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A Guide To Homeowners Insurance Claim History

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A guide to homeowners insurance claims history

Insurance companies use compiled information and data to describe their clients and the risk they represent, similar to a credit score.  Say, one windy night a tree fell on your house, damaging your roof. You filed a claim, they sent you money, your roof is fixed, and everything is back to normal. However, now that claim is on your insurance record and is available information for insurance companies to use to determine the risk that you and your house may pose to them. For the next seven years, the record of a claim is held in the Comprehensive Loss Underwriting Exchange database, often referred to as CLUE. Another major database for this information is the Automated Property Loss Underwriting System referred to as A-PLUS, but CLUE is the more commonly used database. 

CLUE Database

The CLUE database holds two kinds of records: a record of your personal claims, and a record of claims made at each address. The number of claims often play a large role in insurance companies’ decisions on whether they will insure you, and how much your premiums and deductibles will be. Because of the Fair and Accurate Credit Transactions Act, or FACT Act, you have the right to access one free copy of your insurance information that is stored in CLUE. The report will contain all of your personal information as well as a list of all of the claims you have made in the last seven years and will show you what insurers are looking at when they are deciding whether to insure you or not. If you are denied coverage, by law the insurance agency has to tell you why. 

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Something important to be aware of when you are deciding whether or not to make a claim on your insurance for a loss is that when you call your insurance agent the first thing they are going to do is open a claim file. Even when you decide not to file a claim, the file they opened will not just disappear, it will be closed and still appear as a claim on your file. While insurance companies have been encouraged to refrain from this practice, it is still something to be aware of if you have not decided what to do yet. 

Past Claims Can Affect Home Buyers

Home insurance claims are recorded on both the individual person as well as the physical address. This can be an issue when you are in the process of buying a new home and learn that it is either impossible or too expensive to insure it. When you go to buy a home insurance policy on a new home, the insurance company will look at your personal record and the past losses and claims on the house itself. To avoid this unpleasant surprise about the home you want to buy, be sure to request a Home Seller’s Disclosure Report from the seller before you get far in the process. This report will not contain any of the seller’s personal information or previous addresses and will only contain the insurance history of the address in question. 

Start your search for a homeowners insurance policy early into your home buying process so that you can compare rates without scrambling to find a policy too close to the closing date. This report can also be helpful to give you an idea of the condition of the house, the risks that may come with it, and whether the issues were fixed thoroughly or not. 

Another reason you may be denied home insurance is because companies also look at your credit score. To be fully aware of the picture that insurance companies have of you, you can gather your CLUE report, the CLUE report on your property or the property you are purchasing, as well as your personal credit report. 

Your Claims History

Your claims history affects your premium, deductible, and the willingness of future insurers to continue to insure you or to offer you new coverage. To avoid raising your rates, always consider how the claims you start will affect you in the long term. For example, if a loss could be covered by insurance and you are not sure if it is worth the deductible, also take into consideration the cost to your insurance report and history. The record of the claim will stay with you and the house for at least the next seven years and may result in a higher premium for your insurance as well. Similar to how credit decisions affect your long term credit score and health, the claims you make for insurance will be referred to by your insurance company.  It is important to be aware of where you stand and to take advantage of the CLUE report and free credit reports to keep track of your financial wellbeing. 

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