What is a CLUE report?

CLUE stands for Comprehensive Loss Underwriting Exchange, which is an insurance claims clearinghouse. The idea is that all insurance companies will submit claims information for any property and owner to this clearinghouse and it will be available to all other insurance companies.

This is the same clearinghouse that insurance companies use when they write auto policies. They use this system to check the car owner’s insurance history and decide whether or not to issue a policy.

When an insurance company is asked to insure a property, they will generally check the CLUE report to see if the property or owner has a history of insurance claims. Some insurance companies will use only information about the property, while others will also use the owners’ claim history. If you’re having trouble insuring a property because of its insurance claim history, one option is to talk to an insurance company that doesn’t use the owners’ claim history, just the property’s.

Only the property owner can request a CLUE report. For the owner-occupied primary residence, the owner can request the report online for a nominal fee. The report provides a 7-year history of losses associated with the owner and his property. The report presents the following data for each loss:

• date of loss;
• type of loss;
• amount paid;
• policy number;
• Claim Number; Y
• insurance company that paid the loss.

For non-primary residence, such as vacation homes and rentals, the owner must submit a written request and wait for the report to be submitted.

For reasons of confidentiality, potential buyers do not have access to a CLUE report. This is why the standard AAR residential purchase contract requires sellers to provide a CLUE report to the buyer within 5 days of contract acceptance. The buyer has until the end of the inspection period or 5 days after receipt of the CLUE report, whichever is later, to report the rejected items on the CLUE report.

Many sellers will not accept contracts that require them to provide a CLUE report. They will ask buyers to waive that requirement. When this happens, buyers typically have two options (1) insist on receiving a CLUE report from the seller; or (2) call your insurance company and see if they will be able to insure the property after closing.

Your REALTOR should review the CLUE report with you, its importance, and the implications when sellers ask buyers to waive the CLUE report from the contract. Buyers need to understand all the ramifications and make an informed decision about whether or not they’re willing to give it up.

And before I close this article I would like to leave you with a thought. If you are a seller, I strongly recommend that you offer a CLUE report to the buyer. It is a nominal cost that will go a long way in establishing a good relationship. You can even make the document available to potential buyers. It will show them that you are aware of your obligations and that if they decide to bid, you will not cause any delay in the process. Very few sellers do that, and it usually has such a positive impact on potential buyers. Ask your REALTOR to help you obtain a CLUE report and make it available to potential buyers. Your buyers will appreciate it.