Many home buyers fall in love with their house, sometimes at first sight. However, it is important to be careful when you open up your heart – otherwise, you may get trapped in a money pit. Your first step to avoid falling into that trap is to complete a thorough home inspection with a reputable, licensed inspector. Once this is done, take your investigation a step further by requesting a comprehensive loss underwriting exchange (C.L.U.E.) report from the sellers.
Unfortunately, buyers cannot request a C.L.U.E. report themselves. Only homeowners, insurance companies, and lenders are allowed access to these reports. However, as part of the negotiations for your home purchase, you can ask the sellers to obtain their free C.L.U.E. report from the LexisNexis website or by calling 1-866-312-8076.
Why Do You Need a C.L.U.E. Report?
A C.L.U.E. report provides a history of insurance claims on a particular property or on the insured individual. They are available on both homeowners insurance and auto insurance policies, and are used by insurance companies to determine whether to approve an insurance policy and, if approved, how much to charge for premiums.
The C.L.U.E. report includes a seven-year history of all insurance claims with information about the type of claim, the date, and how much the insurance company paid to resolve the problem. The information comes from insurance companies that contribute loss data information to LexisNexis, which maintains databases of consumer information. Home warranty claims are not included on a C.L.U.E. report.
What You Can Learn From a C.L.U.E. Report
When you review the C.L.U.E. report of a home you’d like to buy, look for claims that indicate a potential ongoing problem, particularly claims that involve water damage. For example, if a home has had even one claim involving water, investigate the existence of mold or perhaps explore the need for flood insurance. If the pipes have frozen more than once, the home may need additional insulation.
Other potential red flags include multiple claims of any sort, such as more than one fire or more than one burglary. While these types of problems could indicate carelessness on the part of the owners, they could also mean that the home has a faulty electrical system or is located in an undesirable area.
In particular, review the C.L.U.E. report for claims related to:
- Water damage from a pipe burst
- A flooded basement
- Storm damage
- Damage from an electrical fire
- Multiple fires
- Multiple thefts
It is important to note how much the insurance company paid for repairs, since this can be an indication of the severity of the incident. Also, just because you see a claim or a series of claims on the report doesn’t mean you should avoid buying that house. In fact, if the claim resulted in a new roof or other substantial improvement, you could be in luck, as this is one less homeowner expense you’re likely to face in the future.
Instead of turning your back on a property with a thick stack of insurance claims, discuss the claims and how they were resolved with the sellers. Ask your home inspector to check anything that turns up in the report as well.
A C.L.U.E. report may occasionally indicate whether a property will be costly to insure. Insurance companies primarily use your own C.L.U.E. report with a history of the claims you’ve filed to underwrite your policy. However, if the company sees the potential for chronic issues based on the property’s C.L.U.E. report, they may increase your rate. If a property has had severe and multiple claims, the property could even be uninsurable.
Check Your Own C.L.U.E. Report
It’s important to check your own report for errors because, like a credit report, the C.L.U.E. report provides a basis for your insurance premiums. Under the federal Fair Credit Reporting Act, you can request a copy of your C.L.U.E report to see what is reported about you to insurance companies, including your claim history.
While you cannot erase any legitimate past claims history, you should check your report for errors. If there are mistakes on the report, contact LexisNexis and request a review and a correction.
While a home inspection and the seller’s own report on the condition of a home are important, a C.L.U.E. report is an additional source for you to rely on to make sure you’re purchasing a home free of chronic problems. It certainly is not intended to replace a home inspection; however, having multiple ways to determine the condition of the property you’re interested in buying is always in your best interest.
Have you ever requested a C.L.U.E. report? Was the information useful to you?