Insuring Apartments Without Criminal Background Checks on Prospective Tenants: How Insurers Should Consider New York City’s Proposed Criminal Background Ban

Many landlords require criminal background checks on tenants as part of their screening process to ensure the safety and security of their rental community. In fact, under the Fair Housing Act a landlord can deny an applicant based on criminal history, so long as the decision is to preserve the safety of the property and the community. The possible tenant can be rejected because of a presumed reasonable risk that was found as part of a consistent screening process applied to all prospective tenants.

However, some local jurisdictions are taking this screening tool away from landlords. New York City lawmakers are currently considering legislation that prevents landlords from conducting criminal background checks on prospective tenants. See N.Y.C. Int. 2047-2019. While this law is still be debated, in recent years similar laws, often referred to as “fair chance” or “clean slate” laws have passed in cities such as Portland, Seattle, Berkley, and Minneapolis. As advocates continue to push for this legislation throughout the country, similar laws are sure to be proposed and pass in other jurisdictions. Such legislation may be creating additional risk for the landlord and their general liability insurer.

Insurers must be aware of local laws and consider the additional risk when underwriting apartments. Even if landlords cannot conduct a criminal background check, they can and should still take other consistent screening measures, such verifying employment and checking references. Landlords should also continue safety requirements such as locks, surveillance cameras, and security guards.

If the unfortunate happens, someone with a criminal record who was rented an apartment commits a crime, a Plaintiff may plead negligence by the landlord based on the lack of criminal background check. However, if the landlord continues to consistently take other safety measures and screen tenants, the insurer has a strong defense based in part on their adherence to the local law.

We would be happy to answer any questions and/or concerns, please do not hesitate to contact Rebar Kelly at (484) 344-5340.