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Home Buyers Beware - Get a CLUE (Report) Before. Or Else You Could Lose Your Home Insurance, Your Home Equity and Even Your Mortgage!

By
Services for Real Estate Pros with DivorceThisHouse.com

We received a detailed and extremely helpful comment to our January 16 Blog about C.L.U.E. reports - Comprehensive Loss Underwriting Exchange. 

Sidebar: Through C.L.U.E. reports, subscribing insurers (including the big 5) exchange claim history and loss information about your house, your car and you.  They use this information for underwriting purposes to determine whether to issue you an insurance policy and if so, at what rate. Higher risk = higher rate.

Back to the January 16 blog comment. This home buyer bought a house and within 30 days was informed by a big insurer they were dropping his home insurance coverage.  Not because of his income or his credit score.  They dropped him because of his house.

His new house?  The house he just bought?

Here's an excerpt (emphasis added):

When I bought my present home, all seemed to be fine, mortgage went through, homeowners paid one year in advance. 30 days after moving into the home, I received a letter from my major brand name insurer that my homeowners insurance had been canceled. Included was a check for remaining 11 months coverage due to cancellation. Reasons cited w[ere] the house needed a new roof and front steps needed put back into proper place...

Once dropped by that major insurer, it was impossible to find coverage with a different major insurer. I finally did get insurance from a smaller company and have been with them ever since. My new agent told me the reason I had trouble getting insurance was that there were several insurance claims against the property I had purchased. A CLUE report would have shown that, but I knew nothing about that.

As confirmed by the home buyer, a CLUE report would have shown that the house needed a new roof.  Depending on the size of the house, roof replacement can cost $8,000-$12,000.  A critical and expensive fix. 

Wouldn't you want to know that the house you are considering buying needs a new roof... before you agree on a price to buy the house?  [YES!!!] 

What about prior insurance claims on the house you may buy?  What if there had been a fire, or a flood?  The insurance claim history may reveal this important information (for up to 7 years prior)... at no cost to you or the seller! [YES!!!] 

Bottom line:  thinking about buying a house?  GET A C.L.U.E. (Report) first - for FREE!

The seller is entitled to one free C.L.U.E. Report each year.  From either Choice Point/Choice Trust (the company who maintains this data) or from the owner's home insurance agent. 

Protect yourself.  Ask your REALTOR about requesting as part of your written purchase offer.

To check home insurance "health," the owner may ask her insurance agent for a copy of the C.L.U.E. report for the house.  www.choicetrust.com or http://tinyurl.com/dm67d

And as a home buyer, a licensed insurance professional can help you determine your best options now for a stronger financial future - before you buy your dream house!

www.DivorceThisHouse.com

For more information about how home insurance can cancel your mortgage, see our January 16, 2009 blog - Hidden Divorce Mortgage Mistake - Home Insurance http://tinyurl.com/788nqx

 

 

 

 

 

Comments (5)

Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

Wow....horrible insurer! There's no reason for them to take the money and issue the policy if they haven't done the CLUE report first. We almost had a deal fall through because the CLUE report was wrong....that was fun correcting.

Jan 17, 2009 01:32 AM
Kelly Lise Murray
DivorceThisHouse.com - Franklin, TN

Thanks so much for pointing out that CLUE reports may have errors and that those errors can be challenging to fix.  (Similar to errors on your personal credit report).

However, in my view the "villain" of this true story is ... the home seller.

Here's why.  The CLUE report showed that the roof needed to be replaced, because the seller's insurer probably paid the seller (on an insurance claim) to replace the roof

The seller likely kept the insurance money but failed to replace the roof. And the selling price - without a home inspection - may have been too high.

Home owner "shenanigans" with insurance money happen.  The tool to protect home buyers before they buy the house is a FREE CLUE report.

Home insurance underwriting is what it is: a calculation of factors to approximate levels of risk.  Most insurance companies use similar underwriting procedures.

As far as timing, when was the home insurance application filed?  It is fairly common in real estate transactions for the the sale and mortgage to close with a 30 day window thereafter to obtain home insurance.  In that case, the insurance underwriting is simply following procedure - based on the insurability of the house.

 

Jan 17, 2009 02:18 AM
Anonymous
Richard Henry Wilde

Don't buy a mobile/manufactured home unless you can determine that the home was installed according to HUD Code. Please contact me if you have a question concerning HUD CODE manufactured/Mobile Homes.  Rest assured, you have RIGHTS to a properly built and installed Manufactuered/Mobile Home through the U.S.Government.

Jun 22, 2009 10:33 AM
#3
Joseph Welusz
QuoteMatcher.com - Evesham Township, NJ

I don't think the issue was due to the clue report.  I believe the insurer flagged the home due to the issues that arose from the clue report and most likely sent out an inspector to visually view the outside of the home and it was at this point that they canceled the policy due to the inspectors findings. 

One question asked by all insurance companies is the age of the roof.  Most roofs last on average 18 years before they need to be replaced.  If a roof is older than 20 years old all the major insurance companies will not issue a policy.  When this question was asked on the application most likely the new homeowner didn't know the age of the roof and just estimated or guessed the age and that number most likely would have been less than 20 years old.

The clue report or the insurance company isn't the culprit here.  It would have been more beneficial to have had a home inspection done before purchase.  The home inspector would have revealed approximate life span and age of all aspects of the home and also include items that were not working correctly or needed repair.

Click this link to find out more Homeowner Insurance Information or this link to get a home owners insurance quote

Dec 22, 2009 01:46 AM
Anonymous
Jump Start Investments

Hi,

i have seen a very very nice blog. This is veryinformave blog. i really like this blog. This is very wondering blog.

This blog gives to us very good knowledge about  home buyer and home seller . This is very important blog for home improvement busines.

 

 

 

Thank you,

Jan 04, 2011 04:04 PM
#5