Do you have a clue?

Understanding the Comprehensive Loss Underwriting Exchange.

by Jeffrey A. Skelton   Homeowners insurance has made headlines across the nation in recent months. Media reports have paid particular attention to how insurance companies use prior claims in determining how much people pay for coverage.

When a consumer files a claim, it is recorded in the insurance company’s database. That information is shared with other insurance companies when you shop for new insurance coverage. It is not used for renewing coverage with your current insurance company.

A centralized database was established by insurance companies to act as a clearinghouse for quick reference of this data. More than 600 companies covering 90% of the insurance market contribute to the database. This database is called the Comprehensive Loss Underwriting Exchange (CLUE) and is maintained by a company called ChoicePoint.

Before the advent of CLUE, which has been in use for more than 10 years, insurance companies checked for prior claims by writing letters, sending faxes, and making phone calls. These practices added cost and delayed the insurance agents’ ability to provide the consumer with a quote.

The CLUE database tells the agent and insurance company what claims you have filed in the past five years. The database does not tell the insurance company what to do with the information.

The database does report claims filed by the policy holder for personal losses, such as a lost wedding ring. It also reports losses that have occurred to the property, like a kitchen fire. About two-thirds of all CLUE reports show no claims at all.

Federal law gives consumers the right to review their own CLUE report at any time. Consumers who find errors can dispute those items with ChoicePoint. On the consumer’s behalf, ChoicePoint will contact the insurance company that placed the item on the report to resolve the dispute within 30 days. ChoicePoint is committed to accurate, responsible use of the data that it holds about consumers.

The CLUE report can be a powerful consumer tool for homesellers as well as buyers. Sellers can advertise the fact that they have not had any claims. A buyer may wish to ask a seller for a copy of the seller’s property CLUE report to learn about prior problems with the property.

Realtors^® may wish to consider having their seller clients order a CLUE report as soon as they are under contract to represent them. By ordering the report early, consumers can check for inaccuracies and get them corrected before they seek insurance.

It is also important for the homebuyer to speak with her insurance agent as soon as possible, so the agent can begin working on securing coverage for the new home. In a tight insurance market, obtaining insurance cannot be taken for granted.

Jeffrey A. Skelton is assistant vice president of ChoicePoint. You can e-mail him at jeffrey.skelton@choicepoint.com. You can learn more about CLUE reports, and consumers can order CLUE reports at ChoiceTrust.com.

Editor’s note: Thanks to efforts by the Texas Association of Realtors®, a homeowner may not be denied insurance solely because:
1) There has been any previous mold claim on the home for which a person is seeking insurance, and the mold damage has been repaired; 2) There have been not more than two previous appliance-related water claims in the prior three years on any home in which the person has resided or in the home to be insured, and the damage has been repaired; or 3) There has been one water claim of any kind on any home in which the person has resided or in the home to be insured, and the damage has been repaired.

Illustration © Artville.

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