In the market for a homeowners insurance quote? Here’s a little known fact you should know, especially if you’re considering purchasing an older home. Many insurance companies rely on a claims history database called CLUE (Comprehensive Loss Underwriting Exchange) to review consumer claims data when rating or underwriting a homeowners policy.
The database contains up to five years’ personal property claims history, provided by CLUE member insurance companies. If a company isn’t a member it can neither supply data nor access reports. CLUE compiles the usual data such as the policy holder’s name, date of birth, policy number and description of the property covered (both home and vehicle). But it also keeps tabs on claim information like date of loss, type of loss and dollar amounts paid out. It does not, however, compile personal data such as credit reports, criminal records, civil lawsuits or legal judgments.
CLUE’s original application was largely to flag potential fraud and to track individuals with a history of filing a lot of claims. Fair enough. But in recent years, and partly to counter corporate losses, CLUE is increasingly used to screen for other risks. For instance, if the home you’re thinking of buying has a history of mold damage claims, you may find that the homeowners insurance quotes you receive are much higher than anticipated. Since there are no laws preventing the use of a prior owner’s loss history to determine your coverage eligibility, you may even have a difficult time finding insurance.
So, maybe you’re thinking you should pull a CLUE report on the home you’re considering buying. No can do. Under the FAIR Credit Reporting Act, only the owner, insurer or property lender has access to a property’s CLUE report. Of course, there’s nothing preventing you from broaching the issue with the seller. In today’s real estate market it could prove to be big motivator.
There are steps you can take to protect your current policy from a potentially damaging CLUE report and keep your homeowners insurance quotes affordable. Since water can cause extensive damage and subsequent mold problems, be sure to keep pipes, hoses, caulking and roofing in good repair. Carry a high deductible and consider fixing minor problems out-of-pocket rather than filing a claim, especially if you’re planning to sell your house within the next few years. You have the right to a free copy of your home’s CLUE report once a year (or any time you’re denied insurance). Exercise that right along with the one you have to dispute any false information in your report.