No, home insurers are not exempt from anti-discrimination laws

Last week, Chicago Lawyers’ Committee joined seven other civil rights and fair housing advocacy groups to file an amicus brief in federal district court defending legal protections for Black, Latinx, and other communities of color who seek housing.

Our brief argues in favor of a rule adopted in 2013 by the Department of Housing and Urban Development (HUD) which reinforces the longstanding prohibition against practices that create racial disparities in housing opportunities. A homeowners’ insurance group filed a legal challenge to try and get an exemption from the HUD rule for the entire industry, which would risk permitting racially discriminatory insurance practices to go unchecked and exclude communities of color from the dream of homeownership.

Discriminatory housing practices today are often covert, pervasive, and take many forms. Homeowners’ insurance – an essential step in the home-purchasing process – is no exception. One example is the growing industry use of 'price optimization,' which mines insurance and non-insurance databases of personal consumer information in order to select prices for specific groups of purchasers that differ at a very granular level, creating illegal racial disparities in insurance prices.

Here’s an excerpt from our brief:

It is well-established that home insurance is an integral component of home ownership. Indeed, discrimination in access to housing insurance has played a sizable role in creating the race-based inequality in housing that exists today. Insurance companies have deployed myriad practices to deny people of color access to insurance. Though many of these policies began as explicit bars on people of color obtaining insurance, they have evolved into more covert forms of discrimination that still pervade our housing market. Combined with the discriminatory practices of other industries that make up the real estate market, these practices have resulted in stark disparities: as of 2020, 73.7% of white families own homes, whereas just 44% of Black families do. This gap is the direct result of our country’s shameful legacy of systemic discrimination against Black people, particularly in the realm of real estate and property ownership where homeowners’ insurance is a prerequisite. Though de jure segregation is no longer permitted, the vestiges of these discriminatory systems remain, such that the inequalities resulting from centuries of state-sanctioned racism persist. Black individuals and families have been historically precluded from accumulating wealth, such that policies that exclude people from housing based on income will have discriminatory effects on Black communities.

Essentially, insurers are asking the courts to take them at their word that they will not discriminate against communities of color – even when the entire history of housing discrimination in the U.S. would caution against such a broad exemption. Our brief argues that HUD’s rule should be upheld, empowering communities of color and advocates to root out pervasive insurance practices that discriminate against communities of color based on their race and ensuring that housing opportunities remain open and fair to all.