Most people know that home mortgage companies require a homeowner to have and to maintain ‘Homeowners Insurance’ during the life of the loan. They also know, in some cases, filing a claim with their insurance company may raise their premiums. What a majority of people don’t know is that making an insurance claim not only may hurt their chances in obtaining future coverage, it can also prevent a future buyer from obtaining homeowners insurance on the property as well.
Because of the substantial losses, which have reached into the billions over the years, (mostly thru water damage and mold claims), the insurance companies now carefully screen people and homes that they feel may be a high risk. Insurance companies now monitor the amount of insurance claims, and even non-claim reports, through an agency called Comprehensive Loss Underwriting Exchange (C.L.U.E.) This is a shared industry reporting database in which approximately 90% of all claims & reports are kept for five years. Its intention is to track insurance claims and fraudulent acts in the U.S. The majority of insurance companies report to and rely on this large database.
If you’re a buyer and thinking of buying a particular home, it would be wise to request a copy of the C.L.U.E. report from the seller, if it’s available. Ask your Real Estate Professional how to incorporate the report request into the contract. You can also contact your insurance company to determine if the home is insurable and what the premiums will cost.
If you’re thinking of selling your home in the next few years, then it would be wise not to file any claims with your insurance company. Know that even if you don’t actually "file" a claim, in a lot of cases just calling and inquiring about a problem may cause the insurer to enter the information into the C.L.U.E. database, which could be detrimental in the long run. If you’re not sure what has been reported and want to be proactive, you can request a copy of the report from your insurance company. There may be a fee involved, but it will let you know ahead of time where you stand from a "future" coverage standpoint.
As with any real estate issues, it’s always best to contact a Real Estate Professional to assist you with your questions or concerns.
Terrie Hunt is an “Outstanding Life Member” of the Sacramento Association of Realtors, DRE #01213387, and Broker/Owner of River Ridge Realty. Terrie can be reached at (916) 663-6300.