Were you even aware about the significant damage your home suffered before you bought it? Don’t get ripped off when buying a home, know all you can before you buy. Read on for more information.
[tab: What Is C.L.U.E. And What Can I Do?]
Are you aware that insurance underwriters maintain a database of claims that have been filed against a homeowners insurance policy? This database lists all claims for the previous 7 years whether they were paid on or not. Some insurance agencies also report even a call from a homeowner making an inquiry about insurance coverage if the homeowner has a potential claim. Some agencies even log these calls in the C.L.U.E. database even if that homeowner inquiry did not result in a claim being filed. This database is used by underwriters to determine if past issues with the home were experienced. Underwriters use this information to determine how much your policy premium will be, whether they will even insure the home, as well as other actions they might take. Depending on what is in this database a home could even be potentially blacklisted from obtaining insurance. You can read a great deal about C.L.U.E. at the Privacy Rights Clearinghouse WEB site.
C.L.U.E. is the short name for the “Comprehensive Loss Underwriting Exchange” database. This database is a bane on consumers but it can also help you when purchasing a home. You should learn what is in the C.L.U.E. report before the end of your purchase option period. The C.L.U.E. report can alert you to previous significant damage that might not have been disclosed on any required disclosure form. Some States, such as New York, have an option to not provide a disclosure at all by paying some small and insignificant fee to the buyer. In those cases you could be walking into a horrific home purchase only to find out later after you move into the home. These are some examples of situations that the C.L.U.E. report might alert you of the possibility for further and more in depth checking.
- The owner filed a claim for damage, collected the insurance check but never performed the repairs. You could be walking into a situation where the damage might have been covered over with cosmetic means only to be found later.
- The home suffered a significant, damaging event that might have been corrected in the cheapest manner possible, and potentially not correctly done. The repairs themselves could be shoddy in workmanship, pass any visual inspections (or be in hidden areas), and the problem could appear again later.
- The cause of the damage could be related to defective building materials (i.e. old aluminum wiring, leaking polybutilene piping, etc.) and just the damaged area or component repaired. The rest of the defective materials might still be there and subject to failure. The insurance underwriter might either deny coverage or charge a much higher premium to cover the home.
- There were numerous small claims filed against the home which might either blacklist the home from coverage or cause extremely high premiums.
- If there was a significant fire event that occurred requiring extensive use of water for extinguishing it there could still be the presence for water damaged materials not properly repaired and/or replaced. These materials could have a host of problems to include being weakened, potential mold growth in hidden areas, etc.
It is important that when you are purchasing a home you obtain a copy of the C.L.U.E. report for any home you are purchasing. You should follow these tips to help you prevent walking into a money pit.
- The C.L.U.E. report is covered under privacy laws so you, as a buyer, can not just request it. Make sure that your initial offer includes wording that allows you the right and approval from the seller to request a C.L.U.E. report for the home. Also make sure that your option period is dependent on obtaining a C.L.U.E. report quickly for your review and use. Speak to your Real Estate Agent about the proper wording to place in your initial offer contract to obtain this.
- If the seller offers you an existing C.L.U.E. report be very careful about accepting it. For your protection I would not accept a C.L.U.E. report from a seller as in our digital age anything can be altered. If you do accept it then do not take one that is old as anything can happen between the time of that report and your initial offer. Also make sure that you verify the C.L.U.E. report you were given is accurate.
- Read the C.L.U.E. report thoroughly. If there are any claims listed on it then demand to see the actual receipts for the repair work performed. Make sure they match the claim information in the C.L.U.E. report. Also call the local Authority Having Jurisdiction (AHJ) for building inspections and permits. Inquire with them if any of the repair work performed required permits at the time the repair work was accomplished? If permits were required then ask the AHJ if the proper permits were obtained, inspections completed, and if the permits were properly closed out. If permit required work was not properly registered and completed you could have problems later with your insurance company on future claims or even the AHJ if you attempt to obtain additional permits.
- Take the C.L.U.E. report and the homes information to your insurance Agent. Ask them to provide you an insurance premium estimate for the home with and without considering the contents of the C.L.U.E. report. Also ask your Agent if the underwriters will be requiring you to perform any special actions before they will insure the home, i.e. replacing all aluminum wiring, etc.
Don’t get burned when you buy a home when you can easily check these things out!
Knowledge is power, but sharing knowledge brings peace!
[tab: Links and References]
Privacy Rights Clearinghouse – A great site to learn about privacy issues that affect you.
PS Inspection & Property Services LLC is a full service home inspection and light commercial inspection company servicing the entire Dallas/Fort Worth metroplex. We strive to for the satisfaction of our customers in everything we do. Our services offerings include:
Buyer home inspections
New Home Warranty Inspections
New Home Draw Inspections
Home Maintenance Inspections
Home Remodeling Inspections
Rental And Renter Inspections
Infrared Thermal Imaging Inspections
Energy Audit Inspections
Whole Inspections Or Inspections Customized To Your Needs
If you have an inspection need we can customize an inspection for it. Please visit our main site at PS Inspection & Property Service LLC.
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