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!
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
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