I had something happen on a recent sale. The Seller had just fallen into the “assign your insurance benefits to me and I’ll get you a new roof” scam. They got the money but then did NOT replace the roof. This was a problem when the Buyer went to get insurance on the Property. The underlying premise of the claim is that the roof is ‘dead’. The owner is paid for a new one. But now the new owner wants to insure it.
Most home insurance companies contribute claims history on a property to a database called the Comprehensive Loss Underwriting Exchange, or CLUE. Think of it as a car fax for a house.
Whats in a CLUE report?
A homes CLUE loss history report provides insurance company names and policy numbers and any claim numbers. The report lists the dates of any claims, the loss types and amounts paid for losses, and it will tell if a claim was denied.
Weather-related losses, fires, theft, vandalism and water damage are some of the types of claims listed, says Passmore. But the report does not indicate what part of the property or home was affected. You would need to ask the homeowner for those details.
A report might be blank, for two reasons:
- The homeowner did not make any claims in the past seven years.
- The home was covered by an insurance company that doesnt participate in CLUE.
How to get a CLUE report.
A free CLUE report can be obtained once a year from database giant LexisNexis. Requests can be made online or by calling (866) 312-8076.
Heres the catch for a homebuyer: Only the owner of a property may access its CLUE report. Therefor the Buyer should add language into the Sales Contract along the lines of: “Seller shall provide the Buyer with a Comprehensive Loss Underwriting Exchange, or CLUE, report within say 8 days (before the end of the As-IS period) of the Effective Date.”
You must request the report from the owner of the home youre considering buying, says Karl Newman, president of the NW Insurance Council in Seattle.
Newman says a savvy seller should obtain a CLUE report before showing the home, make several copies and have those available for potential buyers.
Even a homeowner whos not in the market to sell may want to get a CLUE report to check for any inaccuracies.
Since the CLUE report is one of many pieces of information that an insurer might look at, what is in the report can influence your premiums positively or negatively, says Passmore. if there are any inaccuracies, its important to get them corrected, just as it would be for your credit report.
I have a CLUE. What do I do?
A consumer armed with a CLUE report should examine it for any claims that could lead to skyrocketing home insurance premiums. These include fire, burglaries and physical damage to the structure.
If theres a hazard on the property and someone fell into a hole, a claim would ensue Newman says. When the property has experienced multiple burglaries, that can mean that it needs an alarm system, he notes.
Claims might also indicate issues with the physical location of the property that can affect premiums, says Passmore. If its close to the water or known to flood frequently, insurance can cost more.
A recent claim can have positive ramifications if the damage was addressed properly, says Michael Barry, a spokesman for the trade group the Insurance Information Institute in New York.
For example, he says, if a roof was damaged by a windstorm and replaced by a new one, this would actually make the house more desirable to an insurance company.
A CLUE report is not an inspection
Potential buyers should use the CLUE report to let their home inspector know of any repairs that have been made, says Newman, so that the inspector can make sure the work was done correctly.
A CLUE is not a secret database, and it gives no score or recommendations, Newman points out. It just tells what happened in and outside the home. It doesnt take the place of an inspection or disclosures from the seller.
Its an additional tool to evaluate the home and the cost of homeowners insurance, he says.
