When searching for an insurance policy, it’s important for consumers to do their due diligence and compare quotes before choosing the right insurance company. From financial strength ratings, price, customer satisfaction, and even hours of availability, there are many factors to consider before making a decision. Due diligence is not a one-way street when it comes to insurance, however, and is equally as important for insurance providers to know as much as possible about the risk (YOU, the consumer) they are taking on.
Insurance companies use your claims history to determine what level of risk you pose (and, thus, what to charge you for your premium). How frequently have you filed insurance claims in the past, and how costly have those claims been?
What is a CLUE report?
One tool insurance companies use to verify claims history for a potential new customer is through a database called CLUE, or Comprehensive Loss Underwriting Exchange, managed by LexisNexis. (LexisNexis provides insurance companies and other businesses with risk management services and research tools to help them make better decisions.) The CLUE report gives a company up-to-date information about a person’s claims history for the past seven years. By using this report, insurance providers are more easily able to update their pricing for undisclosed claims and even deny a policy altogether if a person’s claims history is too extensive to meet the company’s underwriting requirements.
What information do CLUE reports include?
There are actually two versions of a CLUE report:
- Personal property report: intended for homeowners or renters insurance claims
- Personal auto report: intended to show past auto insurance claims
Both of these reports include valuable information, such as your name, date of birth, any vehicle or property for which you filed a claim, and details about the claim including payouts, deductibles, and lots of other information. Laws vary from state to state about when a claim can be listed on a consumer’s report and when this information may be sent to LexisNexis. In many cases, consumers must be notified by an insurance company when their report has been updated.
Here is a sample CLUE Auto Claims report direct from LexisNexis:
How do insurance companies use CLUE reports?
A CLUE report helps companies quickly determine if a person qualifies for a policy and the rate they should be paying for coverage. Negative history on a CLUE report can often lead to a much higher rate than previously quoted or a complete denial of a policy altogether. Considering that consumer insurance rates are impacted by claims made by others, CLUE reports actually help to keep consumer costs lower by allowing companies to easily access this data and charge accordingly.
Without CLUE reports, insurance rates would be higher across the board because people could choose not to disclose certain incidents, and insurance companies would then have to charge higher rates to everyone to cover claim payouts. If the incident isn’t assigned to a specific person, the cost gets spread to the rest of the customer base because that company’s cost of doing business increases without assigning the additional cost to the responsible party.
CLUE reports also list property losses for homes, helping insurance companies better determine rates when providing homeowners insurance. If a home has experienced multiple claims for the same issue, like numerous burglaries, companies may charge a higher rate to cover the residence. There is also potential for a positive rate impact if a home has not experienced any recent claims or if the roof on a home was damaged and replaced. Since roof condition and age can significantly impact insurance rates, a newer roof can actually result in a lower premium.
Can a CLUE report benefit consumers?
Unless you’re purchasing a brand new car, buyers generally want to know that the vehicle they are considering is free of any major defects and hasn’t experienced significant damage in the past. A vehicle history report normally includes a service history and lists any repairs involving the car in question.
But what about a home? Considering that buying a home is one of the single largest purchases a person will make in their lifetime, having the ability to check the loss history of said home can help consumers avoid a huge financial mistake.
How do you see your own CLUE report?
Just like an annual credit report, consumers can request a CLUE Personal Property Report once a year at no cost, making the free report a no-brainer.
It’s important to note that only the owner of the home can access the report, so if you are a homebuyer and the seller doesn’t have a copy of their CLUE report, request one! This will provide invaluable information about anything that has happened recently to the home, and is also a good indicator of any potential issues with the house if there are multiple claims for the same reason.
For both home and auto, CLUE reports can contain inaccuracies that should be corrected since they can have a negative impact on rates. Inaccuracies may be caused by fraud (such as identity theft) or error. Here’s what to check for:
- Inaccurate social security number (to ensure you don’t have someone else’s report who shares the same name as you)
- Claim date incorrectly listed, which could lead to you being charged longer than necessary for a particular incident
- Inaccurate dollar amount of claim payouts
- Any other personal information like address or vehicle details
Order your free annual auto or home CLUE reports here: LexisNexis
LexisNexiz also provides resources for:
- Disputing your CLUE report information
- Ordering your CLUE report by mail
- Consumer rights and identify theft response
CLUE is just another piece to the insurance-pricing puzzle
Whether you’re looking for homeowners insurance, auto insurance, or both, a CLUE report is used in conjunction with other reports to determine the final price to insure your asset(s).
Motor Vehicle Reports (MVR), and in most states, credit also play a big role in the pricing of your coverage. Having a solid understanding of your personal information contained within those reports can help you avoid surprises and yield better results when shopping for a new policy.