Homeowners Insurance: Do You Qualify?

Savvy consumers know it’s important to keep track of their credit histories and FICO scores in order to safeguard their ability to borrow money. But many have never heard of CLUE, a similar rating system that can determine whether you’re eligible for homeowners insurance, and at what price.

In the worst cases, homebuyers have been denied insurance because the property’s record has been marred by claims filed by a previous owner. A bad score can make it harder to sell your home if the prospective buyer cannot get insurance or finds the home too expensive.

Some consumer groups have complained about the system, and some states have partially restricted its use. But the Comprehensive Loss Underwriting Exchange is a fact of life. The privately run electronic database compiles information on insurance claims gathered by participating insurance companies. Claims adjusters can even report instances in which the homeowners inquired about a claim but did not file one, and this puts a black mark on the records of the policy holder and property.

Insurers say their research shows that people who have filed claims in the past are more likely to do so in the future, and that a home on which claims have been filed is more likely to have future claims even if it has been sold to someone else. Reports contain history for the past five years.

So if you are selling a home, or shopping around for homeowner’s insurance, order a free copy of your property report. If you are buying a home, get the seller to provide the report, which is available only to the property owner.

The report includes instructions on disputing data it contains, as well as appending an explanation to any negative information in the document.

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