CLUE Report
A CLUE report for a homeowners/dwelling fire policy only discloses past
claim information. If you had any past claims in the last 5 years, it will
show up on the underwriters CLUE report. If you get a copy of the clue
yourself, the time period can be greater than 5 years(an underwriter is only
allowed to see 5 years). This report is run using the persons name and
address and property address. Sometimes the CLUE will show a claim for the
property you are purchasing. Because humans look at the reports, one can
erroneously get charged as a result of misreading the CLUE. This is where
you want to use the FCRA (Fair Credit Reporting Act) to challenge the
information. If it is your claim, you should have disclosed it on the
application that clearly asks about prior claims and you would have signed a
statement to the truthfulness of the application (known as a fraud
statement)
" Applicable in Arkansas, District of Columbia, Kentucky, Louisiana, Maine, Michigan, New Jersey, New Mexico, Pennsylvania, Tennessee and Virginia .Any person who knowingly and with intent to defraud any insurance company or another person, files a statement of claim containing any materially false information, or conceals for the purpose of misleading, information concerning any fact, material thereto, commits a fraudulent insurance act, which is a crime, subject to criminal prosecution and civil penalties. In DC, LA, ME, TN and VA insurance benefits may also be denied." (In NJ fraud is triple damages)
The information on the clue will include. The named insured, the amount of the claim, the type of claim (water damage, fire, liability, etc.), the date of the claim, and the status of the claim, and the address. Once again, it is not secret. The next time you sign an insurance application, read the following right above your signature.
"PERSONAL INFORMATION ABOUT YOU, INCLUDING INFORMATION FROM A CREDIT REPORT, MAY BE COLLECTED FROM PERSONS OTHER THAN YOU IN CONNECTION WITH THIS APPLICATION FOR INSURANCE AND SUBSEQUENT RENEWALS. SUCH INFORMATION AS WELL AS OTHER PERSONAL AND PRIVILEGED INFORMATIONCOLLECTED BY US OR OUR AGENTS MAY IN CERTAIN CIRCUMSTANCES BE DISCLOSED TO THIRD PARTIES. YOU HAVE THE RIGHT TO REVIEW YOUR PERSONAL NFORMATION IN OUR FILES AND CAN REQUEST CORRECTION OF ANY INACCURACIES. A MORE DETAILED DESCRIPTION OF YOUR RIGHTS AND OUR PRACTICESREGARDING SUCH INFORMATION IS AVAILABLE UPON REQUEST. CONTACT YOUR AGENT OR BROKER FOR INSTRUCTION ON HOW TO SUBMIT A REQUEST TO US."
A CLUE report for Auto insurance also reveals prior claim history. Some companies will also order a UDR (Undisclosed Driver Report). This is typically used when a family of 2 tries to insure 5 cars. 9 times out of 10 they find more drivers in the house that have horrible driving records. This database is searched by looking up all known Drivers Licenses that have "123 Main St, anytown" as the listed address. Once again a recent move can make this report inaccurate if someone doesn't change the address on their license.
None of the above has to do with credit.
As far as credit:
NJ has had strict laws against the use of credit for insurance until very recently. There has always been a question regarding bankruptcy, repossession, and foreclosure on the application and the companies have based decisions on it.
When I was selling personal lines insurance, Mercury insurance company negotiated a deal with the state of NJ to write business using 'insurance scoring" (notice I didn't say credit scoring). Of course that opened the floodgates for the other carriers to do what they have been doing in other states for years. I went to a seminar when First Trenton Indemnity was going to introduce credit scoring for insurance. What they told me was that the scoring model they used was different than FICO. Just as I could never truly figure out what determined a FICO score so that I could calculate it myself, the insurance score is the same convoluted calculation that nobody could possibly figure out. What they did say was, someone with a high FICO could actually have a low insurance score. Don't ask me how.. I don't know. They claim that in reality it is a great predictor of future claims. I think that there is some truth to it, but not exact. As I mentioned in my earlier email, a person who is struggling to pay his/her bills is not going to make repairs on the house or the car a priority over the rent. I believe that an insurance company must also make exception to certain issues regarding bankruptcies. If there is a death, job loss, or medical reason for the BK, the insurance company must make exception. One company I dealt with for auto insurance had changed the rates in both directions, lowered rates for good insurance scores and raised rates for poor insurance scores. It was a 2 way street.
I can tell you in my office, 20% of our client caused 80% of the claims, cancellations, pay issues, complaints etc. I bet most of you landlords can use that same 80/20 rule for your tenants.
Yes there is a National Database for Life/health/disability insurance as well. If you are denied life insurance or insured under a higher risk the company can report this information to a national database called the MIB Medical Information Bureau. www.MIB.com
If you ever feel that you are being taken advantage of by an insurance company, I suggest you start by talking to your agent. Your agent may not have a solution, but may give you important information as to why the insurance company is doing what they are doing (right or wrong). If you can't negotiate a solution by yourself, then you do have the ability to go to the department of insurance and banking for a full investigation. I also have personally used this avenue in a situation I had regarding a past insurer that I had. DOBI was very thorough in my case. You can file the complaint online https://www6.state.nj.us/DOBI_UIC/UICPublicEntryServlet Believe me, just as the insurance companies like to profit, DOBI loves to make money by fining insurance companies.
I have enclosed a sample Homeowners application that virtually every insurance company accepts. Read it thoroughly, IT IS A CONTRACT!!!!!!!!!!! You investors that flip properties, look hard at questions 19 & 20. How many times have you answered this question no, and then get surprised when you get a cancellation notice after an inspection?
Once again, I am not defending the insurance companies. I am just shedding light on what they believe. I personally believe we would all be better off with the basic idea of no lawsuits and simple fire insurance.
