Homeowners Insurance Claims

When buyers are looking at purchasing a home they often focus on inspection reports and appraisals, but there is another important report to consider.  It is the property’s record of insurance claims.  When a claim is made on a home the insurance company sends a report to an insurance industry database.  This database is known as the Comprehensive Loss Underwriting Exchange (CLUE).

When you apply for homeowners insurance the insurer not only checks your credit, but they also check the claim history for the property itself.  Did the home have a claim for flood damage, fire damage, or were medical claims paid for injuries at the property?  The insurance company may not issue coverage for a property with this type of history, and that could prevent the buyer from closing on the property.

As a potential buyer you may want to request that the seller provide a copy of the CLUE report once you have a property under contract.  The sooner you know about these items the better.  You will also want to secure insurance coverage early in the process – don’t wait until the week of closing to call your agent!  As a seller you may wish to obtain a copy of your home’s CLUE report prior to listing your home for sale.  This will give you time to correct any errors that may exist and you will have it ready for potential buyers that may request it.