Insuring Your Property

What is a CLUE Report?

You come home from work, open the mail and find a letter from your insurance agent stating that your homeowners insurance policy will be cancelled. Knowing the mortgage company will demand continued insurance, you begin calling other insurance companies only to be quoted unaffordable rates or be told they will not cover the property. If this scenario sounds all too familiar then you may have joined the millions of Americans who have a negative CLUE Report.

CLUE, which stands for Comprehensive Loss Underwriting Exchange, is a database used by insurance companies to exchange information about the history of your home including claims, injuries, losses and other pertinent information. The CLUE report remains with the house itself rather than the owner of the home and can provide valuable information about the status of the property and future likelihood of claims.

If you need homeowners insurance help, it is a good idea to begin early. Shopping for insurance can be time consuming and it is important to make sure you do not have a lapse in coverage. Use these quick tips to replace your homeowners insurance:

1. Comparison Shop. Begin by putting together a property information sheet about your home. Include the size, age, type of construction, amenities, location, distance to fire hydrant, security precautions etc... Once armed with all of the information, call insurance agents and ask "Will you insure my home" with these criteria?
2. Obtain a copy of the CLUE Report for your home. Consumers can request a copy of the CLUE report for their home by contacting www.ChoiceTrust.com. It is a good idea to review the information contained in the CLUE report at least annually to assure it is accurate. Be sure to put any disputed information in writing and follow-up until it is corrected.
3. It is also a good idea to obtain a copy of your Personal Insurance Score. This is similar to a credit score and in fact, your personal credit history can also impact your homeowners insurance rates. You can obtain a copy of your Personal Insurance Score from Choice Trust when requesting a copy of your CLUE report. Again, take time to verify the accuracy of the report.

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How do I verify the history of a home in order to obtain insurance?

When searching for a new home, one of the most overlooked areas of concern is the cost - and availability - of homeowners insurance. Recent years have seen an increase of natural disasters including hurricanes, floods, fires and other threats. Combined with the increased cost of materials, labor and supplies, the average cost of homeowner insurance has outpaced the rate of inflation.

For homeowners insurance help, use the following tips and questions before purchasing your next home.

• Can I obtain affordable insurance? When shopping for a home, be sure to ask your insurance agent to pull a CLUE report on the specific property to find out in advance if you will be able to obtain homeowners insurance and at what cost. Once you have the anticipated “real” cost, it is a good idea to build in an annual 5 percent to 10 percent increase to make sure you can afford the house you are buying.
• What is the history of the home? Before making an offer on any property, it is a good idea to include a clause about the availability of obtaining affordable insurance and viewing the CLUE report. The CLUE report will provide an additional layer of protection for the buyer. For example, if extensive repairs were made due to fire or water damage you may feel differently about purchasing the property.
• Where is the Home Sellers Disclosure Report? Finally, ask your real estate agent to request a CLUE report on any prospective properties on your behalf and/or request a CLUE Home Sellers Disclosure Report. Many real estate professionals routinely order a CLUE report before listing a property and will make the CLUE Home Sellers Disclosure Report available upon request.

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Does my homeowners insurance provide coverage for flooding or earthquakes?

Many people are surprised to learn standard homeowners insurance usually excludes flood or earthquake damage. Hurricane claims also have different deductibles and policies. Differentiating between storm damage caused by high winds or the resulting flooding can also result in multiple claims, deductibles and other unusual issues.

It is important to understand the limits, exclusions and coverage of any homeowners insurance policy especially if you live in an area prone to natural disasters such as hurricanes, flooding or earthquakes. In most cases, you will need to purchase an additional policy to cover these risks.

Remember, most standard insurance policies do NOT provide coverage for floods or earthquakes so plan ahead. There is typically a moratorium placed on purchasing new insurance policies once a storm has been identified so it is not advisable to wait until the last minute.

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What Homeowners Insurance Questions should I ask my agent?

Shopping for homeowners insurance may not be a fun part of buying a home, but it is important just the same. Unfortunately, few people understand enough about homeowners insurance to know where to begin. Use this quick checklist when speaking with your homeowners insurance agency to make sure you purchase the coverage needed to protect your home and family:

1. Do I have enough coverage? This can be a big problem especially for those who live in areas experiencing rapid appreciation in the local real estate market. Every few years it is a good idea to make sure your insurance will cover the cost of rebuilding your home. Be sure to ask about guaranteed replacement cost which will automatically provide coverage up to a specified amount should the price of materials, labor and supplies increase before you are able to update your policy.

2. What is included or excluded? Most standard homeowners insurance rates do not include the cost of flood insurance, earthquake, small business liability operated out of your home and other miscellaneous considerations. Be sure to speak to your insurance agent about any special or unique considerations.

3. Does the insurance cover the cost of bringing a building up to code? Building codes change and the cost of rebuilding or repairing can often exceed the original estimates if a new code has gone into effect since the home was built.

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How do I Evaluate Homeowners Insurance?

Homeowners insurance is one of those services everyone hopes to never need. Despite paying premiums each and every year, few things are worse than discovering your homeowners insurance agency isn't able or willing to cover your claim when needed. After hurricane Katrina, many people were stunned to learn they were under-insured, still others found the delay in payments presented an additional hardship to an already challenging situation. So, what can homeowners do to assure their homeowners insurance is able and willing to pay a claim should the need arise?

Take time to shop. Homeowners insurance prices vary significantly. Don't assume every agency offers the same policy. Compare your coverage with the quoted rates and obtain information from your state insurance regulator about the insurance provider.

Research consumer experience, complaints and other information about your homeowners insurance agency: inquire with the National Association of Insurance Commissioners. Don't shop by price alone! It is important to have a company that will be there when you need them so it may be worth paying a little more to stay away from insurance companies that have received a lot of consumer complaints.

Research the financial stability of the homeowners insurance provider you are considering. Companies are rated according to their financial stability just like consumers so it is a good idea to check the financial health of the company before doing business with them.

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How can I reduce homeowners insurance rates?

As the average cost of home owners insurance continues to climb, more people are searching for quick ways to cut homeowners insurance rates without sacrificing coverage. Use these money saving ideas to cut your homeowners insurance:

Increase the deductible. It is possible to save over 20 percent on your homeowners insurance rates by increasing your deductible to $1,000. Take the additional savings and put it into a safe, interest bearing account to pay the deductible should you have a claim. It won't take long before the savings on your homeowners insurance rates pays the $1,000 in full.

Request a multiple policy discount. Many homeowners insurance policies will provide an additional discount if you insure two or more policies with them. Common examples include home and car.

Improve your home. Request a list of available discounts for security systems, fire alarms, dead-bolt locks and other small improvements. Depending upon the age and location of your home, larger home improvements might make sense as well; for example, updating an older electrical system or adding storm shutters could more than pay for itself in reduced insurance rates.

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