How Past Claims Affect Homeowners Insurance Rates

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published 15 March 2013

Is it true that claims made on my home before I bought it can affect my homeowners insurance rates? Why? And how does the insurer know?

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Yes, it’s true. Insurance companies share information about claims in a database called the Comprehensive Loss Underwriting Exchange (CLUE) to help them assess the risk of a claim when you apply for a policy. The database includes information about claims you’ve made over the past seven years, as well as claims that have been made on your home even before you lived there. If a lot of claims have been made on your home in the past, insurers worry that your house may have problems that could lead to more claims in the future -- especially for issues such as water damage, which can lead to more expensive claims for mold.

You can order your CLUE Personal Property Report to check on your claims history. To check out a home’s claims history -- either before or after you buy it -- you can order a CLUE Home Seller’s Disclosure Report, which lists homeowners insurance claims on the home within the past five years. It won’t include all of the personal information you would receive in your Personal Property Report (such as the homeowner’s name, Social Security number and date of birth).

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As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.