee said. “Landlords aren’t allowed to discriminate against a renter’s source of income and the insurance companies shouldn’t be allowed to ask those questions if the tenants are using Section 8 or are low-income.”
The report by NYHC and another 2022 study by the organization University Neighborhood Housing Program found no correlation between rising premiums and lawsuits by tenants who use housing vouchers — a factor cited as a potential reason for the spiking insurance rates.
Insurers and trade groups previously questioned by Gothamist have not pointed to specific reasons for asking whether tenants use housing vouchers to pay for their apartments.
Last July, Gothamist examined 70 property and liability application forms from companies operating in New York City and found all but five asked whether property owners rented to tenants with Section 8 or other housing subsidies. Several explicitly refused to cover buildings with subsidized tenants, or set a threshold for how many households with housing vouchers they would agree to cover.
The reporting prompted lawmakers to introduce new legislation to prevent discrimination last year. Gov. Kathy Hochul included the proposal in her January executive budget.
“A fairer insurance market will help reduce costs for tenants and property owners and allow even more affordable housing to be built and preserved,” Hochul’s spokesperson Justin Henry said in a statement at the time.
The state’s Department of Financial Services, which regulates the insurance industry, has vowed to tackle insurance discrimination after fielding complaints from property owners throughout the city.
In a statement on Monday, DFS Superintendent Adrienne Harris said the agency is “proud to help advance and implement bold initiatives,” including “prohibiting insurance discrimination against Section 8 voucher recipients and affordable housing providers.”
“DFS will continue working every day on these and other initiatives to build a more equitable, transparent and resilient financial system that serves all New Yorkers,” Harris added.