Buying a new home is a tough enough process without worrying about whether a property's sellers have been filing homeowners insurance claims. Unfortunately, that’s something you should think about, because their claims can increase what you’ll pay for homeowners insurance—and their claims activity is also an important piece of the home’s history.
“It’s really smart to be aware of what damage the property may have gone through,” says Laura Adams, senior analyst for InsuranceQuotes.com.
To see claims history for the past seven years, you need a copy of the property’s C.L.U.E. report—from the Comprehensive Loss Underwriting Exchange. Every claim, even if it was denied or only inquired about, is listed there. It’s only available to the homeowners themselves, insurance carriers and mortgage lenders, so you’ll have to request the paperwork. Only 10% of homeowners have done this, according to a recent survey by InsuranceQuotes.com. In fact, only 8% of Americans consider themselves somewhat or very familiar with C.L.U.E. reports, the survey found.
“In some states, sellers are required to disclose any damage or repairs that they’re aware of by law, so savvy real estate agents will help you get those disclosures,” Adams says. “Even if it’s not required, getting the C.L.U.E. report is very smart.”
Here are some pointers:
Discuss claims with the seller. Once you have a copy of the report, make sure everything is correct. “Just like with your credit report, there can be inaccuracies,” Adams says. “Any time there are multiple people involved you run the risk of having something in error.”
Add notes as necessary. If the seller did something to remedy a situation—such as installing a new roof or upgrading part of the home—you can enter information about those changes in the C.L.U.E. report as a personal statement. “Or have the seller enter it, and it will let the insurance company know that yes, the damage occurred, but look at the great job the owner did fixing the issue,” Adams says.
Pull a report every year. Once you own a home, it’s smart to pull a copy of your C.L.U.E. report annually, much like you pull copies of your credit reports. (Of course you do this, right?) You can get one for free every 12 months and review it. You can do this via LexisNexis’s Personal Reports page. “It’s free and it’s really quick,” Adams says. “I do it every year and verify that there’s nothing inaccurate there.”
Be cautious about calling your insurer. The C.L.U.E. database is a record of every claim—even if it was denied or never filed. That’s right: Call your insurer to ask about damage to your home and whether you should file a claim, and a notation gets made either way. “Even if you’re just asking an innocent question,” Adams says. “All of those are noted in your history and could be used against you if it’s substantial.” (Just so you know, 84% of Americans surveyed think this practice is unfair.)
