Have you ever applied for insurance, accepted a quote, paid the premium, only to be told later the rate has changed due to a claim you forgot you had? Have you ever wondered how your new insurance company found out that you had claims with your previous insurance company?
Most insurance companies use a data base called the Comprehensive Loss Underwriting Exchange (CLUE) to see if a you have had losses (claims) in the past five years. They use this information to help decide whether they will insure you, and if so, for how much. It will tell the insurance company the date, type of loss and amount paid. If you are buying a property it will also list claims from the current owner.
I would suggest that if you are buying a home to request a CLUE report at the same time you make your initial offer. That way, if there has been serious damage to the house, you can direct your home inspector accordingly. The same goes for home sellers. Reviewing the report before listing allows you to fix any inaccuracies or make sure repairs have eliminated the original problem. To order your free CLUE report, call 888.497.0011 or visit www.personalreports.lexisnexis.com.
Be careful with inquiries.
If you call your insurance company and inquire if you should put in a claim for the minor damage that you created by backing into your fence pole, you just put in a claim. It doesn’t matter if your insurance company pays little or nothing, you still have filed the claim and that claim will be reported to the exchange (clue). This may have an effect on your future insurance rates.
Notice I said if you call you insurance company and inquire. I will use my agency as an example of how we would treat that inquiry, although I believe many insurance agencies out there will do the same thing that we do. We are an independent insurance agency representing many different insurance companies. We are not the insurance company. It’s a little confusing sometimes for folks to understand the difference, but there is a difference.
I recently got the call of backing into the fence post. Keep in mind this is actually two claims ( one for the car and one under the homeowners policy for the fence). Both the car and the fence had minor damage. What we asked our client to do was to get estimates for the damages. The fence repair was less than what his deductible would have been had he submitted the claim to the insurance company. Again this would have been a claim reported to CLUE showing $0 paid. But it would still be a claim that could effect future insurance rates.
The damage to the car was about $750. This type of claim, backing into the fence post is a collision claim. By another name it is called an at-fault-accident. This type of claim will definitely effect future insurance rates. On top of that he had a $500 deductible he would have to pay before the insurance would kick in and pay the balance. So our discussion was about – did our client want to pay for the car claim out of pocket or did he want the insurance company to pay the $250 balance after his deductible and look at higher insurance rates in the future. For him, that was an easy decision.
Every insurance company has different responses to how small claims will effect your insurance premiums in the future. Depending on the length of time you are with your insurance company, accident forgiveness factors and other previous claims you may have had, all will impact how much turning in a small claim will effect insurance premiums in the future. Also, depending on the company, a claim will stay a part of your rating factor for 3-5 years.
I always advise folks to talk to their insurance professional before filing a property damage claim. Even though your loss might be covered by your insurance, it could end up costing you in the long run.
For more information, visit www.thejemezagency.com.