Glossary

Redlining

The unlawful practice of refusing to insure, or charging more to insure, homes in certain neighborhoods because of residents' race or other protected traits.

Redlining in insurance means declining coverage, limiting it or charging more in particular neighborhoods because of who lives there, not because of the risk. The name comes from 1930s federal lending maps that outlined minority neighborhoods in red. Discrimination in homeowners insurance based on race, color, religion, sex, familial status, national origin or disability is prohibited by the federal Fair Housing Act, and many state laws add protections. In 1992 the Seventh Circuit held, in NAACP v. American Family Mutual Insurance Co., that the Act reaches homeowners insurance.

Redlining is different from legitimate underwriting. Insurers may weigh wildfire exposure, roof age, crime and claim history, and those factors can correlate with neighborhoods. The legal question is whether a factor is a pretext for a protected trait, or whether a neutral practice falls much harder on a protected group, a theory called disparate impact. Courts and regulators have disagreed on how far that theory applies to insurance, and federal policy on it has shifted in recent years.

If you think you were treated unfairly, ask the insurer for its reason in writing, file a complaint with your department of insurance, and consider contacting HUD or a local fair housing organization. See the fair housing guide and the rating territory entry for how location legitimately affects price.

Last reviewed October 10, 2026

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Related terms

Underwriting How an insurer evaluates a home and its owner, decides whether to offer coverage and on what terms, and sets the price. Insurance score A number built from your credit report data that insurers use to predict how likely you are to file claims, and therefore how to price your policy. Department of insurance The state agency that licenses and supervises insurers and agents, reviews policy forms and rates, and takes consumer insurance complaints. Rating territory A geographic area, often a ZIP code or county, that an insurer prices as a unit because losses from weather, fire and theft differ from place to place. Unfair claims settlement practices act State laws, modeled on an NAIC template, that list claim-handling conduct insurers may not engage in and let the insurance commissioner discipline violators. Market conduct exam A state regulator's review of how an insurer treats policyholders, covering underwriting, rating, sales, complaints and claim handling rather than its finances.

Related guides

AI in home insurance: the rules on underwriting and claims What rules apply when home insurers use AI and algorithms to underwrite policies and handle claims, including the NAIC model bulletin, and what you can ask. Insurance redlining and fair housing law How the Fair Housing Act applies to homeowners insurance, what redlining looks like in underwriting and pricing, and where to complain if you suspect it.