Are Insurance Companies Sharing Data On Homeowners Claims? Get at CLUE!

If you own a home, you may want to think twice before filing a homeowner’s claim with your insurance company. That is because 90% of the insurance companies in the country now share claim information through two databases. One which is run by ChoicePoint, called CLUE. The other run by Insurance Services Office, called A-Plus. Typically, reports issued by either database are referred to as CLUE reports.

If your home is listed in one of these databases, it could be uninsureable through private companies. This in turn could have a real impact on the value and salability of your home.

Unfortunately, most consumers are unaware of CLUE until they are impacted by it. This usually follows the filing of an insurance claim.

It is not uncommon for insurance companies to pay claims and then send notice of policy cancellation. Since Hurricane Andrew hit Florida in the early 1990’s, followed shortly thereafter with the Northridge Earthquake in California, insurance companies have made it more and more difficult for consumers to keep their policies active after filing a claim. Insurance company losses in these two disasters were staggering. Many of insurers were also heavily invested in the stock market when it started to drop in 2001. While you may think that this issue should fall into the category of “Not my problem”, stock market losses, combined with disaster payouts have left the insurance industry scrambling to find ways to minimize risk. In other words, they have made it your problem.

Many insurance companies are especially sensitive to any water damage. They are concerned about the liability they may incur for claims of mold, which some believe have health consequences that could make a home uninhabitable.

If you file a claim for water damage, even if it is minor, you could find that your house is written up in CLUE, you policy is cancelled and your property difficult or very expensive to insure. It could also hit you right in the wallet by making your property less desirable to potential buyers.

Because CLUE is relatively new, only roughly 30% of homes actually have CLUE reports. With the average homeowner filing one claim every ten years, it will be some time before the majority of homes are covered.

Consumers who find that their home is included in CLUE do have certain rights, similar to those associated with credit reports. If you are turned down for insurance or if there is some other adverse action taken by an insurance company based on a CLUE report, you have a right to a free copy of the report. You also have a right to submit corrections in the event you find errors on the report.

If you just want to see a copy of your report, you can purchase it for anywhere from $9 to $13, depending upon which report you buy. At present, only property owners and insurance companies have access to CLUE. If you are purchasing a property, you have no right to the report, but there are some things you can do to protect yourself in the event the home you are buying has adverse information in CLUE.

First of all, you may want to have your realtor write into your purchase agreement that if the house is turned down for insurance based on information contained in CLUE, you have a right to back out of the sale.

Secondly, you should apply for insurance as soon as your offer is accepted. This will insure that you find out if there are any problems quickly.

As with credit reports, CLUE reports contain enough information for an ID thief to steel your identity. If you pull such a report on a property you own, keep the report in a safe place. If you dispose of it, don’t throw it out. Shred it.

There is a concern among privacy activists familiar with CLUE that access to the database within the insurance industry may be too wide spread. That people without a need to know may have access to your private information. Unfortunately, unlike with credit reports, you don’t have a right to know when an insurance company pulls your CLUE report. Furthermore, there is no way for you to freeze your information in CLUE. The best protection that you may have is to be aware of what, if any data on your property is contained in CLUE.

You may also want to think twice before you file an insurance claim on your home. Although it may not seem fair, current laws do not prohibit insurance companies from sharing data with each other. If you file a claim, it could cause your property value to drop. It could also be giving people who work within insurance companies the ability to steal your identity by provide access to information that you want kept private.

by Jim Malmberg