Previous Owner Costing You Money Because of Their Insurance Claim?

Some storm damage causes damage to your house and you file an insurance claim and collect a check from your insurer and then you make the repairs. You may think that it's over but it's bot. Every time you make a claim you make on your homeowners insurance the claim is recorded in a insurance industry database called a CLUE report.  Most insurance companies use CLUE to check on the claims history of prospective policyholders. The CLUE report includes claims made on your house before you even bought it. This database is used by most insurance companies to check your claims history and it follows you from one insurer to another.  Claims remain in the CLUE database for seven-years from the date you filed them. CLUE advises 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 these inquires though.

How Insurance Companies Use CLUE

Insurance companies depend on CLUE reports for DFW real estate because these statistics show that if you have filed a claim in the past you are more likely to file another one in the future. The dollar amount of a claim is not as important as how often you have filed a claim. Each insurance company has its own formula to calculating how much a claim will affect your premium. It is safe to say that the fewer the claims you have filed the less you will likely be charged. 

Homebuyers knowing what’s on your CLUE report will give you an idea of whether you will need to pay extra for homeowners insurance or even if you run the risk of insurance rejection. Unfortunately, even a squeaky clean report doesn’t mean you can be sure of getting homeowners insurance at the best price. This is because the claims on your CLUE report are not the only things that affect your overall insurance risk.

Most insurance companies that insure Frisco real estate will also take into consideration your credit score, which is based on such things as how much debt you carry, whether you pay your bills on time, etc.  Insurance company studies show that how people manage their finances is a good indicator of whether they will file an insurance claim. And the more likely you are to file a claim the bigger risk you are to them and more risk means a higher premium or denial of coverage all together. Other factors insurers take into consideration include the location of your home and its type of construction.

How to Understand Your CLUE Report

If you do decide to check your CLUE  report, it is a relatively easy process. Under federal law, you can get one free CLUE report a year just like with credit reports. You can order the report online, by phone, or by mail.

Your CLUE report will include:

• The type of loss fire, water, etc. for each claim and the claim number

• Your name, home address, birth date, and Social Security number

• The number assigned to the report

• The name of your insurance company

• The type and number of the insurance policy

• The date of the loss and the amount of each claim

The report will also tell you how to dispute any errors you find. Because risk calculations vary by insurance company, it is nearly impossible to determine how a claim on your CLUE report will affect your insurance premium. This makes it tough for you to decide how much value checking your CLUE actually gives you. Taking less than an hour once a year to order and review your report could pay off big for you, especially if you find an error.