When an Insurance Company Refuses To Write Homeowners or Other Property Insurance in Coastal Areas, Does That Violate Laws Against Redlining?
Question: When an insurance company refuses to write homeowners or other property insurance in coastal areas, doesn’t that violate the laws against redlining?
Answer: Probably not.
It is true that Section 3429 of the New York Insurance Law, titled Geographical location of risks; fire and extended coverage policies; private passenger automobile insurance policies, prohibits insurers from declining, non-renewing, or cancelling policies “based solely on the geographical location of the risk within this state.” However:
- Its prohibition applies only to policies of fire insurance, fire and extended coverage insurance, and personal auto insurance, and
- It provides a very large loophole: “Such prohibition shall not preclude an insurer from refusing to issue or renew or from cancelling such policies based on sound underwriting and actuarial principles reasonably related to actual or anticipated loss experience…”
If an insurer can show that it based its decision to stop writing new homeowners policies within 500 feet of Long Island “based on sound underwriting and actuarial principles reasonably related to actual or anticipated loss experience”, chances are the New York State Department of Financial Services will conclude that the insurer was not redlining.
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