In our prior blog posts, we discussed contingencies and their place in the home buying process. There is one more buyer contingency worth mentioning that is little-known but very insightful – the C.L.U.E. report!
C.L.U.E. stands for the Comprehensive Loss Underwriting Exchange, which is a database used by the insurance industry. Basically, it’s a history of insurance claims against a property. A home’s C.L.U.E. report stays with it for the duration of its existence, and stays with it throughout changes of ownership.
C.L.U.E. data is used by insurance companies as part of the risk analysis in providing coverage to a particular home. Before issuing a homeowner’s insurance policy, the insurance company looks at the reported loss history of the home, as well as the credit history and insurance claim history of the consumer applying for coverage. This combined information is used to determine if coverage will be granted, and at what price.
The insights provided in a C.L.U.E. report would be highly valuable to buyers who are looking at homes in risk-prone areas, such as coastal properties, flood zone properties or any area where natural disasters are known to strike. A C.L.U.E. report can also tell you if the home had a claim in recent years for repairs for any reason. It will also reveal any liability claims.
Unfortunately, a home’s entire claim history is not available to the public. But there is a form of C.L.U.E. report that a home buyer can request. It’s called the C.L.U.E.® Home Seller’s Disclosure Report. As the name implies, it can only be requested by the current homeowner or by his or her authorized insurance agent. Also, this type of report will only go back 5 years.
If there is any loss history during that period, the report will list the date of loss, loss type, claim status, amount paid, policy type and insurance company name.
Naturally a “clean” report doesn’t mean you won’t have a claim someday. However, if the C.L.U.E. report shows any claims in the past 5 years, it’s very likely you will pay higher insurance premiums for that home – even though you personally did not make the claims!
Since your homeowner’s insurance premiums are affected by the claim history of the home itself, requesting a C.L.U.E.® Home Seller’s Disclosure Report should be among the contingencies in your offer. This is especially true if the home you’re buying is a “flip” where the seller reportedly never lived there, or again, if the home is in a risk-prone area.
Your Exclusive Buyer Agent will give you further guidance tailored to your situation! Find an Exclusive Buyer Agent in your area today!