Why do insurance companies use CLUE reports?

When you apply for an insurance policy of most types, the company you are applying with will check a special database of insurance claims you have filed, called your CLUE report. Short for Comprehensive Loss Underwriting Exchange, your CLUE report contains information about all of the liability and casualty claims you have filed in the last 7 years. There are several reasons why a CLUE database is kept and used, but the general idea is that the database helps insurance companies weed out high risks and potential fraud.

Your CLUE report is a way for insurance companies that have underwritten you to pass information between themselves. This is important because the report encompasses most types of insurance, with the exception of life insurance, health insurance and other non-Casualty or loss types of coverages.

By looking at the sum total of your insurance claims over a 7 year period, a potential insurer can see at a glance how likely you are to file a claim, how much your average claims will cost, and what type of policy you file claims against most often. If you have filed too many claims, or have filed claims for an unusually high combined amount, the insurer may decide that you are too much of a risk to insure or choose to increase your base rates to compensate for statistically expected insurance losses.

Each time you file an insurance claim, it is added to your CLUE report, along with the date, location, claim amount, and final settlement. When the totals exceed industry-set limits, your insurance premiums or even your base insurability will be affected across the board rather than affecting just the type of policy you claim against most often. Because of your CLUE report, it is important that you keep your insurance claims to a minimum as a way of managing your overall insurance costs.