This is also why I like commercial insurance more than personal... none of the above applies. Just show me your loss runs for the last 5 years and I will take it to the insurance company for a rate.
One last note. The commercial insurance market got really soft over the last 2 years and commercial property rates have been going down. I think Katrina hitting inland will have an impact on that trend.
" Applicable in Arkansas, District of Columbia, Kentucky, Louisiana, Maine, Michigan, New Jersey, New Mexico, Pennsylvania, Tennessee and Virginia .Any person who knowingly and with intent to defraud any insurance company or another person, files a statement of claim containing any materially false information, or conceals for the purpose of misleading, information concerning any fact, material thereto, commits a fraudulent insurance act, which is a crime, subject to criminal prosecution and civil penalties. In DC, LA, ME, TN and VA insurance benefits may also be denied." (In NJ fraud is triple damages)
The information on the clue will include. The named insured, the amount of the claim, the type of claim (water damage, fire, liability, etc.), the date of the claim, and the status of the claim, and the address. Once again, it is not secret. The next time you sign an insurance application, read the following right above your signature.
"PERSONAL INFORMATION ABOUT YOU, INCLUDING INFORMATION FROM A CREDIT REPORT, MAY BE COLLECTED FROM PERSONS OTHER THAN YOU IN CONNECTION WITH THIS APPLICATION FOR INSURANCE AND SUBSEQUENT RENEWALS. SUCH INFORMATION AS WELL AS OTHER PERSONAL AND PRIVILEGED INFORMATIONCOLLECTED BY US OR OUR AGENTS MAY IN CERTAIN CIRCUMSTANCES BE DISCLOSED TO THIRD PARTIES. YOU HAVE THE RIGHT TO REVIEW YOUR PERSONAL NFORMATION IN OUR FILES AND CAN REQUEST CORRECTION OF ANY INACCURACIES. A MORE DETAILED DESCRIPTION OF YOUR RIGHTS AND OUR PRACTICESREGARDING SUCH INFORMATION IS AVAILABLE UPON REQUEST. CONTACT YOUR AGENT OR BROKER FOR INSTRUCTION ON HOW TO SUBMIT A REQUEST TO US."
A CLUE report for Auto insurance also reveals prior claim history. Some companies will also order a UDR (Undisclosed Driver Report). This is typically used when a family of 2 tries to insure 5 cars. 9 times out of 10 they find more drivers in the house that have horrible driving records. This database is searched by looking up all known Drivers Licenses that have "123 Main St, anytown" as the listed address. Once again a recent move can make this report inaccurate if someone doesn't change the address on their license.
None of the above has to do with credit.
As far as credit:
NJ has had strict laws against the use of credit for insurance until very recently. There has always been a question regarding bankruptcy, repossession, and foreclosure on the application and the companies have based decisions on it.
When I was selling personal lines insurance, Mercury insurance company negotiated a deal with the state of NJ to write business using 'insurance scoring" (notice I didn't say credit scoring). Of course that opened the floodgates for the other carriers to do what they have been doing in other states for years. I went to a seminar when First Trenton Indemnity was going to introduce credit scoring for insurance. What they told me was that the scoring model they used was different than FICO. Just as I could never truly figure out what determined a FICO score so that I could calculate it myself, the insurance score is the same convoluted calculation that nobody could possibly figure out. What they did say was, someone with a high FICO could actually have a low insurance score. Don't ask me how.. I don't know. They claim that in reality it is a great predictor of future claims. I think that there is some truth to it, but not exact. As I mentioned in my earlier email, a person who is struggling to pay his/her bills is not going to make repairs on the house or the car a priority over the rent. I believe that an insurance company must also make exception to certain issues regarding bankruptcies. If there is a death, job loss, or medical reason for the BK, the insurance company must make exception. One company I dealt with for auto insurance had changed the rates in both directions, lowered rates for good insurance scores and raised rates for poor insurance scores. It was a 2 way street.
I can tell you in my office, 20% of our client caused 80% of the claims, cancellations, pay issues, complaints etc. I bet most of you landlords can use that same 80/20 rule for your tenants.
Yes there is a National Database for Life/health/disability insurance as well. If you are denied life insurance or insured under a higher risk the company can report this information to a national database called the MIB Medical Information Bureau. www.MIB.com
If you ever feel that you are being taken advantage of by an insurance company, I suggest you start by talking to your agent. Your agent may not have a solution, but may give you important information as to why the insurance company is doing what they are doing (right or wrong). If you can't negotiate a solution by yourself, then you do have the ability to go to the department of insurance and banking for a full investigation. I also have personally used this avenue in a situation I had regarding a past insurer that I had. DOBI was very thorough in my case. You can file the complaint online https://www6.state.nj.us/DOBI_UIC/UICPublicEntryServlet Believe me, just as the insurance companies like to profit, DOBI loves to make money by fining insurance companies.
I have enclosed a sample Homeowners application that virtually every insurance company accepts. Read it thoroughly, IT IS A CONTRACT!!!!!!!!!!! You investors that flip properties, look hard at questions 19 & 20. How many times have you answered this question no, and then get surprised when you get a cancellation notice after an inspection?
Once again, I am not defending the insurance companies. I am just shedding light on what they believe. I personally believe we would all be better off with the basic idea of no lawsuits and simple fire insurance.
This is also why I like commercial insurance more than personal... none of the above applies. Just show me your loss runs for the last 5 years and I will take it to the insurance company for a rate.
One last note. The commercial insurance market got really soft over the last 2 years and commercial property rates have been going down. I think Katrina hitting inland will have an impact on that trend.