As a homeowner, it's likely that you already know too many claims against your homeowners insurance can cause your premiums to go up, and in some cases, your insurer may even drop your account.
What you may not know is that insurance claims can also affect your ability to refinance or sell your home because the value has been damaged, or your insurance history has made it difficult for new owners to obtain insurance of their own.
How could this happen? It's because of a database called CLUE - the Comprehensive Loss Underwriting Exchange – which is an industry-wide aggregation of insurance claim data.
While insurers have often used this information to set rates in different regions of the United States, in recent years, a CLUE Home Sellers Disclosure Report has come into being as a tool for realtors to use when presenting properties to prospective buyers. These reports provide a five-year insurance loss history for the specified address, but do not reveal any private or personal details about the property owner.
From a seller's point of view, then, CLUE reports are a double edged sword. If you've never filed an insurance claim, such a report could give your home an edge – making buyers feel more comfortable about presenting an offer. On the other hand, if you've had claims, it may cost you a sale, or at least force you to lower your asking price.
While you can't do anything about claims that previous owners may have filed, there are a few steps you can take to keep your property looking better in a buyer's market:
· Maintenance Matters : Keeping your roof, plumbing, and paint in good shape can all help protect your home from water-related damage, and you should also be certain to check the hoses on your washer and dishwasher, and also be sure to keep your dryer ducts clear (this latter has nothing to do with water, but can do much for preventing house fires).
· Raise Your Deductible: A higher deductible will reduce your premium, but it will also force you to pay for smaller repairs and expenses out of your pocket, thus avoiding claims or damage reports being sent to your insurer.
· Consider Before Claiming: Especially if you plan to sell your home in a few years, you should consider paying for water-related damage, and other repairs, directly rather than risk your home being branded "high risk." As well, don't even report damage to your insurer if a claim won't be made, because even unclaimed damage can be passed on to CLUE.
· Get a Home Warranty: If you don't already have one, consider investing in one today. Home warranty information is not generally passed to CLUE, and will help pay for any small repairs with appliances or internal plumbing, as well as pool equipment.
· Get a CLUE Report: You're entitled to a free copy of the CLUE report for your home once a year. If selling is in the near future, it's in your best interest to know what the report will say.
· Get a Report of Your Homeowners Insurance Company: It can be helpful to know the financial strength of your homeowners insurance underwriter. An additional service made available by homeowners insurance ratings is to explain relevant complaints issued against insurers.
While the real estate market across the country is in a state of flux, one thing that never changes is that having more information is better than having less, whether you're a buyer or a seller. Don't risk having your home affected by insurance information – Get a CLUE.
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