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The Comprehensive Loss Underwriting Exchange

Homeowners Insurance and the CLUE Report

Some homes can be black-balled from insurance and 
you might not know it for up to 60-days after closing

Over the past few years, home insurance rates have gone up, but and you wonder why. Of course natural disasters, recent mold litigation losses, even an individual's credit history, can increase insurance rates. But a little known report, commonly called the CLUE report, can affect how much homeowners pay for insurance and it's causing a lot of controversy. The insurance industry says CLUE reports help keep costs down, but opponents say the reports can be a home buyer's nightmare. There are two major property claims databases, CLUE (the Comprehensive Loss Underwriting Exchange) and A-Plus (Automated Property Loss Underwriting System). Most people refer to the reports generated by either system as CLUE reports

CLUE was created in 1992 and is administered by ChoicePoint, a data management company. Some 600 homeowner's insurers (about 90% of insurers) contribute claims data to it. The insurance Services Office, an insurance industry organization, runs A-Plus to which about 1,250 companies contribute. Insurers contribute loss data can also withdraw information from the exchange. According to the Insurance Information Institute, a typical homeowner files a claim only once in 10 years. Since the data is only kept for five years, most people have no CLUE record. Data provided in CLUE reports include policy information such as name, date of birth, policy number and claim information such as date of loss, type of loss and amounts paid.

Homeowners can get an electronic or mailed copy of their own CLUE report for a small fee depending on which state they reside in. If a homeowner lives in Maryland, Georgia, Massachusetts, Colorado, Vermont or New Jersey, they are entitled to a free copy of their consumer report.

Unfortunately, if a buyer is in the process of purchasing a home, they can't order a copy of the home's CLUE report. It must be done by the seller or the insurance carrier. Sellers who suspect errors may contact ChoicePoint or their insurance agency, which must follow certain procedures to investigate the discrepancy.

A buyer is recommended to make the purchase of a home contingent on receiving a copy of a CLUE report and being able to find affordable insurance.

CLUE reports are playing an increasingly important role in real estate transactions. Many buyers now stipulate that a CLUE report on a home must be included with the real estate transaction. One of the most controversial issues surrounding the information found in the CLUE database is that an innocent inquiry from a homeowner to their insurance company concerning their deductible or a possible claim, can trigger a file to be opened in the CLUE database-even if the homeowner does not file a formal claim.

Sellers might use a clean CLUE report as a marketing tool or a back-up to the Sellers Disclosure Form. The CLUE report will identify a previous 5 year history of the property. Sellers who find that past claims make their home uninsurable may have to take their home off the market. At most the seller would have to wait 5 years for all the claims to drop off the CLUE report as long as no new claims are filed.

Most state insurance laws allow insurers 60 days after issuing a policy to thoroughly review all the underwriting information, including CLUE reports, and cancel a policy if new information comes to light that makes the risk unacceptable. However, a homeowner's policy must be in place at closing and since many home buyers leave purchasing a homeowners policy to the last minute, the insurer may not have checked all the underwriting material by the time the closing takes place. This may leave issues that could arise after the home has closed and the buyer has moved into the property. Because of this, Realtors are now encouraging buyers to start shopping for coverage early in the real estate transaction process and include a contingency that the purchaser is satisfied with the insurability of the property.

CLUE - Choice Trust

How Insurers Size You Up

Previous claims can lack-ball a

What does a CLUE report
say about me?

The CLUE report includes personal information such as your name, date of birth, and Social Security number. Tied to your identifying information is a record of any auto or homeowner property loss claims you have submitted to an insurance company for the past five years, including:

Date of the loss.

Type of loss claimed.

Amount paid by the insurance company.

The CLUE database may also include notations of property "damage" - even if the insurance company didn't pay out a cent. Any hint of water damage to a property, for example, is likely to trigger a negative mark on the property's CLUE report.

Well-intentioned consumers who call an insurer to merely inquire about coverage for water damage have been shocked to have their insurance cancelled. Your chance to get new insurance at a good rate could be affected. (Note: Your state may not allow reports to include inquires that did not result in a paid claim. California has such a restrictions (CA Insurance Code 791.13(c). Contact your state insurance commissioner to find out what applies in your state.

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