The insurer policy described as refusing hazard insurance in high-density urban areas is described as which practice?

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

Answer: (C)

Redlining is the practice of denying or limiting financial services, including insurance, to residents of a defined geographic area based on the area's demographics or perceived risk rather than an individual’s qualifications. Refusing hazard insurance in high-density urban areas fits this description because the insurer is denying coverage based on location, not on the specific risk of an individual property. This geographic discrimination can block residents in those areas from obtaining financing or maintaining homeownership, which is the essence of redlining.

Blockbusting involves stirring fear to induce property sales in a neighborhood, steering directs buyers or renters toward or away from certain areas, and underwriting bias refers to biased risk assessment in evaluating applications. The scenario aligns with redlining because it centers on geographic denial of a financial service.