While article after article has appeared in apartment publications regarding tenant discrimination and the efforts of Fair Housing to uncover such practices whether or not there is intent to be discriminatory, vast numbers of property owners are still not protected against lawsuits alleging discrimination and harassment.
The United States Department of Housing & Urban Development (HUB) has as part of its mission to eliminate discrimination and to promote diverse communities. That in-and-of-itself is a worthy goal, but many unsuspecting people will get caught unaware and be fined and/or taken to court for committing allegedly discriminatory practices.
You can be sued for allegations of discrimination based how you address any protected class of potential or existing tenants. Most property owners assume their regular apartment insurance covers these types of claims. And, the unfortunate truth is that most apartment package specialty companies generally do not offer this type of coverage, or what they offer may be low limits of defense-only (no coverage for the judgment against you) and coverage is completely inadequate.
If a claim for discrimination is brought against you, what is your firstreaction? You turn the claim over to your insurance agent or broker, of course!
Imagine your surprise when, within a few days of your court date to respond to a summons, you receive a letter in the mail from your general liability insurance company’s attorney. This letter is informing you that the insurance company “regrets it cannot take up your defense in this matter” and that you really need to “retain your own lawyer to respond to the complaint, so that you will not default on the claim”.
How Could This Happen?
Basically, the General Liability Insurance policy that you purchased as a part of your Apartment Insurance Package responds to acts of your actual or alleged negligence that result in BodilyInjury, Property Damage, or Personal Injury to Others – all as defined under the policy.
Discrimination and Harassment against Tenants (and prospective tenants) is simply not one of the covered causes of loss – what you are protected against – under your traditional apartment package programs.
But What About the Property Manager’s Insurance?
You should have professional property management in place; that is your first step to protecting yourself as most property managers are keenly aware of the laws to which they must conform, which will keep you out of trouble.
And, most property management companies will have this type of protection. But do you know if your property manager’s insurance will defend you personally (as your name will likely appear on the complaint)? And, what if you do not have a property manager, as is the case with many of the people reading this article?
There is a solution to this dilemma: YOU can purchase Tenant Discrimination Insurance, and it is not terribly expensive.
With this invaluable protection, you can obtain coverage for your legal expenses in defending lawsuits or administrative claims by a tenant or applicant who allege Discrimination on the basis of race, religion, sex, gender, national origin, familial status, hoarding, or other protected class status.
Providing protection to rental property owners, property managers and their directors/trustees and officers, and managerial and supervisory employees, these claims-made policies’ coverage is triggered by an Insured Event, which is essentially the initiation of a lawsuit or administrative proceeding alleging discrimination by a tenant, former tenant, or applicant.
Newer coverage forms also protect you from legal actions (by or from a tenant, former tenant, or applicant) initiated against you through regulatory agencies responsible for the administration of fair housing laws.
The key features of a proper Tenant Discrimination Insurance policy will include:
- Attorneys’ fees and associated expenses, and, with the right kind of policy, you can choose your own attorney!
- Damages (you lost the verdict) are included in your policy limits for most policy forms, although some limited forms which are attached to apartment insurance packages are often only for defense costs.
- You can purchase up to $2,000,000 or more in aggregate limits of protection with most policies.
- Sexual Harassment often is included under the policy,
- Advanced forms offer endorsements to extend coverage for 3rd party discrimination where there is no tenant relationship.
- Coverage for HUD claims charges can be provided, if you choose the better companies.
- Small Deductibles typically are part of the program, and the better coverage forms do not make you pay a percentage of the final claim.
While there are a few exclusions, Tenant Discrimination Insurance can provide property owners significant levels of protection against allegations of discrimination.
As experts in residential property insurance issues, we highly recommend that any property owner explore this incredible protection plan. This coverage can be accessed through most independent insurance brokers.
Stan Dreckman is an independent agent/broker and author of several articles about important insurance issues. Stan is President of Huggins/DreckmanInsurance Agency, Inc., located in Los Alamitos (Orange County), California. He can be reached at 562-594-6541 extension 1500. The Tenant Discrimination Insurance previewed is based upon a product developedand distributed by NAS Insurance Services, Inc., through independent agents.