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Bad Faith Insurance and Claim Denials

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Thanks to CLUE, Ohio Flood Victims Can Expect to be Victimized Twice

The recent flooding that has affected hundreds of Ohio residents will have long lasting repercussions even after the damage has been fixed.
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\nYou might think we are just referring to those that did not have flood insurance. But even those that had the necessary coverage might find themselves having real difficulties in getting homeowners insurance policies, or they might find that thier current rates will skyrocket to near unmanageable levels.
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\nBoth homeowners and prospective home buyers all over the country are discovering that, thanks to an existing insurance claims monitoring database called CLUE, their insurance policies can be cancelled for reasons that had nothing to do with them, or they will find themselves dropped from their insurance coverage for something as simple as asking a question. Water damage to homes is one of the key issues that get flagged in this database, and it can take years for the stigma to go away.
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\nWhat is CLUE?
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\nCLUE stands for Comprehensive Loss Underwriting Exchange. It is a database that tracks insurance claims information on both people and property, and it is scrupulously studied by insurance companies every time you try to buy a policy.
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\nThis shouldn’t come as a surprise. Insurance companies study practically every conceivable factor in order to determine how much risk is in anything that they want to insure. They study weather patterns to determine how much of a risk a property might be for wind or raid damage. They study insect migration patterns to determine the risk of termite damage. They study the rainfall averages in wooded areas to determine how much of a risk there is for fire damage. These numbers are crunched and studied and gone over by insurance company actuaries with a fine tooth comb. This is part of how they determine what to charge you on a monthly basis. This is also the reason that no insurance companies offer flood insurance to property owners that live in areas that are close to rivers or near levies. Insurers offer policies based on what might happen; they won’t offer anyone a policy on something that is more than likely to happen.
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\nCLUE is part of this research. Every time any homeowner makes a claim, whether it is rejected or not, that claim goes in the CLUE database. What was the claim? Was the claim viable? How much did the claim cost the insurer? Were there any secondary costs, or was the overall value of the property affected? Is this the first claim that the person has filed? The answers to all of these questions are now available to every single insurance underwriter in the country.
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\nHow CLUE Affects Homeowners
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\nLet’s say that you are in the process of buying your own home. You have a perfect credit record and a spotless insurance history. You close on your house, move in, get settled, and call to inquire about a homeowner’s policy. You get the news that, for reasons that had nothing to do with you, your new home has been blacklisted as a risk by every insurance company, and either no one will give you a policy or you will have to pay through the nose for a ridiculously high premium.
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\nThis puts you in a fix of either having to dig deeper into your pockets in order to buy a policy or facing the risk of going without any insurance at all.
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\nThe reason you got blackballed was because the person that owned the home before you had the audacity to actually use their homeowner’s insurance policy. Maybe the basement flooded once. Maybe a tree branch fell and damaged a gutter. Maybe an outdoor drain backed up. Any claim made on an insurance policy, no matter how small and insignificant, gets placed into the CLUE database, which is then made available to any adjuster. The catch here is that claims adjusters rarely ask for a CLUE report until the house is in escrow: in other words, until the home is practically already bought.
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\nIt would be one thing if insurers were simply using CLUE to help determine the risk of a property. Instead, they are also using it to weed out and drop those who would file claims:
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\n When Kristen Angel's drains backed up, she called her insurer to see if they were covered. She fixed the problem without filing a claim. So imagine her shock when her insurance company dropped her just, she says, for asking that question.
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\n"There was no damage, no claim, simply an inquiry," Angel told CBS News Correspondent Bill Whitaker.
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\nMs. Angel just asked a question and didn’t file a claim, but the fact that she had the nerve to even ask somehow struck the insurance company as risky. The story got even worse, as Ms. Angel found herself unable to get a new insurance policy because, according to the CLUE database, she might file a claim one day.
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\nHow CLUE Will Affect Ohio Flood Victims
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\nWith all the homes damaged in the recent flooding, even those who have flood insurance will have the black mark of water damage on the CLUE database. Since water damage can cause mold, and since mold can cause serious health risks, every underwriter in Ohio will probably place these homes in the "Risky" category. So flood victims can look forward to being harmed twice: First from the damage caused by the flood, and next from the skyrocketing homeowners premiums or the lack of homeowners insurance altogether.

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