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Insurers Keep a Secret History of Your Home

by Liz Pulliam Weston

http://www.imakenews.com/pureaircontrols/e_article000301020.cfm?

x=b3vpf5W,bvtv58G

A huge database not only tracks claims, it also looks for risks such

as toxic mold. That's why homeowners with even minor water damage are

being canceled -- and are sometimes unable to sell.

You probably know that it's not a good idea to make too many claims

on your homeowners insurance policy because your insurer could drop

you.

What you might not know is that making a claim could make selling

your home more difficult down the road. What's more, you could find

your home's value damaged or a sale jeopardized even if a previous

owner, and not you, made a claim.

Insurers increasingly are using a huge industry database, called the

Comprehensive Loss Underwriting Exchange or CLUE, to drop or deny

coverage based on a home's history of claims or damage reports.

Insurance companies are terrified of rising losses from water and

mold damage. So a single report of water-related problems may be

enough for insurers to shun your home.

Jan and Garder of Bremerton, Wash., discovered this the hard

way. The Garders thought they were doing the right thing when they

told their insurance company, State Farm, about some minor water

damage caused by a rainstorm last year.

Consumers held hostage

The couple, who say they had been with their insurer for 30 years

without filing a claim, ultimately decided not to file one this time,

either.

That didn't stop State Farm from dropping them as customers, they

say. Not only that, but they say State Farm also shared the damage

information with the CLUE database. When the Garders applied for

coverage elsewhere, the other insurers cited State Farm's damage

report as the reason they wouldn't write a policy, Jan Garder said.

" Until then, we didn't know anything about the CLUE database, " she

said. " We really didn't have a clue. "

State Farm declined to comment on the Garders' case, citing privacy

concerns. Spokeswoman Wang said the insurer shares only claims

information with CLUE, not damage reports.

But the company that operates CLUE, ChoicePoint of Alpharetta, Ga.,

said that the database collects damage reports as well as claims. The

information stays in the database for up to five years, said

Lee, ChoicePoint's chief marketing officer.

The Garders say they finally secured bare-bones fire coverage for

about $1,000 a year, more than three times what they paid previously

for full homeowners coverage.

What's more, the problem is derailing their plans to sell their home.

The Garders say they have been told by their real estate agent and

others that they may have a tough time getting a good price for a

home that's already been rejected by many insurers.

" You are totally blackballed, " said Jan Garder, 49. " They should not

be able to hold a consumer hostage like this. "

Insurance companies get aggressive

In previous years, insurers used the CLUE database in large part to

watch for fraud and for consumers who had a history of filing

numerous claims.

After losing billions of dollars on homeowners insurance in recent

years, however, insurance companies have become more aggressive about

screening for other risks -- including damaged homes that could spawn

future claims.

State Farm has been among the most aggressive in weeding out unwanted

risks. The nation's largest property insurer has dropped thousands of

policyholders from coast to coast and stopped writing homeowners

insurance in several states.

So far, insurers' increased use of the CLUE database has not caused

serious problems for the booming real estate industry, said

Tribble, a member of the National Association of Mortgage Brokers'

board of directors.

But Tribble said he has heard a number of anecdotal reports of

residential sales falling through at the last minute because of CLUE-

related problems in securing insurance. He fears the problem could

get worse if insurers begin to shy away from homes that have had even

minor damage.

" Right now, it's still a pretty isolated problem, " Tribble said, " but

that could change if they (insurers) continue to do this. … If you're

not able to get insurance, you're not able to close the deal. "

Tribble thinks it's particularly unfair that a home could be

blackballed because of one claim, let alone a single report of damage

that didn't lead to a claim.

" Insurance companies want to keep their costs down, which is

understandable, " Tribble said, " but this is what you have insurance

for -- to cover you for accidents. "

The insurance industry is notorious for its manic-depressive cycles.

In profitable years, companies will slash premiums, boost coverage

and take on big risks in hopes of gaining market share. When those

risks start costing real money, the companies sound the full retreat -

- hiking premiums, dropping customers and shunning risk.

What's notable about their most recent mood swing was how quickly it

happened, spurred in large part by last year's losses and the massive

increase in mold-related claims, especially in Texas and California.

How to protect yourself

While you can't do much about insurers' overreactions, you can do

something to protect yourself in this particularly difficult time.

Among them:

Keep your home in good repair. A solid, watertight roof, good

plumbing and a decent paint job can protect your home from various

water disasters -- the kind of damage that's scaring insurers the

most these days. It's a good idea to regularly check the hoses on

your clothes- and dish-washing machines, since cracked or burst hoses

often lead to serious water damage.

Keep your deductible high. Pay for smaller expenses out of your own

pocket. Homeowners insurance should be reserved for the big

disasters, not the little problems you can easily pay for yourself.

Think twice about water-related claims. This is especially true if

you plan to sell within a few years. You could be better off paying

to repair the problem yourself rather having your home be branded as

high risk.

Don't tell your insurer about problems unless you're sure you'll file

a claim. This last piece of advice is unfortunate, because insurers

and insurance agents can be a decent source of counsel on whether

it's worth filing a claim. Since any damage you report could get

passed on to the CLUE database, however, it's smart now to err on the

side of caution.

Consider getting a copy of your CLUE report. If you've been denied

insurance, you can get a copy of your home's CLUE report for free;

otherwise, you'll pay about $9. You have a right under federal law to

dispute any erroneous information on the report.

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Pure Air Control Services

800-422-7873

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