|
C.L.U.E.® is the Comprehensive
Loss Underwriting Exchange, an information database of claim history
developed by ChoicePoint of Alpharetta, Georgia. C.L.U.E.®
reports contain a five year history of property insurance claims filed by
the insured and/or on the property they own.
ChoicePoint reports that over 90 percent
of insurers writing homeowners coverage provide claims data to the
C.L.U.E.® database and this data becomes
information that underwriters and insurance agents use to make decisions
on underwriting and pricing policies.
ChoicePoint states that actuarial studies
conducted by insurance companies have shown a correlation between a
consumer's prior claims history and their future insurance loss
potential. In other words, if you have filed numerous claims in the
past, you are considered a higher risk in the future.
Note that ChoicePoint is a reporting
agency and not a credit bureau or insurance company. They do not
make underwriting decisions or determine insurance guidelines, but simply
provide claims information to the companies that do make such decisions.
|
|
|
The Importance of C.L.U.E.® in Real
Estate Transactions
The insurance industry, particularly in Texas, has become very volatile
due to a number of factors. Insurers are reluctant to underwrite
properties with a history of water claims and this can have a direct
impact on the ability to secure coverage for a homebuyer.
With increasing frequency, real estate
agents are encouraging buyers to research insurance availability as soon
as they tender an offer. Many agents have reported problems at
closing when difficulties in obtaining coverage are realized.
Relying on the seller's disclosure isn't
always enough as there are instances when the seller may be unaware of
claims (see sidebar).
A few instances have resulted in problems
after closing due to the time frame between an approved application for
insurance and the final underwriting activity. However, this is
becoming less common as many insurance agents are researching C.L.U.E.®
as part of the application process and not waiting for the underwriting
phase.
|
Zero-Pay
Claims: A Catch-22 There
are situations when an insured can file a claim without realizing
it. Let's
say a homeowner calls their agent to look at water damage at the
property. Upon inspection, it is determined the amount of loss is
under the deductible limit (or isn't a covered peril). The
homeowner does the repairs thinking the insurance company won't be
involved only to find out later on that the insurance agent filed a
'zero-pay' claim...which is still a claim in the C.L.U.E.® database! Some
say it's a Catch-22: filing a claim to see if you have a claim, but it is
something that can happen. |
|
Obtaining C.L.U.E.®
Reports
Information contained in a loss
claim report is considered subject to the Fair Credit Reporting Act (FCRA)
which covers the permissible use of information contained in the files of
consumer reporting agencies.
In general, only someone who has
certified to the reporting agency a "permissible purpose" for
which the report is being obtained may obtain such information. Also, I can get information on me and you can get information on
you, but I can't get your information and you can't get mine.
Listing agents may want to consider
encouraging sellers to research the claim history of the property to
make sure there are not hidden pitfalls. The homeowner should
contact their insurance agent, or may obtain their report from
ChoicePoint's ChoiceTrust
website.
Buyer's agents may want to consider
encouraging buyers to investigate insurance availability as soon as a
property is selected. Buyer's won't be able to obtain a C.L.U.E.®
report on someone else's property directly, but their insurance agent can. |
|
