Knowing whatâ€™s on your CLUE report will give you a sense of whether youâ€™ll need to pay extra for homeowners insurance. Image: Rosanne Olson/Getty Images
A tree falls on the roof of your house. You file an insurance claim with your agent, collect a settlement from the insurer, and fix your roof. End of story, right? Not quite. Every claim you make on your homeowners insurance is recorded in a widely used insurance industry database called CLUE, short for Comprehensive Loss Underwriting Exchange.
Almost all insurance companies use CLUE to check on the claims history of prospective policyholders. The CLUE insurance report also includes claims made on your home before you even bought it. A-PLUS is another company that maintains a loss-history database. Whatâ€™s inside these reports can affect your insurance premiums, or even prevent you from getting coverage.
Your claims history lives on in CLUE
The CLUE Personal Property report, which pertains to homeowners insurance, is divided into two parts: your personal record of claims (â€œClaims for the Subjectâ€) and the claims on your home (â€œClaims History for Riskâ€). The number of claims in either section will affect whether you can get insurance for your home, how much coverage you can get, and how much youâ€™ll pay in premiums. If youâ€™re turned down for homeowners insurance because of information in your CLUE report, your insurance company is required to let you know why you were rejected.
Since the database is used by most insurance companies, your claims history follows you from one insurer to another. Actual claims, as opposed to inquiries, remain in the CLUE database for seven years from the date you filed them. Both LexisNexis, the owner of CLUE, and A-PLUS advise insurance carriers not to report loss information just because you called to ask a question about whether your policy will cover a particular loss. Individual insurance companies may keep a record of inquires, though.
How insurers use CLUE
Insurance companies rely on CLUE reports because statistics show that if youâ€™ve filed a claim in the past, youâ€™re more likely to file one in the future, says Dick Luedke, a spokesperson for State Farm Insurance. The amount of a claim is less important than how often youâ€™ve filed, he says. â€œWe arenâ€™t trying to make up for past losses, but to predict the risk of future claims.â€
Each insurance company has its own formula for calculating how much a claim will affect your premium, according to the Insurance Information Institute, a trade group that provides information to consumers. Suffice it to say the fewer the claims the less youâ€™ll likely be charged. State Farm gives a 5% discount if you havenâ€™t filed a claim in the last five years, says Luedke. Thatâ€™s $40 off an average annual premium of $804 (this varies by company). Ask your agent if a claim-free discount is available.
Claims arenâ€™t all that count
Knowing whatâ€™s on your CLUE report will give you a sense of whether youâ€™ll need to pay extra for homeowners insurance, or even if you run the risk of rejection. Unfortunately, even a pristine report doesnâ€™t mean you can be sure of getting homeowners insurance at a great price. Thatâ€™s because the claims on your CLUE report arenâ€™t the only things that affect your overall insurance risk.
Insurance companies also consider your credit score, which is based on such things as how much debt you carry, whether you pay your bills on time, and so forth. According to the Insurance Information Institute, studies show that how people manage their finances is a good indicator of whether theyâ€™ll file an insurance claim. The more likely you are to file a claim, the bigger risk you are to the insurance company. And more risk means a higher premium or denial of coverage. Other factors insurers consider include the location of your home and its type of construction.
How to review your CLUE report
If you do decide to check you CLUE Personal Property report, itâ€™s a relatively easy process. Under federal law, you get one free CLUE report a year. The LexisNexis order page has information on how to order the report online, by phone, or by mail.
Request a form to receive a Property Loss report from A-PLUS by calling 800-709-8842. Thereâ€™s a charge of $19.95 to have the report mailed to you, according to the companyâ€™s website. This fee will be waived if youâ€™re ordering a report because an insurer took an adverse action against you because of A-PLUS data.
Your CLUE report will have:
The order page lets you view a sample report.
The report also tells you how to dispute any errors you find. Because risk calculations vary by insurance company, itâ€™s impossible to say exactly how a claim on your CLUE report will affect your premium. That makes it tough to decide just how much value checking your CLUE yields. Still, taking less than an hour once a year to order and review your report could pay off, especially if you find an error.
Mariwyn Evans has spent 25 years writing about commercial and residential real estate. Sheâ€™s the author of several books, including Opportunities in Real Estate Careers, as well as too many magazine articles to count