As a landlord, you think your biggest worries are your mortgage loan and keeping your tenants paying on time. Just because you’ve paid your mortgage on time doesn’t mean your insurance premiums will be as low as you expect it. There are two factors that will affect the cost you pay for your property insurance: your credit score and your C.L.U.E. score.
Why Your Credit Report Matters
Unless you’re purchasing your building under a corporation or LLC name, your credit score will have a direct impact on how much you pay for insurance. Insurance companies want to see how responsible you are, just like any other creditor. However, they also claim that there is a direct correlation between an individual’s credit score and how likely they are to file a claim. So yes, you guessed it. The more “probable” you are to file a claim, the higher your insurance rates will be. So as you can see, your credit score is used for more than just loans.
Get a CLUE: Learn How It Affects You
You probably know by now all there is to know about credit reports. You know you need your credit in stellar condition to be approved for a low rate on your property loan. There is another report, however, that you may have never seen – the Comprehensive Loss Underwriting Exchange or C.L.U.E. Home Seller's Disclosure Reports.
According to Lexis Nexis, this report divulges to an insurance company a property’s past five-year insurance loss history report. The property owner’s information is not disclosed as this pertains only to the physical location. Any claims, and possibly potential claims, are listed on this report.
So if you’ve ever wondered why you need to give an exact location of the property when getting a quote on a building instead of just the general neighborhood, now you know why. Even if you’ve never filed a claim for any of your buildings, this potential or recent purchase you have past claims count towards what you pay for your premiums. The more claims filed, the higher your premium will be.
Unfortunately, you can’t get a hold of this valuable document; only the current homeowner can. So, if you own the property, contact your insurance provider so you can find out what’s in the report. If you’re interested in purchasing a property, ask your agent to get a copy for you. What you find in that report could make or break your decision to purchase a property.