CAREFULLY CONSIDER FILING A HOMEOWNERS INSURANCE CLAIM; IT COULD STIGMATIZE YOUR PROPERTY
INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS, TIPS FOR SENIORS
September 8th, 2008
Some companies that write homeowners insurance in California utilize a service that tracks all claims filed by property owners. Sounds harmless enough, that is, until you shop for a new policy or sell your home and the buyer is denied a policy from their preferred insurance provider. Even an inquiry, that does not lead to a claim, could result in damage to your insurance “score”. Comprehensive Loss Underwriters Exchange (CLUE) reports are provided by ChoicePoint and a smaller competitor A-PLUS.
Insurers feed claims data into a national database managed by CLUE. When you, or a buyer for your home asks for an insurance quote, the data base is checked for the claims history on you, your buyer and your property. Along with credit scores and other data, these companies generate a score that determines a risk profile. Based on this, your buyer could be denied coverage, you as the seller could have your policy canceled or your premium could be adjusted to reflect a change in your score.
Water-related claims can place a major black mark on your property. Mold, and all the millions insurance companies have paid out in mold-related claims, has resulted in some insurers rejecting applications for coverage on properties that have a history tainted by water intrusion. A broken water or drain pipe, a leaky roof or damage from floods will almost certainly affect the score for you and the property.
A few years back, I elected to fix a broken sink drain pipe in my kitchen wall and keep the insurance company out of it, even though the plumber said they would cover it. Perhaps, but by hiring contractors myself to handle the various aspects of the job, I kept the cost below my deductible. I also kept a minor problem from being a permanent black mark on my property’s data profile.
Last winter my grandson fell and hurt his teeth on a coffee table. A dentist was consulted and we feared treatment could get expensive. Since homeowners insurance covers accidents to guests, we contacted our insurer and indicated we might need to file a claim, if it was covered. Ultimately, it was determined no real harm was done to my grandson so I told an adjuster following up on the call no claim would be filed. When I called for a quote this past spring form another insurer, I was questioned about this inquiry. I can’t be certain, but I suspect that call had an impact on my insurance score and premium quote!
Unfortunately, the insurance industry has created a scenario where homeowners, in the know, fear filing a claim due to the potential future impact on premiums and possible cancellation. The only way to protect yourself from being labeled as a high-risk insured is to think before you make any inquiry or file a claim. Claims and inquiry data are usually kept for 5 years before dropping off the report. Here’s a list of problems that CLUE reports can create for those that are unaware:
- Inaccurate information can be in the report
- The report may contain information about another individual or another property
- Phone calls to inquire about a possible claim may be reported
- Asking if a specific loss is covered may become part of the report
- The loss may fall below your deductible so you get no money and a black mark on you and your property anyway
- Even if repairs restore the property to original condition, the CLUE report may include information about the claim
- The report can affect the premium you pay as well as whether you are insured at all
You can get a free copy of your CLUE report by calling ChoicePoint @866-312-8076.
If you have questions about this or any real estate matter, contact me:
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY REAL ESTATE EXPERIENCE
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