What Is a CLUE Report and Why Does It Matter When I Buy a Home?

What is a CLUE report, and why does it matter when you buy a home in Orange County? It's a history of insurance claims, and it matters because insurance companies may look at it when deciding whether and how to insure the home you want to buy.

I'm Jeanette Nelson, a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas. Getting homeowners insurance is a real step in California escrows right now, so I want buyers thinking about the home's claim history early.

CLUE stands for Comprehensive Loss Underwriting Exchange. The CFPB's list of consumer reporting companies describes LexisNexis C.L.U.E. as a claims information exchange that collects and reports up to seven years of auto insurance claims, along with seven years of home insurance and personal property claims. The CFPB notes that insurers use this kind of data for pricing and underwriting.

The CFPB's list also names other companies that report property insurance claims history. Your insurer may use one or more of them.

This article is general information, not insurance or legal advice. Your insurance agent can explain how a claim history affects your own quote.

A home with past claims isn't automatically a problem. A claim can mean the issue was found and fixed properly. Still, the history can help you in three ways.

• It points your inspection. A past water claim tells your inspector where to look closely, such as under sinks, around the water heater or at the roof.
• It shapes your insurance shopping. Some insurers look at a property's past claims when they quote or decide whether to write a policy.
• It starts good questions. You can ask the seller what happened, who did the repairs, and whether permits were pulled for that work.

The CFPB says LexisNexis C.L.U.E. provides a free report every 12 months to a consumer who requests it. The report is tied to the person whose claims it lists. For a home you're buying, that's usually the seller.

1. Ask early. Your agent can ask the seller's agent for a copy as part of your requests during the contingency period.
2. Ask the seller to order it. The seller can request their own report directly from the company.
3. Compare it to the disclosures. Read the claims alongside the seller's disclosure forms and your inspection report.
4. Share it with your insurance agent. Ask whether the history affects your quote.

If the seller won't provide it, you can still ask direct questions about past claims and repairs in writing. Your insurance agent may also know more after running your quote.

• Type of claim. Water, fire, theft, wind and liability claims tell different stories.
• Date. A recent claim may still be in repair. An older one may be long resolved.
• Amount paid. A large payout often means major work was done. Ask for the repair records.
• Pattern. More than one claim of the same type can point to a recurring issue worth a specialist's look.

Start shopping for homeowners insurance as soon as your offer is accepted. Your lender will want proof of coverage before closing, and the Consumer Financial Protection Bureau lists the first year's insurance premium among common closing costs.

My article on shopping for homeowners insurance covers how to compare quotes, and this one on the California FAIR Plan explains the backup option if standard coverage is hard to find. For what to watch for at the inspection itself, see what to expect at your first home inspection.

If you're buying and want help lining up your inspection, disclosures and insurance questions in the right order, I'd be glad to talk it through with you. Call or text me at 714.366.8575 | DRE: 01397168, or contact me. Jeanette Nelson is a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas.