Tenant discrimination insurance: what is it and why it's important

Tenant discrimination insurance: what is it and why it's important | Insurance Business

Tenant discrimination insurance: what is it and why it

Recent movements against racial injustice in the United States, accompanied by growing awareness and efforts to realize equal rights, have brought issues of discrimination into the spotlight. Amid this environment, property owners and managers can turn to tenant discrimination insurance (TDI) to minimize the risk of potential litigation.

“Our tenant discrimination defense and loss reimbursement policy is intended to cover any property owners or property managers that find themselves with a claim or lawsuit against them by one of their tenants for some form of discrimination,” said Nicholas Rotondo, Director of Underwriting and MPL Product Leader at Tokio Marine HCC – Cyber & Professional Lines Group. “Our insurance is triggered when a tenant of a covered property sues the property owner or property manager for discriminating against them.”

Discrimination covers a broad range of potential incidents, which can involve race and gender, but also comes in many other forms. Acts of discrimination can center on a tenant’s familial status, criminal background or disability. In fact, Rotondo noted, “We’ve seen numerous claims as a result of a disability.” These claims arise if a tenant alleges that the property owner or manager didn’t provide a reasonable accommodation for a disability. For example, a tenant might rely on a service dog because they experience seizures, but the property enforces a ‘no dog’ policy.

As a result of the exposure they face in the course of doing business, tenant discrimination insurance has become an important coverage for property owners and managers, especially since there is a gap on their other policies.

“Tenant discrimination is not expressly covered in many policies. A general liability (GL) policy, business owners’ policy (BOP), or employment practices liability (EPL) policy with third-party discrimination does not specifically cover a tenant discrimination claim,” explained Rotondo. “We’ve seen plenty of submissions because the applicant had a tenant discrimination claim that was denied by either a GL, EPL or BOP policy, and the claim would have otherwise been covered under our policy.”

Some property owners and managers might not even be carrying such a comprehensive list of coverages in the first place. Small clients with less than 250 units might not purchase extensive insurance policies due to cost, which is why a tenant discrimination policy is important and plays a key role in protecting them from a notable exposure.

“We see requests for coverage from even smaller property owners or managers with 10 units or less, and they often have a very basic insurance package. Without ever speaking to an agent or broker, insureds will often purchase coverage directly through a carrier’s online portal because it’s inexpensive. There is such a great benefit involving someone [agent and broker] who knows and understands their risk well.”

Moreover, smaller clients might not realize how affordable a tenant discrimination policy is – it’s worth it when taking into account the potential costs of discrimination lawsuits. While other competitors in the TDI marketplace have higher premiums and are targeting insureds who have a complex portfolio of properties and robust insurance coverages already, Tokio Marine HCC focuses on clients with 250 or fewer units.

Notably, Tokio Marine HCC has decades of experience in the TDI market, as well as experienced claims-handling and knowledgeable claims counsel.

Agents who work with property owners and managers can do their part by bringing this coverage to their clients.

“Utilize everything that you have at your disposal to explain that discrimination is a very serious exposure for these insureds,” said Rotondo, pointing to the many resources available today that demonstrate the growing societal awareness around discrimination. “That [education] is the best tool that [agents] have in their arsenal for demonstrating the need to purchase this coverage.”