DHCR refuses to address insurance requirement (overcharge)

[Bigskunk911]

A while back there was a dhcr opinion letter suggesting renters insurance may be illegal under RS. A complaint was filed with DHCR regarding a mandate, and the RA and its par didn't rule or mention the matter at all. Apparently, Renter insurance may be allowed for non-regulated units as a requirement and even if its a non RS affordable unit, though there was no disclosure on registration or regualtory agreement, a lease template was approved, but templates are usually blank as unit rent or building may have different numbers.

If anyone knows anything about this, chime in. It may be wise to have insurance anyway but often-times a great policy that's decent may not have what the landlord wants.

[TenantNet]

First, I don't recall that letter.

Second. you may be describing the situation incorrectly. There is nothing in RS that prohibits any RS tenant from obtaining renters insurance. I have it and it's reasonably affordable. I didn't ask or tell my LL; AFAIK, they don't know I have the insurance. It's not their business.

It's a good idea in case you are robbed or something. The LL won't cover damages and neither will the LLs insurance (if they have insurance, some don't or claim they are "self-insured").

Now, if the LL was negligent with building security, that's a different issue and might give a tenant a cause of action to make a claim on the LLs insurance or sue.

I think you meant to say that it might be illegal for a LL to require a tenant to get renters insurance in order to obtain a lease. I don't think that's legal, but there might be other opinions on that.

In the real world a LL can choose to whom they rent, providing it isn't discriminatory, i.e., race, gender, religion, sexual orientation and other protected classes. I'm not sure if type of employment is protected, but LLs can say a prospective tenant lacks the financial resources to rent a place. A LL would likely claim they need to have a guarantee that the rent will be paid.

What I am pretty certain is that if a LL rents a RS unit to a tenant without insurance, then on a renewal, insists the tenant obtain insurance, I would say that is illegal. That is because under a RS the LL must renew on the same terms and conditions as the expiring lease. Other than rent increases from RGB or DHCR, a renewal lease must stay the same.

Another example I see a lot. Many LLs will not rent to tenants who smoke tobacco, or make it a term of the lease. That's OK. But if a long-time RS/RC tenant is a smoker, the LL can't prevent them from doing so inside their apartment (public areas of the building would be off-limits for any tenant to smoke).

Most of your question doesn't make much sense. But be careful in that "required" is not the same thing as "allowed." If you have the decision or opinion letter, please send it to us by private mail. Also, understand that DHCR has no jurisdiction over non-RS units.

To add another wrinkle, if a LL tried to sell you renters' insurance as part of a RS lease, or tells you that's required (as part of a lease), then I would call that an overcharge.

[Bigskunk911]

The LL argued that DHCR was made aware of the renters insurance requirement by approving a lease that contained the clause. DHCR didn't address the issue in the over-charge complaint.

DHCR adminstators affordable housing programs that aren't necessarily subject to rent regulation so perhaps an insurance requirement may have not been prohibited by the affordable housing program. But if the unit is rent stabilized as part of say j-51 or 4-21a in addition to participanting in another program, it should seem that renters insurance mandates should be illegal, and the opinion letter messaged to you indicated so.

Of course, the LL didn't report on the DHCR registration form such mandate, nor did they disclose it in the regulatory agreement or documentation. Essentially, the LL is saying well "wel told dhcr were going to use this lease template and since they didn't object everything is legal". I don't expect DHCR to fine-comb a lease and neither do they seem to micro-analyze things unless there's a complaint and take responsbility. What's the stop an LL then from mandating an insurance policy that costs $400/a month then? I imagine since insurance cost money there should ben a reporting requirement on the owner as to how much the insurance would cost the tenant or at-least an estimated cost.

[TenantNet]

I'm VERY overloaded at the moment (and I also need to look at other poster's questions). I think you did send that letter, but I haven't had time to look at it. I think I offered my opinion in my preceding post.

If it's a new requirement on a RS renewal, I think that would be illegal (and all RS renewal must be on the DHCR RTP-8 form). If it's in the initial RS lease when a tenant takes occupancy, well maybe. I don't think the registration form has a place for that, and in some cases it might be seen as an overcharge above the legal rent, especially if a LL has an interest in the insurance payments.

I'm not considering anything here other than regular RS, not 421a or other situations.

Now, this is just FYI and not intended to foster 20 additional questions From our archives...

A 421a developer/LL says all applicants must carry renters insurance. As far as the tenants know, the RSC does not mandate any tenant to do so and the HPD regulatory agreement is silent on the matter

So one tenant attorney responds, "I can think of no reason why renters insurance cannot be required in a rent stabilized lease, but perhaps Housing Court would not consider a breach of the provision to be a sufficient basis for eviction in a holdover proceeding."

So the question is what is a LLs remedy if the tenant fails to keep the renter's insurance. Holdover proceedings are generally for a) violation of a lease, or b) an ongoing nuisance. But I'm not familiar with any such cases. Would a judge say failure to maintain renter's insurance rises to a lease violation? I don't know.

In another situation, the question asked is, "for an unregulated, new building, the lease requires a tenant to get renters insurance. Is the tenant legally required to have renters insurance to be able to sign a lease?"

One attorney says the landlord is legally entitled to insist on, and for good reasons. If the landlord is insisting on it as a condition of signing the lease the tenant's choice is to agree or lose the apartment. In the event of a flood for example, it is much easier to get reimbursed for property damage by one's own insurance company and let them seek pursue the landlord than to sue the landlord."

