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Get a CLUE About Home Insurance Claims

January 20, 2016

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The Fair Credit Reporting Act (FCRA), as established in 2003, was put into place to protect consumers to ensure fair and accurate credit reporting as well as ensure the privacy of information within consumer reporting agency files. Much of this Act pertains to individual credit ratings, how they are used and by whom, in a variety of transactions such as applying for a loan or credit card. But did you know that there are regulations within the FCRA that apply to how insurance companies use and share your information when it comes to filed claims?

There is a national database used by insurance companies to collect data on auto and home insurance claims. Known as the Comprehensive Loss Underwriting Exchange, or CLUE, this database provides a 7-year claim history on policies. This is used as a tool to determine consumer risk profiles, which are used to establish insurance renewals or new policies. Not all insurers use this database, but many do. Insurers feed information about paid claims and inquiries made about coverage, completing a risk profile which companies access for underwriting purposes. CLUE is probably the largest database in use, but there are others as well. These databases and how they function are complex, but are worth investigating to understand how you may be directly impacted. The Privacy Rights Clearinghouse is an excellent source, which provides in depth information toward understanding this type of database.

Because insurance regulations are established by states, the rules and regulations 01.15.2016_photo02insurance companies must adhere to vary. In California, any property insurance provider which submits claim history and loss experience to a national database is required to disclose this to their policyholders. This is good news for Californians. In fact, part of the California Insurance Code states that insurers are prohibited from using inquiries on coverage which do not result in a claim against consumers. Also, if your coverage is canceled or limited, an explanation as to why must be provided. If, for example, your homeowner insurance no longer includes water damage coverage, you must be informed as to why the change was put in place on your policy.

As a consumer, you have a right to view your own CLUE report once in a 12-month period. You can request the report from LexisNexis, the consumer-reporting agency that controls the database. If you are selling your home, or looking to buy one, a CLUE report can also be used to provide clear disclosure of any past property claims within the last five years. Because of the FCRA restrictions, the property owner must request the CLUE report. As part of ensuring privacy of data, any report request must come from a policyholder or from an insurer, which the holder has authorized to access the data. Just as with credit reports, it is a good idea to view your CLUE report for accuracy prior to selling your home. As a buyer, with the report in hand, you will know if any damage has occurred which resulted in an insurance claim. The report will also help you understand upfront if there could be an impact on getting your own insurance policy when you buy a property.

 

Both parties in a residential Real Estate transaction can benefit from a CLUE report. I strongly encourage sellers to request a report prior to listing their home and include their disclosure package. If not provided, buyers are advised to ask the Seller to provide a copy when making an offer. When you are ready to sell or buy a home, me and my team are ready to help you through the entire process. Our goal is to make your experience both easy and pleasurable. Contact us today at (925) 634-7820, or by email at realestate@cecily.com.

 

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