Housing Group Settles Insurance-Related Discrimination Lawsuit

The National Fair Housing Alliance (NFHA) recently announced the settlement of a lawsuit against Travelers Indemnity Company in which it alleged that Travelers engaged in discriminatory conduct in violation of the Fair Housing Act (FHA). In its lawsuit, which was filed in federal district court in Washington, D.C., NFHA alleged that Travelers had a policy of refusing to provide habitational insurance policies to Section 8 owners that rent to tenants who use Housing Choice Vouchers. NFHA claimed that this policy had a disparate impact on African Americans and women and served no legitimate business purpose. NFHA also alleged that Travelers’ policy violated the D.C. Human Rights Act’s prohibition of discrimination based on race, sex, or source of income.

Travelers filed a motion to dismiss in which it contended that NHFA had failed to plead sufficient facts to show a causal connection between its policy and any disparate impact under the heightened pleading standards established by the U.S. Supreme Court in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. In the Inclusive Communities Project case, the U.S. Supreme Court upheld “disparate impact” liability under the FHA. Under this theory, the Fair Housing Act can be violated when a policy or practice has an unjustified discriminatory effect, even when the provider had no intent to discriminate.

The court found that NHFA had pleaded facts that, if true, “would show that Travelers’ policy will exacerbate racial and sex-based disparities by having a disproportionate impact on African-Americans and members of women-headed households in the District.” As a result, NFHA had stated an adequate FHA claim under the “robust causality requirement of Inclusive Communities.” Because the court assumed without deciding that a similar requirement applied to DCHRA claims, it found that NFHA had stated a claim under the DCHRA as well.

According to NFHA’s press release regarding the settlement, Travelers has agreed to pay $450,000 to NFHA for damages, costs, and fees and not to ask about the source of income of residents at D.C. properties that it considers insuring. This includes not inquiring about the Housing Choice Voucher program and other government housing subsidy programs in connection with the underwriting, pricing, or eligibility for new and existing insurance policies for private rental housing properties in D.C. Additionally, Travelers has agreed to provide training to employees involved in the sale or underwriting of insurance for rental properties.