Co-Author: Eric R. Jaworski, Esq.
- What is a CLUE Report?
- What type of information is found on a CLUE report?
- How can an individual obtain a copy of their CLUE report?
- Who determines what information is put on the report?
- What is the mechanism for challenging incorrect information found on the report?
- Who, besides the individual owner of a property, has access to CLUE Reports?
- How can a CLUE report pose problems for homeowners or future homeowners?
CLUE stands for Comprehensive Loss Underwriting Exchange. It is a comprehensive database of personal property information relating mainly to insurance claims on private property. CLUE was developed by, and is currently operated by, ChoicePoint Asset Co., a Georgia firm.
The typical CLUE report contains information about either an insured or a property. This includes general information about the insured such as name, birth date, and sex, as well as current and previous addresses. The key information on the report is the claims history of the individual or the property. This section includes a list of all claims made in the last 7 years. The claim history report includes the date of the claim, the name of the insurance company involved, policy number, claim number, address, cause of loss, amounts paid, status of the claim, and the name of the insured and the claimant. The report also identifies parties that have received a copy of the report, typically over the most recent 2 years. It is important to note that the CLUE report details the “claim history” of a given consumer. Many consumers have been surprised to find that such history may include virtual any call made to an insurance representative regarding a loss, whether or not a claim for compensation is actually filed. Thus, experts warn consumers to think twice seriously about their deductible, coverage and other factors before calling an insurance representative. Adverse information that is more than seven years old generally may not be reported.
CLUE reports can only be obtained by an individual for the home or property he or she currently owns and resides in. The reports can be obtained from ChoicePoint over the web at www.choicetrust.com or through regular mail. ChoicePoint charges $9.00 for each report requested via standard mail and $12.95 for each electronic report. However, the residents of several states, including Colorado, are entitled to a limited number of free or reduced fee reports. Furthermore, a consumer who has been the subject of adverse action based on the information in the report is entitled to a free copy of the report if they request it within 60 days of the adverse action. Adverse action can include denial of coverage or an increase in premium charges. Insurers are obligated to notify consumers when adverse actions have been taken.
While ChoicePoint compiles the information from all the contributors and maintains the database, the information on the report comes directly from insurance providers who give information on claims to ChoicePoint. ChoicePoint clearly states that “they do not change the substance of any claims information unless directed to by the insurance company that contributed the data.”
ChoicePoint is considered a consumer reporting agency under the Federal Fair Credit Reporting Act (“FCRA”) and its state counterparts. Under the terms of the FCRA, a consumer can dispute items on the report with the source of the information. ChoicePoint claims that it is “eager to help you clarify or amend your CLUE report.” However, it also notes that in regards to disputed claims it will verify the consumer’s claim of a mistake with the insurance company. Thus, the ultimate decision on whether an item is a mistake may lie with the insurance company that handled the claim. However, under the terms of the FRCA, once a mistake is verified, ChoicePoint is legally obligated to remove it from the report. ChoicePoint also offers a consumer a chance to offer a personal statement explaining any items he or she feels deserve an explanation.
Insurance companies. CLUE is mainly used by insurance companies for evaluating potential customers. Only insurance companies that provide information to ChoicePoint on claims made by their current policy-holders are allowed to access the CLUE database which contains the claims information from all other participating providers. Currently, approximately 90 percent of American insurance companies participate in the service. Under the FCRA, ChoicePoint may only furnish reports to entities it believes will use the information for underwriting purposes related to the individual consumer whose report was requested. Parties (other than owners) requesting reports from ChoicePoint must certify that they intend to use the information for permissible purposes such as insurance underwriting only.
When faced with a prospective insured, insurance providers use the CLUE database to find out information not only about the customer, but also about the residence to be covered. Often this will cause problems for homeowners who have recently purchased a property. If they assume they will be able to get insurance easily because they always have had coverage and have never made any claims, they may be surprised when they are turned down based on claims made on their new property by the previous owners. Therefore, savvy realtors are increasingly requiring a copy of the seller’s CLUE report as a condition for closing.Experts suggest that filing 2 claims within 3 years will subject an individual consumer or home to significant risk of being rejected by insurance carriers. However, even more damaging to the ability to get insurance for a given property is the presence of water-related claims. Insurance companies have responded to a recent surge in water and mold related claims by drastically cutting back on coverage for water damage and increasing premiums for properties with past claims for water damage.
Eric R. Jaworski is no longer with the law firm of Frascona, Joiner, Goodman and Greenstein, P.C.
A version of this article appeared in the Colorado REALTOR® News, the monthly publication of the Colorado Association of REALTORS®.