When a homeowner files a claim with their insurance company, it is recorded in the company’s records and then sent to the Comprehensive Loss Underwriting Exchange (CLUE), an insurance industry database. Ultimately, that information is shared with other insurance companies when you shop for new insurance coverage. It is not typically used for renewing coverage with your current insurance company.

The database has been in use for more than 10 years. Before CLUE, insurance companies checked for prior claims by writing letters, sending faxes and making phone calls. These practices added to overall costs and delayed insurance agents’ ability to provide the consumers with quotes.

CLUE and buying a home

Even if you’ve had no problems getting insurance in years past, if you buy a house that comes up with a number of claims against it, you may not be able to get insurance.

Here’s why: When an insurance company considers whether to offer you insurance, they’re not just looking at your history, but the history of the property in question.

The database reports what claims have been filed by the policyholder for personal losses, such as a lost wedding ring. It also reports losses that have occurred to the property, like a kitchen fire. The CLUE report allows you to check out the house’s claims history – whether the claims involved dog bites, flood, earthquake, theft, vandalism, wind or medical payments. The good news is that approximately two-thirds of all CLUE reports show no claims at all.

Choicepoint, the company that owns the CLUE database, charges $12.95 for the report, but there’s a catch. Unless you own the house, you can’t get access to the report. But REALTORS® say that you can always request a copy as part of the transaction – and make the sale contingent on the report’s contents.

Federal law gives consumers the right to review their own CLUE report at any time. If a consumer finds an error on their report, they can dispute the item with ChoicePoint. On the consumer’s behalf, ChoicePoint will contact the insurance company that placed the item on the report to resolve the dispute within 30 days.

The CLUE report can be a powerful consumer tool for the home seller as well as the buyer. The seller can advertise the fact that they have not had any claims. The buyer may wish to ask the seller for a copy of the seller’s property CLUE report to learn about prior problems with the property.

Texas REALTORS® may wish to consider having their customers order a CLUE report as soon as they are under contract to represent them. By ordering the report early, consumers can check for inaccuracies and get them corrected before they seek insurance.

It is also important for homebuyers to speak with their insurance agent as soon as possible so the agent can begin working on securing appropriate coverage for the new home. In a tight insurance market, obtaining insurance should not be taken for granted.

Know your rights

Thanks to efforts by the Texas Association of REALTORS®, a homeowner may not be denied insurance solely because:

* There has been any previous mold claim on the home for which a person is seeking insurance and the mold damage has been repaired;
* There have been not more than two previous appliance-related water claims in the prior three years on any home in which the person has resided or in the home to be insured, and the damage has been repaired; or
* There has been one water claim of any kind on any home in which the person has resided or in the home to be insured, and the damage has been repaired.

Save with these tips from the Insurance Information Institute:

* Make sure you take advantage of every discount you are eligible for. Insurance companies offer many discounts, including discounts for loyal customers and to those who insure their home and vehicles with the same company.
* You may save money if your residence is equipped with smoke detectors and by installing certain home security devices.
* Raise your deductible. Higher deductibles could produce savings of 15% to 30% or more.
* Maintaining good credit could also help you save on home insurance, since insurance companies may use your credit history in determining your rates. Get a copy of your credit report and make sure everything’s correct.