New Orleans—National insurer Covington Special Insurance Company (Covington) has agreed to settle a federal housing discrimination lawsuit filed by the Greater New Orleans Fair Housing Action Center (GNOFHAC) and a local landlord. The lawsuit, filed in the Eastern District of Louisiana in September 2017, alleged that Covington discriminated on the basis of race, sex, and familial status by denying liability insurance to New Orleans landlords who accept tenants utilizing Housing Choice Vouchers (informally known as “Section 8” vouchers).
The Housing Choice Voucher (HCV) program provides housing subsidies to low-income families seeking housing in the private rental market. The complaint alleged that the Covington’s policy had the effect of making it harder for HCV households—who are disproportionately African American, female-headed, and families with children—to access housing. The complaint also alleged that the insurer’s discriminatory policies disproportionately affected predominately African-American neighborhoods in New Orleans, where HCV households are highly concentrated.
GNOFHAC and Dr. Andre Baugh were plaintiffs in the litigation. The litigation arose after Covington Specialty Insurance Company canceled Dr. Baugh’s liability policy because he disclosed that HCV families occupied five of his eight rental units. A local agent explained to Dr. Baugh that Covington was “not in the business of doing Section 8.” Covington is based in New Hampshire and operates as a subsidiary the Alleghany Corporation, a national publicly traded investment company with a focus on property and casualty insurance. After finally securing insurance from another insurer at a higher rate, Dr. Baugh contacted GNOFHAC, which undertook significant public education and outreach efforts to counteract the insurers’ discriminatory policies.
The complaint alleged that Covington’s discriminatory policy was based on stereotypes about voucher holders, rather than any particular risk analysis. Despite such negative stereotypes, New Orleans data shows HCV households are far less transient than market-rate renters. According to U.S. Census and HUD data, 22% of all New Orleans renter households moved in the last year compared to only 7% of HCV families, who stay in their units for an average of seven years.
As a result of the settlement, Covington will stop considering individuals’ source of income when determining pricing or eligibility for property or commercial liability insurance sold to owners of private rental properties. In addition, Covington will no longer ask owners whether they rent to HCV households. Covington agreed to pay $160,000 to compensate plaintiffs for their damages and attorneys fees.
“Stereotypes and assumptions are simply not a valid reason to perpetuate segregation or deny families housing,” said GNOFHAC Executive Director, Cashauna Hill. “We commend Dr. Baugh for coming forward with this complaint and encourage anyone else who suspects they may have been a victim of housing discrimination to contact the Fair Housing Action Center.”
Plaintiffs separately reached a settlement with Covington’s local broker, Hull & Company, which issued and administered Dr. Baugh’s policy with Covington.
The Plaintiffs were represented by Relman Dane and Colfax PLLC, GNOFHAC’s Legal Director, Elizabeth Owen, and Galen Hair of Scott, Vicknair, Hair & Checki.