If you don't properly educate yourself on the home buying process, it can very well be like walking into a minefield. Most buyers at least have a novice understanding on areas like their credit, pre-approval, a home inspection, and so forth. However, most buyers don't have a clue what a CLUE report is, much less what an important element it is when buying and insuring a new home. Considering that around 90% of all insurers underwriting homeowner's insurance subscribe to the CLUE service, it's certainly something that you should know about.
What Is CLUE?
The Comprehensive Loss Underwriting Exchange, or CLUE, is a database that allows auto and homeowner insurers to exchange information about property loss claims. Unless your state specifically requires it, prior notification isn't required before your information goes into the system. ChoicePoint, one of the largest personal consumer data compilers in the United States, maintains the database. Property loss claims and even inquiries into coverage are entered into the CLUE database.
Your insurer can access the CLUE database when you apply for homeowner's insurance on your new home. The system will allow them to see any past claims that previous owners filed on the house. It also allows them to see past inquiries on damages, even if there wasn't a claim filed. You could find yourself in an insurance nightmare if a bad CLUE report causes insurers to be unwilling to provide you with coverage. Furthermore, it's not just your new home under scrutiny. Old claims that you made on your previous home are also available through the CLUE database and can affect the cost and/or availability of homeowner's insurance on your new home.
What Do I Do About CLUE?
The best thing you can do to keep CLUE from affecting the cost of your homeowner's insurance and/or your ability to obtain insurance is to know your rights. Just as with any other credit reports, CLUE reports fall under the Fair Credit Reporting Act, or FCRA. This means that you're entitled to certain rights, including the following:
* Notification if the insurer intends any adverse actions, such as increasing the cost of your new policy's premiums or denying your new policy, based on the information they obtained from your CLUE report.
* Get a copy of your insurance scores and the actual CLUE report. The FACT Act is a recent amendment to the FCRA that entitles you to one free copy of your CLUE report per year. Aside from your one free copy, you're entitled to get another copy of your CLUE report if you've had your policy canceled, coverage limited, premiums increased, or an application for insurance denied.
* Dispute incomplete information or inaccuracies within the CLUE report. You can do this at the ChoicePoint website. ChoicePoint is required by law to investigate your dispute. If you aren't satisfied with the investigation by ChoicePoint, you can file a statement. This statement must be attached to all future reports.
In summary, you can see how a CLUE report can substantially impact your home purchase. Do keep in mind that you can't obtain a CLUE report on a home that you don't own yet. This means that you will need to ask your real estate agent to obtain a CLUE report for any property you're considering purchasing.