Get a Clue

The home you’re eyeing looks perfect in every way, but prior damage and other issues may be lurking in the house’s backstory. These are details you’ll want to know about before signing the closing papers. And you can, thanks to a free tool that lists insurance losses on a property going back seven years.  The majority of home insurance companies contribute claims history information to a database called the Comprehensive Loss Underwriting Exchange, or CLUE. Underwriters use the information in a CLUE report to rate insurance policies. They look at the claims history to see if the person applying for insurance hasn’t disclosed a certain condition or indicator of how the property is being maintained, or if there are several instances of the same type of loss.

These same facts and figures can help a home buyer determine whether to buy a particular house and how difficult and costly it might be to get homeowners insurance on the property.  If you’re clueless about CLUE, don’t feel embarrassed. A recent survey found that 82 percent of Americans have never heard of the database or the reports associated with it.  So, what’s in a clue report? A home’s CLUE loss history report provides insurance company names and policy numbers and any claim numbers. The report lists the dates of any claims, the loss types, and amounts paid for losses, and it will tell if a claim was denied.  Weather-related losses, fires, theft, vandalism, and water damage are some of the types of claims listed. But the report doesn’t indicate what part of the property or home was affected. You’d need to ask the homeowner for those details.  A report might be blank, for two reasons: 1. The homeowner did not make any claims in the past seven years. 2. The home was covered by an insurance company that doesn’t participate in CLUE.

“Claims for the property under a different owner also won’t be included either, and therefore not considered when rated for insurance,” says Jeffrey Ill, a vice president for homeowners insurance at Esurance in San Francisco.  How to get a Clue?  A free CLUE report can be obtained once a year from database giant LexisNexis. Requests can be made online or by calling (866) 312-8076.

Here’s the catch for a homebuyer: Only the owner of a property may access its CLUE report. “You must request the report from the owner of the home you’re considering buying. A savvy seller should obtain a CLUE report before showing the home, make several copies, and have those available for potential buyers.

A Clue Report is not an inspection.  Potential buyers should use the CLUE report to let their home inspector know of any repairs that have been made so that the inspector can make sure the work was done correctly.  A CLUE is not a secret database, and it gives no score or recommendations. It just tells what happened in and outside the home. It doesn’t take the place of an inspection or disclosure from the seller. It’s an additional tool to evaluate the home and the cost of homeowners insurance.