Tenant Discrimination Insurance: Essential Protection for Landlords

You don’t discriminate against potential or current tenants. You’re careful to treat everyone equally. So why do you need Tenant Discrimination Insurance?

Because your potential liability goes far beyond your own words and actions. In some cases, what one of your tenants does to another could even be a liability for you. And acting in good faith won’t necessarily protect you.

Unfortunately, many landlords and property managers have learned this lesson the hard way.

Common Tenant Discrimination Insurance Scenarios Covered

In broad terms, discrimination is treating some members of a protected class differently from the way you treat other tenants. Examples of tenant discrimination may include:

• Refusing to rent to someone based on race, age, gender, religion, sexual preference or government-subsidized housing eligibility
• Steering someone to certain units, or adding other restrictions, based on those same factors
• Denying availability of certain units or types of units based on those same factors
• Creating unreasonable restrictions on the number of occupants of a unit
• Creating different terms, standards or services for different tenants
• Changing the process for certain tenants, such as requiring background checks for some, but not all
• Requesting sexual favors or creating a sexually hostile environment
• Terminating a lease based on a discriminatory reason

Why Landlords Need Tenant Discrimination Insurance

Without Tenant Discrimination Insurance, you may be liable for incidents where you weren’t anywhere near the premises. For example, you could be legally responsible if one of your employees does something discriminatory. In some cases, failing to stop another tenant from making discriminatory, harassing or threatening comments to a person in a protected category exposes you to liability as well.

That doesn’t mean that, if one of your tenants makes a racist or sexist comment to another tenant, a lawsuit is coming. But if, say, one of your employees was aware of the harassment but “didn’t want to bother you” about the day-to-day activities in your building, you may be liable.

Even an innocent mistake, such as making more timely repairs to some units and delaying work on others, can expose you to significant civil fees and penalties based on several federal, state and city fair housing laws. That can include attorneys’ fees if your tenant or potential tenant files a lawsuit.

Sure, when you’re conducting building-wide repairs or maintenance, it’s tempting to put the senior citizens in Apartment 4-F (“They’re always complaining about something.”) last on the list. But if they can show a pattern of always being last for maintenance or repairs, and they’re part of a protected class, you’ll have a hard time proving that isn’t discrimination.

What should you do? Establishing neutral policies that treat all tenants and prospective tenants equally, and training and monitoring all employees to follow those policies, is a start. But Tenant Discrimination Insurance provides additional protection against liability.

What’s Typically Included in the Policy?

In short, any claim brought against the property owner, manager or landlord that involves an accusation of discrimination against a tenant based on race, color, religion, age, gender, national origin, disability, pregnancy status, sexual orientation or government-subsidized housing eligibility, is covered by Tenant Discrimination Insurance. Often, such claims will include an accusation of harassing the tenant or wrongfully evicting them based on such discrimination.

A general liability policy does not include this protection. For this reason, we highly recommend purchasing a Tenant Discrimination Insurance policy to lower your potential exposure.

How to Choose the Right Tenant Discrimination Insurance Policy

There is no “one size fits all” Tenant Discrimination Insurance policy. To start, consider these two major factors.

First, look for a policy that offers comprehensive coverage tailored to your specific needs, including coverage limits, deductibles and the types of claims covered. Pay attention to any exclusions or limitations in the policy.

Then, check the insurer’s reputation and experience in handling discrimination claims. An insurer with a track record of efficiently handling claims and offering strong legal defense and support is more important than a slightly lower premium. If the insurer can also offer guidance on risk management practices to help reduce the likelihood of discrimination claims, that’s a plus.

An experienced, knowledgeable agent/broker can be an invaluable resource for comparing and choosing the best policy.

Safeguarding Your Property

Even with insurance, make sure you take the obvious steps to protect yourself and your property.

• Provide regular training for staff on fair housing laws and sensitivity training.
• Practice consistent screening processes for prospective tenants based on objective criteria, such as creditworthiness and rental history, to avoid any perception of bias.
• Document your processes and decisions.
• Create an environment where tenants feel comfortable voicing concerns, and provide clear channels for complaints.
• Take prompt, appropriate action when issues are raised.

Do everything you can to avoid potential legal issues. And then make sure you’re insured against them if something happens.

To learn more about adding Tenant Discrimination Insurance coverage of for a free review of your insurance coverage, please call us at 877-576-5200.