What is a Termite Bond? How do they work and do I even need one?
If you’re buying or selling a house, or you simply want to ensure that you never have to deal with termites again, you might have stumbled upon termite bonds. Bonds can be pretty intimidating subjects, so it would only make sense if the term made you a little nervous. This guide on termite bonds, what they are, and how they work will explain what you need to know about them.
What is a termite bond?
At their core, termite bonds are agreements between a pest control service and a homeowner that protects the homeowner against termite damage. These agreements go by many names, including termite warranty or termite agreement, but they’re essentially one and the same. So then why the confusion?
It’s the term “bond.” Bonds are usually insurance terms stating that a surety (the insurance company) agrees to pay for damages caused by their insured policyholder should something occur. They are usually for set amounts, and the policyholder will typically pay a fraction of the amount of the bond’s coverage to secure it.
Here’s the thing, though: If the specific event outlined in the bond occurs and the surety has to pay for the damage, the policyholder has to pay the surety back. This is much different than a warranty, and because the term “termite bond” is used so often, it makes people never. Luckily, that’s not how a termite bond works.
Why are they important?
The reason why a termite bond is so important is that most homeowners insurance companies won’t cover damage caused by termites, carpenter ants, and similar damage. Should damage occur, the homeowner would have no choice but to pay for the damage themselves. Termite bonds can reduce the cost, or pay for it altogether, depending on the terms of the agreement.
What a termite bond isn’t
The internet is riddled with explanations about what a termite bond is, and some are incorrect. One explanation is that a termite bond is an agreement between a pest control company and an insurance company. This explanation states that if the company goes out of business and owes anyone money, the bond will make everyone whole.
That’s not correct. Similar bonds do exist, but they’re typically performance bonds or contract bonds. These are bonds in their actual form, but they are not termite bonds. They also aren’t protection against other pests or infestations like silverfish or earwigs or even other wood-destroying insects.
How does a termite bond work and what does it cover?
To truly understand what a termite bond is, it’s important to pick apart what it does and what it covers. To start, we’ll say that a termite bond is a signed contract between a homeowner and a pest control company at the start of an agreed-upon service period (typically years).
But what does it include?
Initial inspection/treatment
The first part of a termite warranty or bond is the initial inspection and treatment of any findings. When a homeowner signs one of these agreements, the pest control company will arrive on-site and perform a WDI inspection. This is a surface-level inspection that can tell the technician whether the home has visible termite or carpenter ant damage. They’ll look for mud tubes, piles of wings, and other indicators.
If termite damage is located, the termite bond will also involve treating the termite infestation. The company will use a variety of termite killers, termite baits, repellents, and sprays to kill the termite colony. From this point on, the homeowner and the pest control company expect the home to have a clean bill of health.
Ongoing monitoring
Once the house is given an all-clear, whether from a lack of termites or after treatment, the termite bond agreement states that the pest control company will monitor the property. This includes arriving on-site at appropriate intervals for the region and checking for signs of termites or termite damage.
Treatment of returning termite infestations
The agreement states that the pest control is obligated to treat any future termite infestations or other problems. And this doesn’t come out of the customer’s pocket.
So, if a termite problem is found during routine inspections, the pest control company is obligated to fix the problem. They’ll find and treat the colony per the terms of the agreement, preventing the homeowner from spending lots of money on termite treatment.
Repair
Most agreements will cover the costs of repairs, as well. So, if a colony of termites tears through a joist, causing the floor to sink and the tiles to pop and break (something home insurance is unlikely to cover), the pest control company will pay for the repairs. This can be a significant savings, as termite treatment and damage repair typically cost around $9,000.
Is it different from a termite letter?
Termite bonds and termite letters are different things. A termite bond is an agreement while a termite letter is proof that a house has a clean bill of health.
The termite letter is actually called a WDI report (wood destroying insect report), and homeowners and potential buyers are provided with this letter after an inspection. The WDI report details the areas of the home that were accessible and inspected by the inspector, as well as their findings. It includes suggestions if they found termite damage or it marks the house as clear.
Many times, mortgage lenders will require a termite letter or WDI report before they’ll underwrite a loan. However, if the termite report comes back with evidence of termites or termite damage, the lender may then require that the homebuyer enters into a termite bond before they’ll approve the loan.
What does a termite bond cost?
The average cost of a termite bond is between $500 and $2,500, but it varies depending on the pest control company and the region in which the home sits. This may or may not include the initial inspection, which could be an additional fee to the homeowner.
While this might seem like a lot of money, consider the fact that the average cost of both treatment and repair. These figures come in at around $9,000, which is significantly more than the cost of the termite bond.
Who needs a termite bond?
There are certain folks who absolutely require termite warranties. Those who are purchasing homes with less-than-stellar WDI reports are likely required to carry a termite bond. Also, some government-backed loans like FHA and VA loans in certain areas of the country may require a termite bond.
However, anyone who lives in an area prone to termite damage may consider a termite bond. These agreements are essentially insurance against very destructive pests and can provide peace of mind to the homeowner. Should an infestation occur and cause damage, both the treatment and the repair will be covered by the agreement.
FAQs
That’s the quick-and-dirty on termite bonds, but there may still be some additional questions that need answering. The following are some of the most frequently asked questions about termite warranties, agreements, and bonds.
What does a termite bond mean?
While the term “bond” may seem intimidating, a termite bond is simply an agreement between a homeowner and a pest control company. The agreement states that the pest control company will inspect, treat, and monitor the home for the agreed-upon amount of time. Should termite reinfestation occur, the pest control company agrees to pay for the treatment. If damage occurs, the pest control company will pay for that, as well.
Is a termite bond worth it?
Termite bonds are worth it if you live in an area prone to termite activity. These agreements typically cost between $500 and $2,500, while the average cost of treatment and repair of termite damage is around $9,000.
What is the difference between a termite bond and a termite warranty?
While some websites claim there are differences, termite bonds and termite warranties are essentially the same thing.
Can termites come back after treatment?
Yes, they can. They can reinfest an older colony or they can start another colony within the same home. For this reason, they can be very difficult to get rid of and a termite bond may be the best option.
Should termites stop you from buying a house?
Termites shouldn’t necessarily stop someone from buying a home. If the home is structurally sound and the infestation was treated successfully, proceed with buying the home but definitely look for a bit more during negotiations. However, if there is an active infestation, the homeowner will likely have to handle it and supply a WDI report that says the house is free and clear of termites. At that point, the lender may require the home buyer to purchase their own termite bond.
Does a termite bond cover damage?
In most cases, termite bonds will cover the damage caused by termite but the damage is limited to termites only (not other cellulose-consuming insects like silverfish or wood-destroying insects). It depends on the pest control company, but homeowners should read their contract carefully before agreeing to the warranty.
