Gov. Kathy Hochul is proposing new rules to prohibit insurers from discriminating against low-income tenants, following a Gothamist investigation into the pervasive practice contributing to surging housing costs.
Hochul’s executive budget, which was released this week, includes a measure prohibiting insurance companies from refusing to cover buildings based on the tenants’ source of income. The plan would also prohibit insurers from asking property owners how much tenants earn and whether their buildings contain income-restricted apartments where low- and middle-income tenants pay affordable rents.
“A fairer insurance market will help reduce costs for tenants and property owners and allow even more affordable housing to be built and preserved,” said Hochul’s spokesperson, Justin Henry, in a statement.
The proposal, contained in her $233 billion budget plan, comes seven months after Gothamist found that dozens of insurance companies doing business in New York ask building owners if they rent to tenants with housing subsidies, like the federal Section 8 program, and refuse to cover their buildings.
The rejections force owners to find insurance coverage — which is mandatory — through unregulated markets, usually at far higher costs. Landlords often pass on the cost increases to tenants through higher rents. But in the case of rent-stabilized apartments, landlords may cover the higher insurance premium by forgoing routine maintenance or other building investments.
A 2022 report by New York’s Department of Financial Services and Division of Homes and Community Renewal found that insurance premiums rose by an average of 43% for affordable housing owners between 2019 and 2021. The report attributed the spike to a range of factors, including climate catastrophes and regulations unique to New York, as well as routine rejections based on tenant characteristics.
Property owners, industry experts and state lawmakers have referred to the practice as insurance “
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