An insurance company refuses to write hazard insurance policies on properties located in high-density urban areas. How is this policy BEST described?

• A. Steering
• B. Underwriting bias
• C. Redlining
• D. Ghettoization

Answer: (C)

Redlining is the discriminatory practice of denying or restricting services, such as insurance, to residents of a geographic area—typically based on the area’s racial or ethnic makeup—rather than on the individual risk of a property. When an insurer refuses to issue hazard policies for properties simply because they’re in a high-density urban area, the decision is based on location and neighborhood characteristics, not on the specific risk of each property. That makes it redlining: a form of housing discrimination tied to geography.

This kind of practice runs counter to fair housing protections, which require that housing-related services be provided without discrimination based on protected characteristics. It’s not steering, which involves guiding a client toward or away from a particular neighborhood; it’s denying coverage to an entire area. It’s also more specific than a general underwriting bias, and it’s not a sociological term like ghettoization.