Termite Bonds: Legally Eliminating Pests and Securing Your Property

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Termites! These wood-garroting insects can be a nuisance in any home. Once a home gets infested, homeowners can end up with thousands of dollars spent on removal and damage costs. A good termite treatment from a reputable pest control company can keep a home pest-free.

A pest control company uses pest control products and equipment to eliminate different types of pests and critters, such as cockroaches, fleas, rats, bedbugs, and of course, termites. Before a pest control or termite control company and its team of exterminators can legally perform its insect-neutralizing duties and apply pesticides, it should obtain a proper license and permit. And as part of the licensing requirements in most states, pest control operators must purchase a pest control, or in this case, termite surety bond.

What is a termite surety bond?

Let's say that you require termite treatment from a local pest control company. After completion of work, you notice that your termites are gone. But suddenly, in just a week’s time, your termite problem reappears. For sure, you would not be a happy camper at all. You may be getting in contact with the pest control company immediately and requesting retreatment.

A termite bond, also coined as a termite protection contract, is a guarantee or form of insurance against this type of unexpected service problems. Instead of paying for termite treatment, a homeowner pays what is essentially called a retainer fee which is the dollar amount for a specified time to control the termites on the property. If there is a termite infestation reoccurrence one or two weeks later, the pest control company would also return. If termites do not come back during the specified period, the company would not have to provide its services for the second time.

The bond also lists down the type of treatment and its frequency the company would be providing and may include repair and treatment guarantees at no additional cost. Furthermore, all states require pest control companies to post a surety bond to comply with all local, state, and federal laws regarding pesticide application.

This type of commercial bond classifies under the pest control company bond; it works the same way as the bond ensures that the company or operator will apply chemicals correctly and in exact quantities.

How does a termite bond work?

A termite surety bond involves three parties:

  • The Obligee - the government agency or public (usually a homeowner or business owner) that requires the bond.
  • The Principal - the pest control company, termite control operator, or termite exterminator that purchases the surety bond.
  • The Surety - the bonding company that sells the bond is typically an insurance company or bonding agency.

If the pest control company or operator mishandles pesticides and other chemical-infused products for eradicating termites, whether, through the application, placement, or storage, and its actions cause an impact on the environment, the surety company will pay the state agency or the homeowner the damages, up to the bond amount.

A termite bond is not only offered after treatment following an active infestation but it is also carried out during a home inspection process or when a home is sold.

The terms for a termite surety bond may vary by state and surety bond provider (and also in termite activity levels). As previously mentioned, some termite bonds cover only retreatment services. Other bonds include repairs for termite damages when applying the treatment.

Usually, the terms of the bond may indicate that a pest control/management professional will inspect the home on a regular basis (monthly, quarterly, or annually) and provide additional treatment as needed.

What is the cost of a termite bond?

The bond amount for a termite bond may vary. Each state has established its bond amounts for this type of surety bond.

For example, in California, the requirement for a pest control bond can be as low as $125. It can be the same for a termite bond. The cost is essentially the percentage of the total bond amount.

The surety underwriter will evaluate the principal’s credit score, experience, and, in most states, previous performance as determining factors for the bond rates. Rates can vary in each surety agency, but a company or operator with excellent credit, seasoned experience, and no preceding claims could get a lower bond cost.

Also, the cost of termite bonds may depend on other deciding factors, such as:

  • Terms of the bond
  • Type of termite species (there are 45!) covered by the bond
  • Treatment or retreatment
  • Location or state
  • Pest control, termite control company/operator/exterminator

Note that there are two key considerations when securing a termite bond. They include transferability (when a home is sold) and stability of the surety company. Should the pest control company or operator relocates or goes out of business, the bond may not be honored by another surety company.

What is the difference between the termite surety bond and liability insurance?

In some states, pest/termite control companies must possess liability insurance as well as a surety bond. Similar to a surety bond, liability insurance is a process of proving financial capacity or presenting proof that the pest control company can pay for damages it causes. Liability insurance affords payment for claims that results from the pest control company’s actions. Individual customers such as property owners, as well as the state, can file claims against a company's liability insurance to recover damages.

What is the importance of obtaining termite bonds?

According to Termites.com, termite statistics indicate that these wood-chomping insects damage approximately 600,000 homes in the U.S. each year. Homeowners insurance barely covers the damages and repair costs. According to the United States Department of Agriculture (USDA), US citizens spend at least $1 billion on Formosan termite control and repairs annually!

It takes five years for an average termite colony to grow and spread enough damage to the home and may take a bit of time to evaluate termite activity levels. Having a termite bond contract on hand that designates preventive measures action can keep your home protected and possibly cover the cost of retreatment and repairs when needed.

If a pest management inspector finds no signs of current termite infestation, you may think you do not require a termite bond. But, just like home insurance, termite bonds prove valuable in the protection they provide in the event of an infestation. Termite bonds can help minimize the risk of damages.

There are several benefits to acquiring termite surety bonds. For example, if your California commercial property has been serviced against termites before, a bond contract can protect your investment and guarantee that the pest control company will be providing retreatment and repairs. If you are a homeowner in the process of selling your home, you can avail of a transferable bond so that buyers will know you have this type of protection in place for the home.

Sellers do not usually purchase a termite bond if a home does not show signs of termite activity, but it would be a good option for buyers to get a termite bond upon purchasing a new home.

Are you a provider of termite-exterminating services? Be sure to obtain a termite surety bond today! Call Surety Bond Authority at 800-333-7800 and say goodbye to a termite-ridden home.

Check out this Infographic!

"Termite Bonds"

Termite Bonds Infographic
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