Inside the Insurance Industry's Secret Database About You

Tree which has fallen on the roof of a house. Caused by Hurricane Sandy.
J.R. Bale/Alamy

Q. Are you paying more for your homeowners and car insurance than you should?

A. Yes.

Q. Do you know why?

A. Probably not -- in fact, we haven't a clue.

And that's just the problem. We haven't a CLUE.

Most Americans Are CLUE-less

This would appear to be the upshot of a new report out of, a subsidiary of personal finance website (RATE).

Says (we'll call them "IQ" for short), the insurance industry has a "'Secret' Report That Affects What You Pay for Insurance." It's called the "CLUE" report, which stands for "Comprehensive Loss Underwriting Exchange," and essentially, it's a database keeping track of every insurance move you make. When you call your insurer to report damage to your home or auto, that goes into the CLUE database. What's more, even when you simply call your insurance agent to ask about whether a certain incident is covered by your insurance -- that goes in there, too.

And that's the real revelation today. Most consumers probably assume that insurance companies have some sort of system to track their insurance claims. After all, it's common knowledge that insurers often raise your rates after you make a claim.

But that's about all we do know about CLUE.


According to IQ, a whopping 82 percent of Americans surveyed have never even heard of the CLUE database (at least not by that name). Only about 7 percent of insurance customers say they are at least "somewhat familiar" with the concept of the CLUE report. These people may be aware of the bare outlines of the system -- for example, that CLUE tracks loss dates, claims for losses and monies paid out for insurance claims for up to seven years.

And yet, only 1 percent of us say we're "very familiar" with how the database works. The vast majority of Americans have no clue at all, for example, that the database:

  • Records denied claims as well as claims paid out -- so that your insurance rate may be raised after you've made a claim, even if you got no money out of it.

  • Includes not only claims made by you, the customer, but also claims made on the same property by its previous owners. Thus, you can be penalized for insurance claims made by the person from whom you bought a car or house.

  • If you simply ring up your insurance agent to discuss a claim you might want to make -- but ultimately decide not to make -- that discussion can also go into your CLUE report, and be used by an insurer to raise your rate.

Yes, you read that right: Insurers can hike your insurance premiums just for asking them if an accident might or might not be covered.

It's Time to Get a CLUE

So, now that you're aware of what a CLUE is, what can you do to make sure your CLUE report doesn't get used against you?

Sad to say, there's probably no getting around the fact that once you admit you've suffered some damage and make a claim, an insurance company can decide you're a riskier client than you were before making a claim, and raise your rate. But regarding the "unfairness" of insurance companies hiking your rate simply for asking a question about coverage, IQ senior insurance analyst Laura Adams has a few words of advice.

%VIRTUAL-pullquote-The fewer clues you give the insurers to the fact that you may be about to make a claim, the better for your bank account. %First and foremost, unless you plan to make a claim -- and a claim for a dollar amount significantly higher than your insurance deductible -- it's best to keep mum. If you absolutely must contact your insurer, though, to find out whether it's worthwhile to make a claim, IQ notes that "talking to an insurance company about specific damage to your auto or home can result in a notation in your CLUE report, which could result in higher rates."

The key words here are "specific damage." As in, when calling your insurer, try not to mention specific items or damage. Warns Adams: "If you begin to discuss details of an actual loss, such as a broken water pipe or a roof leak that has occurred, an insurance company may record that information and it may appear on your CLUE report."

Instead, "when speaking with an insurance company or an agent ... be clear [that you are] only making an inquiry. If you need to ask about what potential issues may or may not be covered under your home insurance policy, say so" at the very start, and make it clear that you are not making a claim for, or even asking about, a specific incident that has already happened.

The fewer clues you give the insurers to the fact that you may be about to make a claim, the better for your bank account.

You can order free copies of your CLUE personal property (i.e., home) report or CLUE auto report -- or both -- from Lexis-Nexis.

Motley Fool contributor Rich Smith recently made the dumb mistake of asking if a frozen water pipe would be covered by his insurance -- and fears he may pay a price for this slip-up. (So much for the theory that "there's no such thing as a stupid question.") Neither he nor The Motley Fool have any financial interest in any of the stocks mentioned above. Is your portfolio ready for the new year? Check out our free report on one great stock to buy for 2015 and beyond.