CLUE Yourself In: How Your Claims History Informs Your Insurance Future
Your claims history plays a major role in your insurability. Understanding its impact equips you with the power to make better decisions to improve your insurance score.
When you are finally able to buy that dream home where you want to spend the rest of your life, you may have a spotless credit report and enough money to make a down payment of more than 20%.
But when you try to obtain coverage from your insurance company, you are rudely surprised to find out that the insurance premiums for the property you are buying are sky-high. All because the previous owners have filed a number of claims on the property over the past 10 years.
This makes the house a source of high risk to the insurer, even though you may be dealing with a different insurance company than the one the previous owner used.
What is a Comprehensive Loss Underwriting Exchange?
When it comes to calculating the cost of insurance for any type of vehicle or real estate, the insurance company that you decide to use will calculate the monthly premium based on the number of claims made against the property in question, regardless of who filed the claims.
This claims history is compiled by various data collections services such as CLUE (Comprehensive Loss Underwriting Exchange), A-Plus and AutoPlus. The vast data storehouses that companies such as these maintain contain millions of claims that have been filed in the past.
A claims history is constructed for every property that has been insured with the insurance companies who subscribe to that database. Virtually all property-casualty insurers subscribe to at least one of these data collection services so that they can more accurately calculate the premiums for a given home, vehicle or other piece of property.
Of course, these same databases also maintain records on people as well. This is why it is hard to escape your claims history by switching from one insurance company to another, because databases such as CLUE will still have your previous history available for your next prospective insurer.
Although there are property-casualty insurers that do not subscribe to CLUE, about 90% of all homeowners insurers do. This allows CLUE to compile an accurate list of claims for a given piece of property going back for at least the past five to seven years. The reports that data collection agencies such as CLUE provide are somewhat akin to a credit report. Just as your credit report reveals how well you are able to meet your obligations, a CLUE report shows how many claims have been filed for a given piece of property. CLUE is a subsidiary of data giant LexisNexis, which compiles billions of pieces of information on people, property and other items that are useful for various purposes.
What is in a CLUE Report?
It should be noted that insurance companies are not required to submit their claims histories to CLUE or other such agencies, but most do so because they know that supplying accurate information to these agencies can help to keep their costs down in the long run. But that does mean that all of the claims involving a given piece of property or vehicle may not necessarily be found in the CLUE files. Homeowners insurance companies that submit information provide the following for the CLUE report:
Insurance company’s name.
Date of loss.
Type of loss.
Amount that the homeowners insurance company paid for the loss.
Types of claims that may appear on CLUE reports:
Damage to other people’s property.
Can I Get a Copy of my CLUE Report?
It is relatively easy to get a CLUE report from LexisNexis. You can request a report via email, by post, by phone or online. Here is their contact information:
CLUE reports can also follow people. Vehicle insurers want to know which insureds have repeatedly filed claims in the past so that they can charge them higher premiums. The Fair and Accurate Credit Transaction Act (FACTA) ensures that consumers can get a free CLUE report on themselves at least once a year.
When you apply for homeowners insurance for your new home, your insurer will most likely pull reports on both you and the seller as well as the house in order to arrive at their premium price. The reports will provide the details about any claims made from any of those parties over the past seven years.
It is also a good idea for you to pull a CLUE report for any piece of property that you want to buy, so that you can see what repairs or improvements have been made to the property and also any particular forces of nature to which the property may be vulnerable, such as flooding or earthquakes.
You should also keep in mind that most home insurance companies also keep a record of any inquiries that have been made by a given homeowner. So even if you consulted with your home insurer on a specific repair or other related expense but then decided to handle it yourself, the insurance company may still keep a record of that interaction. But this type of inquiry will not be found in a CLUE report.
While A-PLUS is not as well-known as CLUE, it functions in essentially the same manner as its larger counterpart, providing claims histories for the past seven years for people, vehicles and properties. A-PLUS is administered by Verisk Analytics’ Insurance Services Office, and about 1200 property-casualty insurers subscribe to it. AutoPlus is the database used in Canada, and it functions in a similar manner as the other companies mentioned here, except that it only keeps a database for vehicles and not properties.
The Bottom Line
So what do these data collection agencies mean for you? You probably already know that you need to keep your credit report as clean as possible, but you also need to know what is on your claims report so that you can be sure that all of the information that it contains is correct. A bad report can jack up the cost of your insurance premiums, so be sure that all claims-related activity that is on the report is valid.
If you are looking to buy a home or a used car, a CLUE report can give you some insight into the number of claims that have been filed. A CLUE report is a homeowner’s equivalent of a CarFax report and can reveal key pieces of information such as whether the home has ever had fire or water damage. Consult your financial advisor or property-casualty insurance agent for more information on CLUE reports and how they can impact you.