Huge insurer database holds dossiers on homeowners

Nation's Housing

April 27, 2003|By KENNETH HARNEY

DO YOU have even the slightest clue about CLUE?

Do you know that an innocent phone call to your insurance agent asking about the deductible on your homeowner's policy could trigger an electronic loss report on your home to a national database, even if you never file a claim and pay for all repairs yourself?

Sound bizarre?

Welcome to the emerging Alice-in-Wonderland world of homeowners insurance, where not only do you have a personal three-digit risk score, but your house has its own separate electronic dossier accessible by insurance companies nationwide. Depending on what's in that dossier, your house may already be stigmatized as high risk - rendering it more difficult to sell since insurance may be unavailable or extremely expensive to a prospective buyer.

Worse yet, your "homeowners insurance score" could be tainted by the scoring software's heavy reliance on your personal credit file data - information which recent national studies have documented to be too-frequently riddled with errors and omissions.

What is CLUE and what does it do? The abbreviation stands for Comprehensive Loss Underwriting Exchange. It is a privately run national electronic database for the insurance industry, located in Alpharetta, Ga. Insurers who write more than 90 percent of America's homeowners policies contribute information to it, covering more than 40 million claims records on homes.

Each house has its own discrete file that lists every claim or property-damage-related information supplied by local agents during the past five years. Even if the file indicates a zero-payout loss - where the agent learned of damage below the deductible threshold through an innocent inquiry by the homeowner - the file may contain a loss notation on the property record.

To the insurance industry, the CLUE database is an invaluable source of risk-prediction information. In the words of Joe Annotti, vice president for public affairs of the National Association of Independent Insurers, CLUE "is just an automated loss history [database] that speeds up the process of underwriting and pricing insurance."

It is nothing more sinister than the 200 million-plus credit files maintained on Americans by the private, national credit repositories - Equifax, Experian and TransUnion.

But CLUE reports and homeowner insurance scores can also be unseen, leaden weights on houses and their owners. Houses with just a couple of small claims listed on a CLUE report can suddenly be more difficult to sell. A homeowner who filed a damage claim on her last property in one state may find her score too low to qualify for insurance on a new house she wants to buy in another state.

Both she and her former house may carry insurance stigmas - the new scarlet letters of American real estate - for years. To see a description of the CLUE system and obtain your own home's current CLUE report, you can go to www.- The cost online is $12.95. You also can obtain your homeowners insurance score for the same price.

The CLUE system - and rapidly rising homeowners insurance rates nationwide - have prompted the formation of a task force by the National Association of Realtors. The group is expected to make recommendations for reforms to the 890,000-member association next month.

One of the task force's members, Nick D'Ambrosia of La Plata, Md., cites what he calls a typical example of how the CLUE database can trigger unexpected problems for homeowners.

The CLUE report on a house in Upper Marlboro, Md., included two relatively minor insurance claims - one for a ruptured water heater that spilled onto the basement floor. But, says D'Ambrosia, "that was enough to stigmatize the property" and render it difficult to insure by its unsuspecting purchaser. Six major insurers turned down the buyer's applications for insurance.

Another member of the Realtors task force, Nick French of Santa Fe, N.M., notes the example of a Florida homeowner who mistakenly phoned his insurance agent to ask about coverage on a fallen tree in the yard. "The tree didn't hit the house," French says. "There was no claim filed." But it ended up as a zero-payout damage report on the home's CLUE file.

The Consumer Federation of America's top insurance expert, Bob Hunter, says "for years we've told people to call your insurance agent and ask questions about your policy. But if questions are going to be used against you, that's ridiculous."

How should you handle the tricky new realities of homeowner's insurance? Order a copy of your home's CLUE report so you know what it contains. If you are buying a home, ask the seller for a copy of the CLUE report as a contract contingency item.

And perhaps most important: Be aware that even the most casual inquiry to your insurance agent about property damage could end up as a black mark in your home's electronic dossier.

Ken Harney's e-mail address is

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