The Last Minute Surprise
One of my readers reached out with a situation that rattled their nerves a few days before closing. Their insurance agent called to say the homeowners premium would be higher than expected because an insurance claim discovered in the CLUE report for more than $100,000 had been filed on the home less than a year ago. Nothing in the inspection hinted at water damage and the sellers had not disclosed anything. Anxiety went through the roof. Before I get into what happened next, here is a quick refresher on the CLUE report and a link to my full guide.
What A CLUE Report Is And Why It Matters
CLUE stands for Comprehensive Loss Underwriting Exchange. It is a database that tracks home insurance claims, usually up to seven years back. Insurers use it to price and approve policies. A CLUE report typically shows the date of loss, type of loss, amount paid, and the insurer that handled the claim. It can be pulled for a person or for a specific property. A clean report may help your premium. A history of water or fire claims can raise it or trigger extra questions.
For the longer version with examples and how to request a copy, read Everything You Need to Know About a CLUE Report.
What Happened In This Transaction
After the call from the insurance agent, the buyers contacted me. I asked them to contact their real estate agent with this information right away. Their agent spoke with the listing agent and learned that the sellers had a major water issue about 11.5 months earlier. Siding on the back of the home had failed. Water traveled from the second floor exterior, into the first floor walls, and down to the basement. The fix was extensive. The contractor removed the rear siding, replaced damaged sheathing and insulation, repaired areas of subfloor near the affected wall, and then installed new siding.
Here is the problem. The seller disclosure in that state asks two clear questions. Has there been water intrusion or damage. Have there been insurance claims against the property. The sellers answered no to both. They later said it slipped their minds because the repair work was mostly exterior and everything had been buttoned up for months. Regardless of intent, that is not how disclosures should work.
How It Was Resolved
I asked the buyers to take three steps.
- Ask their home inspector to return for a reinspect focused on the repaired areas and the basement.
- Request full documentation from the sellers. Invoices, scope of work, any moisture readings, and any warranty on the new siding and materials.
- Confirm with the insurance agent that the higher premium was based only on the prior claim and not on an active concern.
The inspector returned and gave the work a clean bill of health. The buyers reviewed the invoices and a transferable workmanship warranty from the siding contractor. Their insurer confirmed the higher premium was simply a result of the prior claim history and not a fresh risk. The buyers closed on schedule. The week before closing was stressful, but everyone ended up with clarity.
Lessons For Sellers
Seller disclosures are not a speed test. Sit down with the form and think through each question carefully. Talk it out with your agent. If you are not sure whether something counts as a material fact, ask. When in doubt, disclose. Full disclosure protects you. It also protects the buyer and keeps a surprise from blowing up your deal days before closing.
Keep a property file. Save invoices, permits, contractor names, and warranty details. If you ever file a claim, add the adjuster report and final paid invoice. That file becomes your evidence that an issue was fixed correctly.
Lessons For Buyers
Ask your insurance agent to run the CLUE report as soon as you have a signed contract on a home. Do not wait until the final week. If something pops up, you will have time to investigate, reinspect, and negotiate if needed.
When a prior claim appears, focus on three things. Cause, scope, and proof of cure. You want to know what failed, what was opened and replaced, and what documentation supports the repair. If anything is unclear, bring in a specialist such as a siding contractor, a roofer, or a moisture intrusion expert.
What If You Discover Nondisclosure
If a seller missed or ignored a required disclosure, talk to your agent and your real estate attorney about your options. Depending on your contract and state law, you may have remedies that range from repair credits to cancellation. Most of the time a path forward exists when both sides share documents and bring in the right professionals.
Bottom Line
This entire scare would have been avoided if the sellers had disclosed the water claim and if the buyers had asked for a CLUE report right after going under contract. The good news is that the work was solid and the buyers closed on a home they loved with confidence.
If you want help navigating a similar situation or want to talk through how a CLUE report can affect your purchase or sale, send me a note. I am happy to answer questions and connect you with a vetted real estate agent or insurance pro in your area.
