Do You Have A C.L.U.E. About Insurance?

As investors, risk is a part of our business. There is price risk, market risk, property condition risk, and more. Whenever we can reduce our risk, it's usually a smart thing to do. And we can significantly reduce our risk at no, or a tiny cost, we're in a "why not" situation. One area of risk involves the condition and history of a property. It may look good to us, and it may even look good to all of our inspectors. But, if there was flood or water damage sometime in the past, and it is no longer visible, it doesn't mean that there is no more risk of problems. What if we end up with a mold issue from previous water damage not visible or disclosed?

It's possible that the current owner/seller doesn't even know about past damage when the property belonged to others. There is something we can do in our purchase offer process to reduce our risks with regards to damage or problems that resulted in insurance issues or claims. We should, in our offer, make it contingent on our examination and acceptance of a C.L.U.E. report provided by the seller. This is where we get more than just a "clue" about this property's history.

A C.L.U.E. (Comprehensive Loss Underwriting Exchange) Report provides dates of claims, insurance company(ies) involved, the type of policy, whether loss was related to a named catastrophe (hurricane, etc.), location of the loss (on or off property), the amount paid and cause of the loss. It can only be requested by an insurer or the seller/owner of the property. The cost is only about $20. Even if you offer to pay for it in your contingency, you can see that it could be a very smart thing to do. It is ordered on the Internet, and available almost immediately.

The ability to avoid the purchase of a property with a damage history that could come back to bite you is worth a sentence or two in your purchase offer. When we can remove one more element of risk from an investment property purchase, we've taken one step closer to a profitable real estate investment. As sellers and their brokers might not know what this is, it would help to add another sentence or two and direct them to the website for the order at