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Homeowner Insurance & C.L.U.E.®

 
       
 

 
 


Overview

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.
 

 
 
This is a very general overview and is not intended to be insurance advice.  Users should contact an insurance professional or ChoicePoint for any specific questions, interpretations or current status regarding this program.  
 		  
     
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