Insurance Inquiry Led to Unjust Report

Kathy Kristof writes (“Your Home’s Rap Sheet Can Mean Costly Insurance,” Personal Finance, Feb. 9) that “in California, making an inquiry to your agent ... generates a report” to the Comprehensive Loss Underwriting Exchange, or CLUE, the national database of claims.

I recently learned about this when I was denied a 20% claims-free discount for five years by Allstate when I sought insurance for a home I purchased.

Last year, I had called my State Farm agent to inquire whether moth damage to an Oriental rug that was insured under my personal articles policy was covered.

He told me that I would have to file a claim to ascertain coverage, even though -- as I later learned -- he knew that pest damage was excluded. When I discovered that his inducing me to file a worthless claim had resulted in my being reported to CLUE, I contacted him, and he insisted that he was obligated by law to file a claim whenever he learned of a loss. His supervisor offered the same defense, and when I asked her for the legal citation, she offered Title 10, Subchapter 7.5 of the California Code of Regulations.

When I read the code, I learned that they were misrepresenting it. Section 2695.5 (d) does state that “upon receiving notice of a claim, every licensee or claims agent shall immediately transmit notice of claim to insurer.”

However, Section 2695.2 (n) states: “For purposes of the regulations the term ‘notice of claim’ shall not include any written or oral communication provided by an insured or principal solely for informational or incident reporting purposes.”

Although I had to go all the way to the vice president of State Farm, I was able to get the claim removed from CLUE because I had called my agent only to request information; I had not asked to file a claim.

Consumers should know that they have a right to ask their agent about coverage without being reported to CLUE.

Donald D. Hoagland

Pasadena