C O A L I T I O N Corner Coalition Corner: Business training tools for HR staff, real estate agents and other service professionals in the relocation and real estate industries So What is C.L.U.E. ® Report, Anyway? By Richard H. Mansfield Worldwide ERC ® and Coalition General Counsel Mansfield & Associates © 2004, Employee Relocation Council/Worldwide ERC ® Coalition

C O A L I T I O N Corner Program objectives This program supplements a monthly editorial feature in Worldwide ERC ® ’s Mobility magazine This segment will: –Examine Comprehensive Loss Underwriting Exchange (C.L.U.E. ® ) Property Loss History reports and –Explore the impact of these reports on the relocation industry

C O A L I T I O N Corner Homeowners’ insurance review In exchange for yearly premium, “insurer” agrees to pay financial losses concerning property (“covered losses”) which would otherwise have to be paid by homeowner/“insured” Necessary requirement for real estate transfers Good personal financial management for homeowners

C O A L I T I O N Corner Homeowners’ policies and insurance companies Homeowners’ policies often come in two parts: –one to cover casualty losses to structure (i.e., wind, fire, water damage) –one to cover liability issues (i.e., accidental falls on property, dog bites, etc.) In past few years, insurance companies faced with exponential increase in number and cost of casualty claims (especially related to water damage and mold) Insurance companies also subject to costs of “policy hoppers” – those who file and collect on claims and switch companies to avoid premium increases

C O A L I T I O N Corner Risk assessment and the C.L.U.E ® report To help determine risk level when underwriting policies, insurance companies often turn to a central database of policies, insureds, and claims, as developed by ChoicePoint Inc., a data management company ChoicePoint collects insurance data and produces a C.L.U.E. ® (Comprehensive Loss Underwriting Exchange) Property Loss History report, listing data for individual properties and homeowners

C O A L I T I O N Corner Reports contain information regarding property and homeowner, as submitted by insurers Information goes back 5 years Underlying database tracks 27 “causes of loss” about claims. Some examples include: –Environmental contamination –Damage to property of others –Dog bite –Earthquake, fire, flood, lightening, smoke, water, wind or hail damage –Freezing water –Medical payments made under a policy –Slip and fall –Theft/burglary claims –Vandalism damage –Workers compensation claims What’s in a C.L.U.E. ® report?

C O A L I T I O N Corner Included are not only claims actually made, but all inquiries regarding claims, even if never submitted Each insurer decides how to use C.L.U.E. ® reports based on its own underwriting and rating criteria In many states, insurance companies can revoke a policy within 60 days from the issuance of a policy, based on underwriting issues uncovered in a C.L.U.E. ® report (Author’s Note: There appears to be some state resistance to such a long period; Arizona, for example recently reduced it to 30 days) What’s in a C.L.U.E. ® report?

C O A L I T I O N Corner Additional C.L.U.E. ® report information Reports contain personal information on insured, including date of birth, social security number and claims history for casualties unrelated to condition of his/her house C.L.U.E. ® reports are protected under the Fair Credit Reporting Act (FCRA), and can only be accessed by the insurance company or the insured A sample report can be found at

C O A L I T I O N Corner What’s the relevance for relocation? In some areas, particularly Western U.S., sellers are being asked to provide a C.L.U.E. ® report or a claims history on a house or individual 32 states have promulgated property condition disclosure forms which, in the judgment of the legislature, contain items which should be disclosed While some are found in C.L.U.E. ® reports, it is a history, not an inspection or disclosure of actual property condition at time of sale Claims history can range from irrelevant to deceptive when improperly used as a vehicle for property condition disclosure

Inquiries or fully repaired items may have nothing to do with the current condition of a house In the case of repaired items, there may be an implication that they are not currently a problem These are issues properly left to homeowner to disclose or inspector to note A history of claims or inquiries is not a substitute, and may in fact be deceptive, as to the current condition of the house Seller’s personal data and information concerning liability claims are irrelevant to buyer 10 C O A L I T I O N Corner What’s the relevance for relocation?

C O A L I T I O N Corner Bottom line? Should sellers provide C.L.U.E. ® reports to aid buyers in procuring insurance on a house? So long as: –there is an insurability clause in the sales contract, and –the buyer immediately applies for insurance… The buyer’s insurance company will get its copy of the seller’s C.L.U.E. ® report, and will make its decision

C O A L I T I O N Corner Bottom line? Are there helpful consumer uses for a C.L.U.E. ® report, other than as a disclosure vehicle? Data contains items which should be checked periodically by consumers, just as credit reports are checked The FCRA guarantees every consumer the right to view and submit corrections where necessary As insurers use information to issue and price insurance, all consumers should be certain the information is correct