An insurer refusing to write hazard insurance policies on properties in high-density urban areas is best described as:

• A. Redlining
• B. Risk-based pricing
• C. Mortgage discrimination
• D. Credit scoring bias

Answer: (D)

Redlining is the practice of denying or restricting access to financial services, including hazard insurance, based on the geographic location of a property—often targeting high-density urban areas with specific neighborhood characteristics. By denying coverage because of where the property sits rather than evaluating the property’s actual risk, this approach discriminates on location and perpetuates inequitable access to housing and insurance. It’s viewed as a discriminatory pattern that fair housing laws aim to prevent, since underwriting decisions should be grounded in objective risk factors of the property rather than broad neighborhood factors. While risk-based pricing uses measurable risk to set premiums, and credit scoring bias concerns how credit history is weighed, the situation described relies on geography to block coverage, which is the hallmark of redlining.