Before You Buy a House, Get a Home History Report: Here's How
Many home shoppers experience some degree of fear of the unknown. Prior to submitting an offer, you may run Internet searches on neighborhoods or examine public records to find out about the history of a property. If you're interested in insurance information for a specific property, loss history is collected and made available upon request in the form of a C.L.U.E. Home Seller's Disclosure Report.
What is a C.L.U.E. Report?
C.L.U.E. stands for Comprehensive Loss Underwriting Exchange. The information in the C.L.U.E. Report is provided by a consortium of insurance companies that have agreed to voluntarily share historical loss information on properties across the country. Home insurance loss data detailed in the C.L.U.E. Report includes the dates of losses, the types of claims and the amounts paid by the insurance company for one address. This information helps insurance agents properly assess risk and calculate premiums, but it also helps potential home buyers research the history of a property.
Modern Technology Results in Better Data Collection
C.L.U.E. Reports evolved from early data collection efforts beginning in the 1980s. Companies such as LexisNexis built insurance databases and insurance companies began to group loss information by property, auto and also by individual. The data was studied and used to calculate more precise predictions of loss, which allowed insurance companies to adjust home and auto insurance rates as needed. Sharing data also helped insurers detect double payments for the same loss in the event that an individual attempted to file a claim with two different companies.
How Do You Request a C.L.U.E. Report?
Before placing a home on the market, sellers should run a C.L.U.E. Report to check for reported losses. LexisNexis provides one free C.L.U.E. Report to homeowners each year, in compliance with the Fair Credit Reporting Act. Because a C.L.U.E. Report covers five years of past data, sellers who have not owned their home for that long may want to review the C.L.U.E. Report and take note of any previous losses. The report should also be reviewed for accuracy to ensure that a loss amount is not improperly attributed to your address.
C.L.U.E. Home Seller's Disclosure Report
According to LexisNexis, only the current owner of a home may request a C.L.U.E. Report. Home buyers and real estate agents must work with sellers if they wish to review insurance loss information. To provide assurance to those interested in submitting an offer, sellers can purchase a C.L.U.E. Home Seller's Disclosure Report for review by real estate agents and home buyers. The report is formatted with home buyers in mind and provides no personal data about the current home owner. The C.L.U.E. Home Seller's Disclosure Report provides only loss data related to the property.
Red Flags for Buyers
If a seller chooses to provide a C.L.U.E. Report, buyers should look for certain red flags that may raise questions. Repeated losses related to the same issue, such as more than one occurrence of water damage, may indicate an ongoing problem inside the home. For example, if a water heater leaks or bursts and causes an insurance loss, homeowners typically learn from experience and will change their future habits (i.e., shut the water off when leaving for vacation) or correct the problem by replacing the faulty heater. Multiple losses resulting from water damage might also indicate that a portion of the home's plumbing system was installed incorrectly, or there is a problem with the property's grading, causing flooding. Numerous incidents of broken pipes may indicate that the plumbing was not insulated correctly and therefore the house is vulnerable to large temperature changes. A shifting foundation may also result in repeated losses, which would be noted in a C.L.U.E. Report.
If you have any questions about the information in a C.L.U.E. Report, or if you're a new homeowner looking for home insurance, you can save time and effort by working with an independent agent. Independent agents like those at Trusted Choice® can search multiple insurance carriers at the same time and will work to find you the largest discounts and best coverage on your new property.
About the author: Jennifer DiGiovanni is a freelance writer and a partner in a real estate investment firm. She previously worked in the financial services industry and has attainted an MBA from Villanova University. Jennifer enjoys writing about real estate, business, home design and healthy living. Jennifer resides in the suburbs of Philadelphia, PA.
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