When it Comes to Home Insurance, Do You Have a CLUE?
As it’s usually the largest single investment for many people, insuring the home is important. As real estate prices rise, insurance premiums do as well, and insurers become ever more careful to verify details before offering coverage.
In real estate transactions, the ability to get homeowner insurance is no longer taken for granted. That’s why you’ll see an insurance contingency in home purchase agreements. The buyer makes the final purchase contingent upon the ability to procure insurance. Their mortgage company will also want that contingency and will want their interests covered by the policy.
Even though there is almost always some sort of home condition disclosure document to tell prospective buyers about problems with the home, everything may not be there. This is especially true if there was a past problem that was corrected, and the seller doesn’t remember or consider it important. There is a process by which insurers can check out the insurance claim history of a home, however.
What is a C.L.U.E. Report and What Does It Tell Us?
A Comprehensive Loss Underwriting Exchange (CLUE) report includes a 5-year history of insurance claims on the homeowner policy. The date of the claims, nature, and the amounts paid out will be in the report. The insurance company considering committing to insure a home in a purchase process will check out this report to see if there is something that could cause concern. It can be the reason for denial of coverage or cause an increase in premium due to perceived risk. An example would be a previous large water leak. The insurer may want to cover possible mold damage claims in the future.
The most common homeowner insurance claims are:
- Fire and lightning
- Water damage from interior leaks
- Wind and hail
- Personal liability
Insurance companies have their own reasons for concern about recent claims for these situations, mostly about possible repeat problems.
C.L.U.E. Report Value
It depends on your situation what you may find of value in requesting a CLUE report. If you’re buying a home, you would want to request one as a contingency in the contract so that you can see any claims that may be red flags before you close on the deal. If you’re selling your home, and if you’ve owned it five years or more, you know what may or may not be in the report. However, you could get one in preparation for listing the home to show buyers there is no issue in the recent past.
If you bought your home under five years ago, you may want to get one to see if something wasn’t disclosed and may be of concern. You may not be able to do anything about it legally, but you may be able to check out the problem for any follow-up issues. If you’re about to shop for additional or replacement homeowner insurance coverage, you may want to get a copy of the report to make sure there isn’t something there you didn’t know about or an error.
How to Get a CLUE and the Cost
As a homeowner, you’re allowed one free CLUE report each year. The cost of additional reports or those requested for other reasons is $19.95.
Once you have a C.L.U.E., you know what the insurers know. Information has value.