CLUE?
When you go to buy or sell a house or property its a good idea to get a CLUE. What is a CLUE?
Its a Comprehensive Loss Underwriting Report. Huh? The insurance industry is in business to make money, they make money on winning bets. One of the ways they win their bets its to have better information. They also have experienced attorneys, experienced bureaucrats, a good industry lobby, expert analyzers…well if I thought longer and harder, I’m sure I could come up with some other advantages they have. But for our purposes today, its the information that’s important.
The insurance industry has a shared database of information on property. Before they issue you an insurance policy on your property, that is to say property insurance–not title insurance, that’s a different topic altogether–they check the history of claims on the property, and yes they check your history of claims as well. Just like with auto insurance, if you have a history of claims, they charge you more than if you don’t. And if the property has a history of claims, they charge you more too. And sometimes, they won’t even insure the property for any cost–or such a prohibitive cost that you can’t reasonably buy the property anyway.
Example 1: a property next to a watertower had sustained damages when a storm cause the watertower to leak. The water tower was still there. The property was still there. The potential for major damage was still there. The price for insurance was through the roof. No buyer could afford it. The seller abandoned the property to the bank. The bank foreclosed and couldn’t give the property away.
Example 2: Hurricane Isabel hit Anne Arundel County, downtown Annapolis was flooded. Large portions of the county were flooded. Some of the properties sustained so much flood damage that they had to be destroyed and get rebuilt. Who paid for it? The insurance companies and the owners. When you go to buy some of those properties, the insurance rates will be very high.
What do you need to do? Buyer beware, make sure the seller provides you a CLUE report, and get a responsible insurance report before you close on a new property.
Sellers, make sure you get a CLUE report so you can verify that your property is actually sellable.
How do you get a CLUE report?
Contact a good real estate agent and ask for one. If they are CLUE-less, you might want to consider a different agent, especially for low lying properties–a very large percentage in the Annapolis area.
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