Business and Finance

What are CLUE and A-PLUS?

You may want to believe insurers are hot competitors and never talk to each other. Except you would be wrong. There’s a steady flow of information into two central databases. The bigger and more important is called CLUE (Comprehensive Loss Underwriting Exchange) with the smaller competitor called A-PLUS (the Automated Property Loss Underwriting System run by Insurance Services Office Inc) which collect a broad range of information about you and how you relate to insurance companies. This is not just details of the claims you make. A range of factors are combined to produce an insurance score. This parallels the work done to create a credit score, and both scores are used by insurers to create a risk profile for you and set insurance rates. So, for example, both organizations record when you ask for clarification of your cover even though this does not result in a claim. It even records whether you are late in paying any of the premium installments. There’s also a positive effort made to collect public information about you, e.g. whether you are involved in litigation, have judgments against you, are subject to foreclosure orders, and so on. If any of this information is incorrect, it could mean you are only offered cover at high rates or you are refused cover. Because of this, many states have passed laws to give you basic rights. You will usually find your local rights set out on the site run by your state’s Insurance Commissioner.

The CLUE reports are sold by LexisNexis and provide information about all claims relating to your home or your vehicle. The key problem is that, if the score is very low, it could cause your home address to be blacklisted. While this might be an accurate assessment of your risk profile, it would do a significant injustice to anyone later buying your home. As an aside, all the information is stored for not less than five years so insurers use your history of claims to assess the risk you will file another.

The Gramm-Leach-Bliley Act is supposed to help you by requiring insurers to tell you when they share your information with anyone else, except CLUE reports are excluded from the Act. This brings us to the Fair Credit Reporting Act (FCRA) which does apply equally to credit and CLUE scoring. You have the right to ask LexisNexis and ISO Inc for one free copy of your insurance report every year. If you find any inaccuracies, you are entitled to have them corrected. If you feel the response of either LexisNexis or ISO Inc is unsatisfactory, you can insist a note is included in your file explaining your views. Unfortunately, you have no right to opt out of this sharing arrangement. Your insurers are entitled to continue sharing this information.

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When the wind blows

This article is being written as Californians are receiving the usual warnings about the Santa Ana winds. These winds come in the late fall and early winter periods as hot dry air is forced out of the deserts and heads for the sea. This weather warning will bring 2011 to a close with a bang. With 1560 tornadoes confirmed and 575 people killed, this has been one of the worst years on record for death and destruction caused by the wind. This includes the Super Outbreak in April which affected the larger part of the southern states and the midwest.

In a way, we have all been conditioned to think of this damage as being mainly a property problem. We see all the pictures of the winds picking up buildings and leaving nothing but wreckage behind. When the twisters move through a town, entire neighborhoods are flattened. So we routinely reach for the homeowners insurance policy and start reading the small print to see whether we are covered. As an aside, the insurers have been getting more restrictive with their coverage as the number of wind-related events have been increasing. Premium rates have been rising fast when the homes involved are more prone to damage. This can be the obvious problems of mobile homes and trailers through to older properties where roof construction may not be as robust. You may benefit from asking a builder for quotes to reinforce your roof – discussing the plans with your insurer can bring the premium rates down so rebuilding can be a good investment.

Although buildings are static targets, not everyone can drive their vehicles out of harm’s way. There are three major source of danger for vehicles. The wind can literally blow a high-sided vehicle over. If you are overtaking a semi-trailer truck or a bus, you can suddenly find yourself caught in a trap as something falls on to or in front of your vehicle. Equally, once a tornado or windstorm picks up branches or debris, it has to come down somewhere. If you are driving when it hits, it can cause an accident. If you are parked, it can simply damage the vehicle in your garage or parked on the yard. Secondly, wind can move water. It can be rain, sleet or snow, or in a lake or the sea. This combination can produce flooding which can seriously damage modern vehicles with their electronic systems. Thirdly, windstorms like Santa Ana routinely cause wild fires. Read the rest of this entry »