CLUE reports document the insurance loss experience of a home, and more and more home buyers are asking for these reports during the home buying process. In many cases, home buyers and real estate agents may even make the request a contingency to a purchase offer.
According to Stephen Gillard, product principal for CLUE at LexisNexis, home buyers want the documents for a variety of reasons. Perhaps the biggest is to eliminate surprises; the losses experienced by a home can impact the cost and availability of homeowners insurance for the new home buyer, and a rise in insurance rates can increase the total cost of the purchase to a point where it is no longer affordable.
“If the report for a property indicates that [significant or notable] insurance losses have not occurred within the past five years, the buyer can feel comfortable that the insurance loss history of the property should not impact the availability or pricing of insurance,” he wrote in a recent email.
Gillard notes that CLUE reports provided by a seller will only report losses associated with the address in question. One possible shortcoming to the buyer is that homeowners insurance providers also consider losses associated with that same buyer at locations they’ve owned.
This distinction is not part of the CLUE home seller’s report, he says.
Overall, the extent to which a CLUE report can impact a new home buyer’s insurance rates varies by insurer.
If the CLUE report indicates no losses, home buyers generally will get good insurance rates — in some cases even better than average. For those home buyers where a CLUE report indicates prior loss activity, rates may rise depending on the type and amount of loss, and the number and age of losses, as well.
Perhaps the only complicating issue with CLUE reports is that they’re not available to everybody. Because the reports are protected by the Fair Credit Reporting Act, only the owner or lender for a particular property can get them.