Get a CLUE and don’t get caught off guard on your Insurance Rates.

That new house looks perfect in every way, but prior damage and other issues may be lurking in the house’s history. These are details you’ll want to know about before signing the closing papers and being responsible for this house. You can check this history thanks to a free tool that lists insurance losses on a property going back seven years.

The majority of home insurance companies contribute claims history information to a database called the Comprehensive Loss Underwriting Exchange, or CLUE. Underwriters use the information in a CLUE report to rate insurance policies.

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CLUE and you

CLUE is a claims-information report generated by LexisNexis®, a consumer-reporting agency. The report generally contains up to seven years of personal-auto and personal-property claims history. An insurer may request a CLUE report when you apply for coverage or request a quote. The company uses your claims history, or the history of claims at a specific property, to decide if it’ll offer you coverage and how much you’ll pay.

Insurance companies match that information to their insurance underwriting rules, which vary from company to company. These same facts and figures can help a home buyer determine whether to buy a particular house and how difficult and costly it might be to get homeowners insurance on the property.

If you’re clueless about CLUE, don’t feel embarrassed. A recent survey found that 82 percent of Americans have never heard of the database or the reports associated with it.

What’s in a CLUE report?

A home’s CLUE loss history report provides insurance company names and policy numbers and any claim numbers. The report lists the dates of any claims, the loss types and amounts paid for losses, and it will tell if a claim was denied.

Weather-related losses, fires, theft, vandalism and water damage are some of the types of claims listed. But the report doesn’t indicate what part of the property or home was affected. You’d need to ask the homeowner for those details.

The report contains the following claim information provided by your insurance company:

A report might be blank, for two reasons:

• The homeowner did not make any claims in the past seven years.
• The home was covered by an insurance company that doesn’t participate in CLUE.

Claims for the property under a different owner also won’t be included either, and therefore not considered when rated for insurance.

 What companies report

Insurance companies report all claims for which they:

• Pay out money
• Set up a file for a possible claim
• Formally deny a claim

How to get a CLUE

A free CLUE report can be obtained once a year from database giant LexisNexis. Requests can be made online or by calling (866) 312-8076.

Here’s the catch for a homebuyer: Only the owner of a property may access its CLUE report.

You must request the report from the owner of the home you’re considering buying. A savvy seller should obtain a CLUE report before showing the home, make several copies and have those available for potential buyers. Even a homeowner who’s not in the market to sell may want to get a CLUE report — to check for any inaccuracies.

Since the CLUE report is one of many pieces of information that an insurer might look at, what is in the report can influence your premiums positively or negatively, So if there are any inaccuracies, it’s important to get them corrected, just as it would be for your credit report.

• You can check for inaccurate or unrelated information that could be making you pay higher premiums. If you find mistakes, contact LexisNexis Consumer Center at 888-497-0011. They’ll verify your information with the reporting insurance company and notify you of the results within 30 days.
• You can add an explanation to an item in the report that will show in all future reports.

I have a CLUE. What do I do?

A consumer armed with a CLUE report should examine it for any claims that could lead to skyrocketing home insurance premiums. These include fire, burglaries and physical damage to the structure. If there’s a hazard on the property and someone fell into a hole, a claim would ensue. When the property has experienced multiple burglaries, that can mean that it needs an alarm system,

Claims might also indicate issues with the physical location of the property that can affect premiums, . If it’s close to the water or known to flood frequently, insurance can cost more.

A recent claim can have positive ramifications if the damage was addressed properly. For example,  if a roof was damaged by a windstorm and replaced by a new one, this would actually make the house more desirable to an insurance company.

A CLUE report is not an inspection

Potential buyers should use the CLUE report to let their home inspector know of any repairs that have been made so that the inspector can make sure the work was done correctly.

A CLUE is not a secret database, and it gives no score or recommendations, It just tells what happened in and outside the home. It doesn’t take the place of an inspection or disclosures from the seller. It’s an additional tool to evaluate the home and the cost of homeowners insurance.