The Previous Owner's Insurance Claims Are Still on Your House's Record. You're Paying for Them.

There is a file on your house. Not on you. On the house. It lists every insurance claim filed on that address for the past seven years, including the ones filed by people who moved out before you ever saw the place. When you got your homeowners insurance quote, your carrier read that file and priced your policy partly on somebody else's water damage.

It is called a CLUE report, short for Comprehensive Loss Underwriting Exchange, and it is maintained by LexisNexis. Most major carriers contribute claims data to it and most pull from it when underwriting a new policy. This has been standard practice since 1992. A survey commissioned by insuranceQuotes found that 86 percent of Americans do not know insurers use a previous owner's claims history to price a new policyholder's premium.

Why this is worse than it sounds

A CLUE report on a home insurance policy captures more than paid claims. It typically captures inquiries too. If the prior owner called their agent to ask whether a cracked window would be covered, decided not to file, and hung up, that conversation can land in the file as a loss inquiry. Carriers read a cluster of inquiries the same way a lender reads a cluster of credit applications.

Two claims of the same type are the real problem. Insurers care much less about a single lightning strike than about a pattern. Two water losses in seven years on the same address will get you priced as a water risk regardless of who was living there, and in some markets it will get you declined outright rather than surcharged. State rules vary on whether a carrier can use a prior owner's loss at all, and in most states the answer is yes if the carrier can show a correlation between that loss and future loss probability, which is not a high bar.

The number

Filing a claim raises a homeowners premium by 18 to 28 percent on average for a first claim, and water damage claims sit at the steep end of that range. On a $3,000 annual premium that is $540 to $840 a year. The record lasts five to seven years, but the rate impact is not flat across it. Most carriers weight recent losses far more heavily, and the practical effect fades substantially after year three. Call the realistic exposure $1,500 to $2,500 on a claim you did not file and may never have been told about.

You are entitled to one free copy of your property's CLUE report every twelve months under the Fair Credit Reporting Act. The entire exposure is discoverable for the cost of a phone call.

The move

Pull the report. LexisNexis Risk Solutions Consumer Center takes requests at 866 312 8076 or at consumer.risk.lexisnexis.com/request, and it takes about fifteen minutes. Only the current owner can request the report for a property, which is exactly why you should do it now rather than during your next renewal scramble.

Read it for errors. Wrong claim amounts, claims that belong to a different address, duplicate entries, and inquiries logged as losses are all common and all disputable. LexisNexis has 30 days to investigate a dispute and correct or remove inaccurate entries.

Then use it. If the report is clean and your premium suggests otherwise, that is a conversation with your agent worth having. If it is not clean, you at least know what every carrier sees before you shop, which changes how you shop.

And if you are still under contract on a purchase, ask the seller to pull the CLUE report and share it. A good agent will ask for this. Most do not.

At Rafter we look at the loss history attached to a member's address as part of setting up their home profile, because the cheapest insurance savings are usually sitting in a document nobody has read.