October 2007 Coach's Quiz

September 30, 2007

We have given you seven rules to follow to help you make sure you have fair housing discrimination insurance coverage and use it properly. Now let's look at how the rules might apply in the real world. Take the COACH's Quiz to see what you have learned.

INSTRUCTIONS: Each of the following questions has four possible answers. Only one of them is correct. On a separate piece of paper, write down the number of each question, followed by the letter of the answer you think is correct—for example, 1)b, 2)a, and so on.

We have given you seven rules to follow to help you make sure you have fair housing discrimination insurance coverage and use it properly. Now let's look at how the rules might apply in the real world. Take the COACH's Quiz to see what you have learned.

INSTRUCTIONS: Each of the following questions has four possible answers. Only one of them is correct. On a separate piece of paper, write down the number of each question, followed by the letter of the answer you think is correct—for example, 1)b, 2)a, and so on.

COACH's TIP: The correct answers (with explanations) follow the quiz. Good luck!

QUESTION #1

Carmelita, a prospect interested in a one-bedroom unit in your community, was not shown any units on her visit, because there were none available at the time. However, she thinks it was because she is a single mother with a child. Therefore, she has threatened to file a claim of fair housing discrimination with HUD. Your community has a general liability insurance policy. What should you do?

  1. Call Carmelita and offer her a financial settlement because it is covered by your insurance.

  2. Call your insurer and ask whether fair housing claims are covered by your insurance policy.

  3. Ignore the threat and maybe it will go away; if it doesn't, your insurance will cover it.

  4. Offer Carmelita the next available one-bedroom unit in your community.

QUESTION #2

In April, you obtained fair housing discrimination insurance for your community. Carmelita, as in Question #1, is still threatening to file a fair housing claim with HUD because she wasn't shown a one-bedroom unit in January. What should you do?

  1. Ask your insurer whether you are covered for acts that occurred before you bought your fair housing discrimination insurance policy.

  2. Tell Carmelita to proceed with her fair housing claim; you have insurance to cover it.

  3. Ask your insurer whether your policy covers prospects and applicants, as well as residents.

  4. Ask Carmelita what it would take to get her to forget about filing a fair housing claim.

QUESTION #3

Abdul is a Muslim who applied for a studio in your downtown community, which is comprised mostly of Christians and Jews. Your leasing office staff member has suggested to him that he would be happier living in another community of yours, right outside of town, because no Christians or Jews reside there. This is consistent with your unwritten policy about not mixing people of certain religions in particular communities. Abdul has filed a fair housing complaint against your employee, you, and your community. Is it covered by your fair housing insurance policy?

  1. Yes, because your employee didn't actually discriminate against Abdul by rejecting his application.

  2. Yes, because the community policy your employee invoked is unwritten, so Abdul won't be able to prove it exists.

  3. No, because your community policy is discriminatory by its nature, and it is against public policy to insure acts that are intentionally discriminatory.

  4. It depends on whether you win or not.

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    Coach's Answers & Explanations

    QUESTION #1

    Correct answer: b

    Reason: Rule #1 applies here:

    Rule #1: Know What Coverage You Have

    It is rare for a general liability policy to cover claims of fair housing discrimination. Before you do anything, you should talk to your insurer about what is covered by your policy, and talk to your attorney about what to do next.

    Wrong answers explained:

    1. If you don't know that fair housing claims are covered by your insurance and you offer a settlement, it will probably come out of your pocket, since most general liability policies don't cover fair housing claims. Also, most insurers don't approve of an insured's offering settlements without the insurer's input or participation.

    2. Ignoring a fair housing claim or even the threat of one is never a good idea. Here, it is an especially bad idea, since you don't know whether your insurance policy covers fair housing claims or not.

    3. Although offering Carmelita the unit she was initially interested in might seem like a good idea, it's not. It could be viewed as an admission that you discriminated against her in violation of fair housing law, and she could still proceed with a claim and win a settlement that is not covered by your insurance.

    QUESTION #2

    Correct answers: a and c

    Reason: Rule #3 applies here:

    Rule #3: Know What Is or Can Be Covered

    You need to know exactly what is covered by your fair housing insurance policy. Some policies will cover prior acts. Some policies may only cover occurrences with existing residents. Make sure you know the limits of your coverage; if they are too restrictive, talk with your insurer about expanding the coverage.

    Wrong answers explained:

    1. If you have reason to believe that Carmelita is going to file a fair housing claim, you should not be speaking with her or anyone else about it except your attorney and your insurer. In this instance, not only could Carmelita think you are goading her into filing a claim (which you don't want to do), but you could be wrong about whether your discrimination insurance covers this occurrence—and any financial liability that results could come out of your pocket.

    2. Again, you should not be speaking with Carmelita, and certainly not about her potential fair housing claim. Asking her what she wants from you to make the claim go away could be viewed as an admission of wrongdoing.

    QUESTION #3

    Correct answer: c

    Reason: Rule #4 applies here:

    Rule #4: Know What Can't or Won't Be Covered

    In most jurisdictions, intentional discrimination—that is, policies that treat any of the protected classes differently because of their protected characteristic—will not be covered by fair housing insurance, because covering such acts violates public policy. Most states and localities will not allow insurers to reimburse insureds for intentionally violating the law; to do so could be perceived as encouraging such violations.

    Wrong answers explained:

    1. Suggesting that a prospect or applicant would be happier living elsewhere, because of a protected characteristic—as in this case, because of Abdul's religion—is steering, which is discrimination in violation of fair housing law.

    2. Policies don't have to be written to be proved. Your employees will probably testify about them; and even if they don't, an investigation of your community's practices will probably reveal these unlawful policies.

    3. False or unfounded claims should be covered by your fair housing insurance policy, but your coverage should not be determined by the outcome of any particular complaint or lawsuit.

    See The Lesson For This Quiz

    Getting and Using Adequate Fair Housing Insurance Coverage

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