What is a CLUE report in real estate?

A Comprehensive Loss Underwriting Exchange (CLUE) report provides a home buyer with a detailed overview of any homeowners insurance claims that have been filed and made on a house.

Sometimes referred to as a loss history report, a CLUE report can be a handy tool when researching a property you’re considering buying. The report helps surface any potential red flags that may cause insurance providers to decline providing coverage or increase their insurance rates.

In effect, a CLUE report provides a snapshot of a property’s insurance history and any potential issues that you should be aware of before moving in. Read on to learn how a CLUE report can help protect your real estate investments.

What is a CLUE report?

A CLUE report is a helpful real estate shopping tool that provides the potential home buyer with a detailed overview of any homeowners insurance claims made on the property within the last 7 years. This report is useful to buyers as it enables them to get a closer look at the claims history of the property.

Obtaining a CLUE report can help give you a better sense of any concerns you’ll want to be aware of before buying a new home. You can expect the CLUE report to contain details such as the date of loss, type of loss and amount of funds paid out. It’ll also contain general information about various insurance providers and claim details.

How do CLUE reports affect homeowners insurance?

A CLUE report can be an important factor in determining homeowners insurance premiums and eligibility for coverage. Insurance providers use the report to assess the risk associated with insuring a property based on its past claims history.

For example, if the CLUE report reveals a previous insurance payout due to foundation issues, a sagging roof or water damage, it may raise concerns to the buyer and insurance provider.

That’s because these issues might make it harder or more expensive to upkeep the home and/or procure insurance on the property as needed. Properties with frequent or severe claims may be seen as a higher risk to insurance companies. On the other hand, a clean claims history can result in lower premiums and better insurance policy terms.

A CLUE report is significant in that it can provide claims information that causes a buyer to pause, reevaluate and reconsider whether it makes sense to purchase a home.

What insurance information is included in a CLUE report?

A CLUE report contains several detailed insights into personal property claims filed, as well as a number of general pieces of information about insurance providers and loss recovery attempts. These details often include the:

• Insurance policy number
• Claim number
• Date of loss
• Type of loss
• Amount paid on the claim
• Insurance company name

How to get a CLUE report

A CLUE report can be obtained through the consumer reporting agency LexisNexis every 12 months. Only a property owner or insurer can obtain one, but free reports can be ordered via mail, phone or the internet.

To get one, you’ll need to provide personal information, like your full name and date of birth, in addition to other personal documents. You’ll also need to answer various property ownership questions. As a general rule, the majority of real estate professionals would tend to recommend obtaining a copy of your CLUE report, given the helpful information it provides. If you’re buying a house, you can ask the seller to request one so you can review it before making an offer.

How much does a CLUE report cost?

Under the Fair Credit Reporting Act, you can obtain a free CLUE report from LexisNexis once a year. If you’re interested in getting more than one in the same year, it will cost $19.95 per report.

What to use a CLUE report for

Home buyers and sellers can gain many insights from obtaining a CLUE report. For starters, the claims information it contains can help provide you with greater peace of mind as a buyer and alert you to any glaring concerns related to a house outside of a home inspection.

The CLUE report can also help you verify that the home is a good investment property. For example, if you look at your report and see that few insurance claims have been filed, it’s a good sign that the property remains in good condition.

Conversely, a CLUE report that comes with past claims attached may have undergone significant rehabilitation or repair. If many claims have been filed, it may also indicate issues with construction or buildout, or it could mean that the property is starting to age or fall into disrepair.

Here are some more specific benefits a CLUE report can provide buyers and sellers.

As a buyer

Buyers can use a CLUE report to get a sense of any property claims that are worth being aware of before making an offer on a house. Your insurance agent or provider may also want to see the CLUE report because it offers them a better look at what’s going on behind the scenes on any given piece of property.

As a seller

Sellers can use a CLUE report to help give prospective buyers greater confidence in a transaction. It essentially helps provide a home with a clean bill of health – at least, from an insurance perspective. Not only is this helpful for the potential buyer but it also makes you a more reliable and trustworthy seller.

The bottom line: A CLUE report can provide useful information

A CLUE report is a helpful financial tool that provides a recap of any home insurance claims filed on a particular piece of property within the last 7 years. Using it, buyers can get a better idea of the health of a home, sellers can provide prospective purchasers with greater peace of mind and insurance companies can get a better sense of how risky it will be to insure the property.

If your CLUE report comes back clear and you’re ready to take the next step towards homeownership, start the mortgage process today.