New York State Bars Insurers from Discriminating Against Affordable Housing

Will other states follow suit?

When New York State lawmakers enacted its fiscal year 2025 budget last month, it included legislation intended to support housing statewide and address the state’s housing crisis. One part of the passed legislation was a measure to ban insurance carriers from discriminating against affordable housing providers.

This is a first-in-the-nation ban of this kind, and it may foreshadow more such legislation and national attention to insurance rates for affordable housing sites. In fact, HUD and the Federal Housing Administration (FHA) recently updated their policies for wind and named storm insurance coverage required for multifamily properties financed with an FHA-insured mortgage. This update was made to address insurance costs for multifamily properties that have risen significantly in recent years, largely due to the greater frequency and severity of storms resulting from climate change.

Premiums doubled in four years. In recent years, rapid increases in insurance costs have added pressure to increase rents and have put the financial viability of affordable multifamily rental housing at risk. An analysis by the New York Housing Conference (NYHC) found that the average cost to insure an affordable apartment is $1,770. This is a 103 percent increase from four years ago when the average annual per unit premium was $869. And insurance costs represent 22 percent of monthly rent for an extremely low-income household’s LIHTC one-bedroom unit.

Factors behind spikes. According to NYHC, costs are skyrocketing due to a number of factors, including climate change, fewer insurance companies offering multifamily coverage, changes in the reinsurance market, inflation, and discrimination. In 2021, a law was passed calling for a study of the increase in insurance premiums and unavailability of insurance coverage for affordable housing developments in New York by the New York State Department of Financial Services, which oversees the insurance industry. The 2022 findings of that report pointed out that no state law prohibited insurance companies from asking policyholders about a property’s characteristics, including any affordability restrictions.

What ban prevents. To address claims that insurers discriminate against affordable housing based on income source and income level and that many insurers won’t consider insuring developments in New York City, the state enacted legislation that prohibits discrimination when issuing insurance for affordable housing projects in the state. The legislation prevents insurers from inquiring about, canceling, refusing to renew, or increasing the premium of a policy based upon:

• A property having a regulatory restriction that limits occupancy to specific income levels;
• A property or residents receiving rental assistance, including, but not limited to, Section 8;
• The level or source of income of a property’s residents; or
• Ownership of a property by a limited-equity cooperative, public housing agency, or other affordable cooperative corporations.