The standard "Seller's Property Disclosure" form does not yet require the inclusion of Comprehensive Loss Underwriting Exchange (CLUE) reports. Nevertheless, REALTORS® should alert buyers to the possibility of having difficulty insuring certain properties deemed at greater risk because of a history of previous claims.
In some rare cases, a homeowner's policy may be rescinded because of claims made by previous home owners. One way to prevent unwanted surprises, according to the Pennsylvania Association of REALTORS®, is to ask the seller to provide a copy of the CLUE report ahead of time. A CLUE report on property claims is obtained from a national data base. As with credit reports, only the current home owner can request a CLUE report.
When representing buyers, REALTORS®, should encourage their clients to apply for homeowners insurance immediately after the execution of the contract. The insurance contingency creates a 15-day window for buyers to apply for and obtain home insurance on the property they are planning to purchase. Within this timeframe, if a property is not insurable or carries a higher than expected premium due to information gleaned from the CLUE report, buyers may terminate the contract and receive a refund of all earnest money.
The insurance premium on a home is also influenced by a buyer's credit scores, i.e.. buyers with lower credit scores will payer higher insurance premiums. To that end, buyers shopping around for home owner's insurance may benefit from obtaining policy quotes from several insurance companies by consulting wth an insurance broker.
This is just one more way that REALTORS® create value for their clients!