Many people have never heard of a termite bond, often incorrectly referred to as a termite warranty or termite insurance. Most new home buyers, and many professionals, who hear the phrase “termite bond” wonder, “What are they?” An understanding of what they are and what is not a termite bond can save a great deal of frustration, time and money.
So, let’s start to learn. A termite bond is an agreement purchased to warranty termite prevention treatment by a home builder, or by an individual or organization responsible for termite control in a structure, such as a homeowner, condominium association, or apartment complex owner, to defray termite management costs and damage repairs.
What Is Not Considered a Termite Bond?
Termite bonds are not the same as letters. Letters are also called Wood Infestation Inspection Reports and are simply reports outlining them and other insect activity in a structure. A clean letter is often required by a lender prior to closing on a home sale. Termite warranties, on the other hand, are only a requirement by local, regional or national agencies for some home builders and are sometimes requested of homeowners by home buyers as a condition of sale.
Termite warranties are also not insurance, either, although they do provide insurance in different usage of the word. Like insurance products, termite warranty agreements have terms and conditions that are provided in the termite warranty contract before signature and purchase. Termite surety bonds and insurance are also similar in that bonds pay only when certain conditions are met. Although they are similar, Bonds are not an insurance product. In this way, these bonds provide termite insurance against damage but are not an actual insurance product — most insurance companies do not sell termite insurance. NFP does though.
Do I Need a Termite Bond?
Homeowners, new home buyers, home builders, condominium associations, and apartment complex owners may need to purchase a termite warranty. Certain areas of the United States, such as parts of New York, are infested with subterranean, so these bonds are especially needed in these areas. These pests generally thrive in the more southern, warmer areas of the country that provide an abundance of food, prime soil conditions, and the just the right climate.
The Termite Infestation Probability Zone (TIP Zone) map included in the yearly International Residential Code (IRC) publication shows which regions are most prone to issues. An online search for this year’s version of the TIP Zone map will help with deciding whether one needs termite insurance.
A home buyer may wish to purchase their own termite warranty at closing, or at any other point during homeownership. The emergence of these buggers in a home is not a matter of “if”, but of “when”. If a home has not undergone a termite prevention treatment since move-in, they will eventually invade.
How Much is a Termite Bond?
Purchasing termite insurance is often much less costly than clearing infestations from a home and repairing the damage. Prices vary by bond provider, region, and length of the bond term, but typically range from $500 – $2,500. The average cost of repairing termite damage is in the tens of thousands of dollars.
Other factors affecting termite warranty cost include the length and depth of coverage, whether it covers prevention, and whether the bond is transferable.
Who Sells Termite Bonds?
Some insurance companies and sureties provide termite bonding solutions, but pest control companies also offer termite bonds. NFP carries termite surety bonds in all states as well.
How termite warranties work is by providing all or part of payment due or free services for the termite inspection, prevention, and treatment when needed after a claim has been made on the bond. Sometimes, termite issues can be resolved without placing a claim on the termite warranty simply by contacting the responsible pest control company. Future bond costs increase each time a claim is made on a bond, so the pest control company has a vested interest in a customer’s complete satisfaction when the customer has purchased a bond.
When a builder purchases termite insurance, they are doing so as a promise that all necessary and reasonable precautions to keep termites out of the new home were taken at the construction site prior to the house being built. A bond that a home builder purchases is transferable, which means that the promises made in the bond by the pest control company to the home builder can be transferred to a home buyer.
What Are the Types of Termite Bonds?
Termite warranty types include transferable and non-transferable bonds. Each of these types of termite bonds is also categorized as a termite treatment bond, termite repair bond, or termite prevention, treatment, and a repair bond.
Transferable bonds are advantageous to purchase if a homeowner is thinking of selling their home. A transferable termite warranty is sometimes required of new home builders to provide buyers of newly built homes a guarantee that the ground was sprayed to kill any termites and to provide a barrier of protection between soil and natural wood and the home. Both transferable and non-transferable bonds provide protection to the homeowner or apartment or condominium dweller.
Sureties typically include an outlining of termite control measures to be provided by a pest control company promising the effectiveness of its services. Termite warranty agreements can include an annual inspection and spraying for prevention or termite treatment only. Sometimes, even damage from an infestation is covered as well.
These bonds typically all stipulate that the pest removal company monitors termite treatment effectiveness and state that the company will include free re-treatment should termites appear before the end of the bond term.
Many people believe that homeowners’ insurance will cover termites. Unless pest control was specifically offered as a rider to your homeowner’s insurance policy, which is rare, they are typically not covered. Termites can cause extensive damage, so some type of termite protection is needed.
To protect yourself from the financial hardship of bug infestation, and to protect your property, consider purchasing termite insurance. Termite warranties cover some or all some of the cost of having your home treated for these pests and provides every homeowner with peace of mind that their investment is protected. If you aren’t sure what you need, feel free to contact us. NFP is the industry leader in all kinds of sureties and we are here to help you.