Get a Clue on the Claims History of Your Future Home
Buying a home can be a minefield if you don’t educate yourself about the process first. Many of the savviest homebuyers don’t have a clue as to the importance of a CLUE report.
The Comprehensive Loss Underwriting Exchange (CLUE) database is maintained by ChoicePoint, one of the country’s largest compilers of personal consumer data. It is designed to permit homeowner and auto insurers to exchange information about claims for loss of property, without notice to you unless required by your state. Approximately 90 percent of all insurance companies that underwrite homeowner’s insurance are subscribers of the service.
Actual property loss claims, as well as inquiries about coverage, are entered into this central database. When you buy a house and apply for homeowner’s insurance, the insurance company can access the CLUE database and see both the past claims filed on the house and any inquiries about damages, even if no claim was ever filed. This information may cause your dream house to become an insurance nightmare if no insurer is willing to cover it.
What’s more, it isn’t only your new house’s past claims that insurers examine. Your old claims could come back to haunt you. In fact, you may find that your new homeowner’s policy comes with a high price tag because of the previous claim history on your old home.
So, how can you keep CLUE from blocking your ability to obtain insurance or causing you to pay higher premiums? Know your rights. CLUE reports are treated like any other credit report under the Fair Credit Reporting Act (FCRA).
According to The Privacy Rights Clearinghouse, you are entitled to:
- Obtain a copy of your CLUE report and insurance scores. Under recent amendments to the FCRA, called the FACT Act, you are entitled to one free copy of your CLUE report each year.
- Be notified by the insurer if they intend to take an “adverse action” based on information in the CLUE report. Examples of adverse actions include denial of a new policy or a new policy premium that costs more because of negative factors.
- Obtain another copy of your CLUE report, in addition to the free one you are entitled to annually, if you have been denied insurance, your policy has been cancelled, your coverage has been limited, or your premiums have increased.
- Dispute inaccurate or incomplete information included in the CLUE report. ChoicePoint must investigate disputes.
- File a statement that must be included in all future reports if you are not satisfied with the investigation.
Keep in mind, that when buying a home, your real estate agent will need to help you obtain a CLUE report on the property because you cannot request a report on a house you don’t own.
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