Claims that boost your insurance rates

When NOT to file an auto claim
By Jean Chatzky

When is it time to contact your auto insurance or home insurance company to make a claim?

You might be thinking, "Duh! Whenever my car or house has been damaged, like by an accident, or a disaster."

But deciding whether to file a claim isn't necessarily a no-brainer. In some cases, a claim may cause an insurance company to raise your rates.

In other instances, a claim could land your name in a database that might make it difficult to get or maintain coverage in the future.

Before you make another claim, make sure you know how it could come back to haunt you.

Claims that boost premiums

Certain types of home insurance claims are more likely to trigger an increase in premiums. They include:

  1. Dog bites
  2. Water damage
  3. Slip-and-fall claims

Database dangers

"The whole point of insurance is to make good on a loss, to make individuals whole again," says Claire Wilkinson, the editor of Terms + Conditions, the blog of the New York-based trade group the Insurance Information Institute.

However, many people fear that filing insurance claims will cause them to be "blackballed" by insurance companies, resulting in higher premiums, loss of coverage and difficulties obtaining new insurance. And in some cases, they might be right.

The vast majority of consumer insurance claims are recorded in one or both of 2 databases: CLUE and A-PLUS.

The larger and better-known database, CLUE, which stands for Comprehensive Loss Underwriting Exchange, is operated by the Ohio-based LexisNexis.

A-PLUS, which stands for Automobile-Property Loss Underwriting Service, is the other database. It is run by New Jersey-based Insurance Services Offices Inc. (ISO).

CLUE and you

CLUE is so popular that people in the insurance industry often refer to reports generated by either database as "CLUE reports."

"More than 98% of insurers writing automobile and homeowners coverage provide loss data to the CLUE databases," says Fiona McCaul, a LexisNexis spokeswoman.

CLUE reports include "policy information such as name, address and policy number, and claim information such as date of loss, type of loss and amounts paid," McCaul says.

Homeowner claims and auto claims are registered in CLUE and A-PLUS. Health insurance and other types of insurance claims are not included.

It's up to individual insurance companies to decide how to use CLUE data, McCaul says.

However, insurers may rely on the databases -- which originally were created to prevent insurance fraud -- to research and screen applicants' claim histories. In some cases, that can result in higher rates or difficulty obtaining coverage.

Even inquiries can count against you?

Information found in these databases may be more expansive than many people realize. Privacy Rights Clearinghouse, a San Diego-based consumer group, warns that an insurance carrier may submit information to CLUE when a customer simply calls on an inquiry.

However, McCaul says that practice is frowned upon.

"A claim is loaded into the database when the loss occurs and is accessible when a CLUE report is requested by the carrier at the time of application for insurance," she says. "For several years we have cautioned insurance carriers not to enter inquiries into the CLUE database -- only actual claims."

Some states have taken steps to restrict the type of information that may be found in these databases. In particular, many states have passed laws that regulate whether inquiries are counted as claims.

Note that information is kept in the CLUE and A-PLUS databases for up to 7 years.

Homebuyers cannot obtain CLUE reports on homes they are considering purchasing. But sellers can make the reports available.

"Home sellers can use their CLUE report as a marketing tool to demonstrate to potential buyers that their home has not had a loss claim or, if it has, to show that repairs were done properly," McCaul says. "Homebuyers can make the purchase contingent upon the seller providing a copy of the CLUE report."

Get your CLUE report

  • To get a free copy of your CLUE report, contact LexisNexis either online or by calling (866) 312-8076.
  • To get a free copy of your A-Plus report, contact ISO either online or at (800) 709-8842.

When to think twice about home claims

So, when should you file a home insurance claim?

"There are no general guidelines," says Tim Bowen, an assistant vice president on the homeowners insurance team at MetLife. "These decisions are made on an individual basis on claims made by any insurance carrier's customers."

Filing a single claim for home insurance generally will not result in higher rates. However, Bowen says that making 2 claims in a 3-year period is more likely to trigger a hike, although each company is different. Many companies base their decisions on how long you've been with the company and the nature of the claims.

Also, most insurers say homeowner claims resulting from weather or other catastrophes typically do not result in higher rates.

So, which claims do pose a potential risk to your insurance rates or coverage?


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