Another attorney says in some cases a LL might require RENT insurance (not renter's insurance). This would cover the rent itself (if a tenant lacked funds to cover the rent), not damages, i.e., flood, fire or burglary. See https://www.insurent.com/renters/ (We're not advocating or promoting this insurance, just citing an example.)

The lawyer added, "I don't see any legal barriers to landlords requiring such a policy except in Section 8 cases where source of income is not a permissible criteria to reject" and "Not clear yet if a landlord of a RS apt. can require a tenant to continue to maintain such a policy on a renewal lease."

And finally, there are cases where LLs or insurance companies demand SS# from tenants. From what I've seen the LL can't demand that (although they might be able to demand it in the course of renting the unit).

So please, let's put all this to rest for a few months

[Bigskunk911]

Hi, don't want to over-analyze the situation, in this case the insurance requirement was liability insurance and went above an insurance company
s cheapest policy meaning a more expensive policy was needed.

I'm guessing if it came to a lease violation, it may not hold up, but if its an over-charge, what's the harm in trying to get $ back. The reason I consider it be a bit more serious, is that the LL can demand a higher more expensive coverage amount. Tenants who may not be aware may pay this fee since the lease says its required.

To clear up confusion, the point was that a developer may participant in 2 housing programs, one similar to middle income 80/20 housing as well as 421a, the former doesn't require RS and so the insurance mandate may be more of an non-issue, the latter because its under RS may be an issue. In any case, there should be a ruling as what's to stop a developer from requiring insurance on an RS lease at $200/a month and the tenants purchase insurance thinking there would be in violation. Since a tenant may worry about breaching their RS lease, they would get scared not to comply. In this case the insurance mandate didn't appear on the renewal lease, so maybe it wasn't legal.

[TenantNet]

I can't read this.

[TenantNet]

Not to revive this thread, but came across this article:

https://therealdeal.com/new-york/2024/0 ... e-tenants/
Hochul tries to address insurance discrimination
against low-income tenants
Proposal would prevent insurance companies from inquiring about tenants' income levels
January 22, 2024

New York Gov. Kathy Hochul is taking steps to curb insurance discrimination against low-income tenants.

The governor’s $233 billion executive budget includes a crucial measure aimed at preventing insurers from denying coverage to buildings based on tenants’ sources of income, Gothamist reported.

Under the proposed rules, insurance companies would be prohibited from inquiring about tenants’ income levels and whether a building contains income-restricted apartments.

The move is expected to foster a fairer insurance market, ultimately reducing costs for both tenants and property owners, while also facilitating the construction and preservation of more affordable housing units.

The changes stem from a Gothamist investigation seven months ago, which revealed that numerous insurance companies operating in New York routinely asked building owners about renting to tenants with housing subsidies, such as the federal Section 8 program, and subsequently refused coverage. Property owners were compelled to seek insurance through unregulated markets, often at significantly higher costs. The financial burden was then transferred to tenants through increased rents, impacting not only their wallets but also the maintenance of rent-stabilized apartments.

A 2022 report by New York’s Department of Financial Services and Division of Homes and Community Renewal highlighted a 43 percent average increase in insurance premiums for affordable housing owners between 2019 and 2021. Various factors, including climate-related incidents, unique New York regulations, and routine rejections based on tenant characteristics, were identified as contributors to this spike.

This discriminatory insurance practice has been colloquially termed “insurance redlining.” Despite existing state and city laws prohibiting housing discrimination based on income sources, Governor Hochul’s proposal aims to address the specific issue of insurers refusing coverage based on tenant characteristics.

Assemblymember Linda Rosenthal, who chairs the housing committee, introduced legislation immediately after Gothamist’s investigation to ban source of income discrimination by insurers. She welcomes the governor’s support, emphasizing the unacceptability of insurance companies refusing coverage for buildings with Section 8 tenants.

State Sen. Jamaal Bailey, sponsoring similar legislation, sees insurance premiums as a significant factor in increasing rents. The proposed ban has garnered support from industry experts and lawmakers, with Susan Camerata, CFO of Wavecrest, expressing optimism that it marks a positive shift in how the insurance industry approaches policy formulation.

With 682 certified insurance carriers in New York, the proposal addresses a critical issue affecting buildings with low-income tenants or those utilizing housing vouchers. Overall, Governor Hochul’s initiative aims to promote fairness, reduce costs, and contribute to the creation and preservation of affordable housing in the state.

— Ted Glanzer

[Bigskunk911]

A bit off topic but in reply to your post, new york's anti housing discrimination statues have a separate category for each protected class instead of a "catch all" statue. Not a lawyer but spoke to one, when a discrimination statue is crafted and uses terms like landlord,broker,management and then when separate statues cover appraisers it creates an ambuguity.

Many statues will be interpreted to read such as any party in a transaction, or anything that can affect the outcome of housing such as the federal fair housing act.A statue that merely says "“sell, rent, or lease a housing accommodation” may not cover insurers and other parties. An easier solution would to have been to broaden the statue in the first place, I wrote to legislatures before this issue came up and it fell mostly on deaf ears.

[Bigskunk911]

Hi, wanted to point out a possible clarification, while the unit in question is 421-a, the lease template seems to be in use for all rent stabilized tenants regardless of 421-a whether 421-a or not,so its possible non 421-a and non-affordable RS 421-a RS units have the same clause. Of couse I can update the cover-page template, but your probably busy.