Buying a home can be overwhelming. You have access to a lot of information all of which requires you to make a buying decision. While you’ll always get an appraisal and hopefully an inspection, there’s one report that you’ll definitely need if you buy an existing home – it’s called the CLUE report.
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What is the CLUE Report?
The CLUE report stands for Comprehensive Loss Underwriting Exchange. It’s a database of information on homes that have filed insurance claims in the past 7 years. This might sound like useless information to you, but it’s actually important.
Knowing the types of claims a homeowner filed against the home in the last 7 years can help you know what to expect. For example, has there been a flurry of storm-related damage claims in the last few years? You may not want to buy the home if you know that it’s susceptible to a large amount of weather-related damage.
You can also keep track of claims that are due to theft or vandalism. Any type of repeated claims should be a red flag in your mind. Do you want to buy a home that stands a high risk of loss? It should be one of the factors you consider as you decide if you should purchase the home.
Other Reasons to Care About CLUE
You might not care if a homeowner has filed claims on a home. Maybe you think the homeowner is just prone to filing claims and it doesn’t’ affect you. But it does. When you try to insure the home after you purchase it, you may find it difficult to find a company that will insure the home.
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Insurance companies determine the risk of you filing a claim on the home before they insure it. If the home has a lot of claims on it in the past 7 years, insurance companies aren’t likely to insure it. This can leave you without insurance or if you can find a company that offers it, you may end up paying a lot more for the insurance than you intended.
Obtaining the CLUE Report
It’s important to know that you can’t get access to a home’s CLUE report unless you own it. Even though it’s a helpful report for buyers, the report is only available to the home’s current owner. This means you’ll have to ask the seller for the CLUE report if you want to see it before making a decision.
You should know that owners aren’t obligated to show you the CLUE report. If they are reluctant, this can be a sign that they filed a lot of claims and don’t want you to know it. If this is the case, you may want to find another home. At the very least, you can talk to your current insurance agent about the likelihood of getting the home insured.
While the CLUE report doesn’t seem important, it actually plays an important role in your decision. If you can’t get homeowner’s insurance on a home, you can’t secure financing. It’s usually a condition of the final approval to have a full-year of homeowner’s insurance paid for before the closing. Talk with your real estate agent to find out if a home is a good option or if you should look elsewhere because of the numerous claims made.
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