Don’t Get a CLUE
April 1, 2012
Your less-than-conscious idiot tenant paid no attention to the leaking water heater until his feet began squishing in the water soaking the carpet. Then he called you. The damage is in the neighborhood of $3500 to fix. So you called your insurance company. Big mistake!
If you call your insurance company, even if you never file a claim, you may be unable to get property insurance at any price when the current policy expires. Insurance companies talk to each other with a reporting system they call C.L.U.E., short for Comprehensive Loss Underwriting Exchange. So that call you made to your insurance company is dutifully entered into that database as something the insurance companies ought to think about when next you apply for insurance on that property or maybe even any property.
An article in Insurance Advocate, an insurance industry publication, from March 2003 explains that loss history is important not only for the property but also the individual policy holder. Claims history that includes “how many claims have been reported,” “how many resulted in loss payments,” and “how much each loss cost” are important considerations for insurance adjusters. But the insurance adjuster will pay attention not just to a property, but an individual, too. “An individual’s claim history” include the number of claims a person has filed and “the circumstances of each.” Too many claims or even reports of damage will result in “fewer companies” competing “for these types of risks.”
PrivacyRights.org reports “Well-intentioned consumers who call an insurer to merely inquire about coverage for water damage have been shocked to have their insurance cancelled.” The Insurance Advocate confirms that. “Consumers should be aware that contacting their company or their agent to discuss an actual loss is generally considered reporting a claim, even if the company does not end up making a claim payment.”
Several states have prohibited listing inquiries in the CLUE database. You can find out if yours is one of them by getting in touch with
This information lurks in the database for five years, waiting to ensnare the naïve property owner who thought his insurance premiums were to insure him against damage and his insurance company was actually on his side.
But that’s just one caveat. If you call your insurance company to inquire about water-damage coverage, never file a claim, and your inquiry ends up in the CLUE database, it could come back to bite you even if your insurance rates don’t go up one penny.
The Insurance Advocate opines that not even inquiries are important and “valid considerations” for “prospective home buyers.”
Many real estate agents are advising their buyers to have sellers provide a CLUE report. The only people who can request the report are the insured and insurance companies. So a prospective buyer would see the CLUE report as part of the offer on the property. What would you do if you were a buyer and you saw a water-damage report on a property’s CLUE report?
One last warning! The water-damage restoration companies advertise such things as “insurance billing” and “insurance claim processing.” One also advises “Call your insurance provider to inform them [sic] of the damage.” This makes me suspicious that these companies are in the pockets of the insurance companies.
That less-than-conscious tenant who didn’t notice the leak? Get rid of him. But eat the cost of the cleanup and repair yourself. It will be far cheaper than the property insurance you won’t be able to buy on that property or maybe even other properties because of a water damage claim. Don’t get a C.L.U.E.