Do Home Buyers Need CLUE Reports? (agents, department, insurance, listing)

[stonecypher5413]

What is a CLUE report and why are buyers in California and other big states asking for one in their purchase offers to sellers? I am in Oregon.

[Silverfall]

CLUE is the Comprehensive Loss Underwriting Exchange. This in an insurance industry database which tracks claims made by homeowners. CLUE was designed to help insurance companies avoid fraud and identify people that make excessive claims.

One of the side benefits is that it keeps all of the claims made on a particular house. How does this impact you as a buyer?

Let's say you want to purchase a house. The sellers disclosed to you that the water heater tank broke and flooded the basement. They tell you the insurance company paid for the repairs and they were completed. You can have the seller order a copy of the CLUE report and it will tell you if indeed this is true. It is a good resource for buyer due diligence.

The other issue that buyer's may have is with water damage. Let's say that the seller's have a house that sits below grade and is susceptible to flooding. The house flooded and the sellers filed a claim with their homeowners insurance, but the claim was denied. The claim gets reported on the CLUE report. You as a buyer, try to get a policy issued, and the insurance company sees this claim for the house. They may decide that the house is too risky and require a higher rate. Suddenly you are paying more per month for your house. That would be nice to know early in the transaction, rather than right before the close of escrow.

So...unless the house is new construction, you may want to consider asking the seller to pull the CLUE report for their house. It's $15-$20 and can be done online.

[middle-aged mom]

Sometimes sellers get amnesia when completing a disclosure report. If they flooded and made claim on their policy, it's going to show and then you know and can decide if you think the seller's amnesia includes others issues, not covered by insurance.

Some listing agents are begining to make a practice out of pulling the report to avoid being misled by their clients afflicted with selective amnesia.

[TexasHorseLady]

To clarify, only the homeowner can pull the report, correct?

[Brandon Hoffman]

Unrelated but I thought at first your heading was "Do buyers need a CLUE?" (chuckles...)

[stonecypher5413]

In my ongoing research before I purchase a house next year (and, at the rate I'm reading about home buyer horror stories that keep me from sleeping at night, maybe THE YEAR AFTER), I discovered the following on Privacy Rights Clearinghouse--privacyrights.org

When it comes to the CLUE report, you have the same rights as with your credit report:

• You can get a copy of your CLUE report and insurance scores. And now, under recent amendments to the FCRA, called the FACT Act, you can get one free copy a year of your CLUE report.
• The insurer must notify you if it intends to take an "adverse action" based on information in the CLUE report. Examples of adverse actions include denial of a new policy , or a new policy premium that costs more because of so-called negative factors.
• If you have been denied insurance, your policy has been cancelled, your coverage has been limited, or your premiums have increased, you are entitled to a free copy of your report - over and above the one free copy per year you can obtain under the FACT Act.
• You can dispute inaccurate or incomplete information included in the CLUE report.
• The consumer reporting agency that prepares the report must investigate disputes.
• If you are not satisfied with the investigation, you can file a statement that must be included in all future reports.
• If you have been turned down for continuing coverage or your premiums have increased because of inaccurate data that affected your "score," you should receive an adverse action notice and a free copy of your credit report. You can dispute such score-related inaccuracies just as you can inaccurate claims information in your CLUE report.
• These rights also apply to the A-PLUS report, the less common property loss database.

But this was only after I read about home buyers discovering the hard way about CLUE blacklisting:

Will I get a warning from my insurer when there's a problem with my CLUE report?
Unlikely. Most consumers find out about insurance practices and the CLUE report the hard way. Below are some examples of unfair insurance company practices and the CLUE report told by the California Insurance Commissioner at a 2003 press conference, (August 4, 2003, #093) www.insurance.ca.gov/docs/FS-News.htm (broken link):
A former 21st Century Insurance fraud investigator and 32-year-old homeowner and mother was forced to get substandard homeowner's insurance at three times the normal price because the house she was purchasing was "blacklisted" on a national Comprehensive Loss Underwriting Exchange (CLUE) report.

A 79-year-old homeowner was turned down for a homeowner's policy because she made a $393 claim on her purse that had been stolen in Montreal while she was visiting her daughter.


A 75-year-old homeowner was "blacklisted" after she made a telephone inquiry about her policy coverage with Allstate, with whom she had continuous homeowner's coverage for 30 years.


The Chief of the Consumer Services Division, California Department of Insurance and Palm Springs homeowner was turned down when he attempted to get insurance for his new home. An inaccurate CLUE report showed five claims, two of which were for another property owned by the seller in a different city; two other "claims" were only for coverage inquiries and one claim was fully remedied and should not have had bearing on his eligibility.


I'm so depressed, I think I'll go sit down now and peruse the rentals.

[Silverfall]

Originally Posted by TexasHorseLady

To clarify, only the homeowner can pull the report, correct?

Yes.