A homeowner’s insurance policy covers various conditions – fire, theft, hurricane, and hailstorm among others. What about termite damage? Is termite damage covered by insurance? With its high prevalence among American households, you may think that it’s a default that insurers include this on their policy. The truth is this: termite damage isn’t covered by homeowner’s insurance. It rarely does.
Before anything else, here’s what you need to know about termite damage and home insurance.
Background of homeowner’s insurance
Basic homeowner insurance clauses will cover certain
conditions and perils relative to the industry’s standard practice. Most of the
time, this insurance policy will cover storm damage. However, termite damage is
far from common when it comes to these inclusions.
Some will argue that it should be included in the building clause, which covers the structure of the house. It does cover structural damages, but it’s usually divided into two: repair and replacement.
The repair clause
The repair clause covers all basic damages brought by
natural disasters. Still, this part isn’t absolute. You have to check the
stipulations that govern this clause. Insurance policies usually have
“triggers” – situations that will categorize the damage to define its repair
cost.
Meanwhile, replacement coverage covers the total replacement
of your home if it happens to crumble on the ground. Again, specific clauses
will apply here.
Although it may seem like termite damage fits the bill, one
fact excludes it from the coverage.
Why termite damage is not covered?
So why is termite damage not covered by homeowner’s
insurance? It’s because termite damage is preventable. Termites, like bed bugs
and rodents, are categorized as pests. These pests can be prevented if the
homeowner employed measures that will stop the infestation.
Unlike termite damage, storms and natural catastrophes are
beyond the homeowner’s control.
Also, for insurers to cover a certain damage, it has to
occur accidentally and suddenly. As you know, termite damage happens gradually.
In fact, even the Formosan termite will take 25 days to consume a 2” x 4” piece
of wood. Insurance providers assume that homeowners can buy the time to detect
the infestation and do something about it.
The conditions covered by your insurance policy are called
perils. Of all perils, neglect isn’t covered. If you think about it, termite
damage falls under the “neglect” peril along with power failures, mold, and mischievous
acts.
When does insurance
cover termite damage?
Fret not, because you still have options to protect your
home financially against termite damage. There are some scenarios when termite
damage could be covered in your insurance policy.
For example, if the termite damage is secondary to a covered peril, you still have the chance of getting a claim payment. Here are two main examples:
➡️ If your house collapses due to a widespread termite infestation
Insurance policies are tricky, but sometimes, you can use
this to get a certain termite condition covered. If your house crumbled to the
ground suddenly – meaning the collapse didn’t happen gradually – you could
receive a settlement or claim payment.
Still, this scenario is subject to the limits of your policy.
Even if the collapse itself isn’t covered, the damages the collapse incurred to
your appliances and other belongings will be covered.
➡️ If a covered peril triggered the infestation
For example, if you have water damage due to a pipe leak,
it’s most likely going to be covered on your insurance policy. If the leak led
to the proliferation of termites, the termite damage could be categorized as
secondary damage due to the leak.
The insurance company will send an insurance adjuster to your home to assess the damage. Also, they will determine how much of the damage will be covered.
The likes of storms, blizzards, and hurricanes can be used
as grounds to the development of the infestation.
Just take note that any damages on your property should be reported to your insurance provider right away. If not, your claim could be denied and the termite damage along with other damages will not be compensated.
Here’s when termite damage could be covered by your homeowner’s insurance:
How can I get termite
insurance?
Most insurance companies don’t sell termite insurance. Instead, you can opt for a termite bond. This is a special type of insurance that you can get from a pest control company.
This bond or policy includes regular inspections of the
property to prevent the occurrence of termites. Unlike insurance policies that
cover the damage once it’s done, termite bonds are in place to avoid the threat
of the pest.
Aside from home inspections, the bond may also include regular preventive treatments for the property.
This bond can be purchased during the pre-construction phase of your house. This way, pre-construction treatment will be conducted. Such treatment can last for up to 5 years.
If any termite damage surfaces on the duration of the bond,
the pest control company will shoulder the repairs and mitigation of the
infestation.
Take note, that like insurance policies, termite bonds have specific stipulations. Always check what termite species are included and excluded. It will help to consider the termite species that are commonly found on your locality.
In this video, an expert from LawCall explains what a termite bond is:
More about termite
bonds
Termite bonds can be transferable or non-transferable depending on your agreement with the pest control company. Don’t mistake a termite bond with a ‘termite letter’. The latter is just a statement proving that the house is termite-free upon inspection.
➡️ Common inclusions
Termite bonds often include three main clauses, which are
the following:
-Agreement to provide
treatment when damage is discovered
Aside from inspections, this clause covers the treatment
upon the discovery of the termites. Homeowners don’t have to pay extra fees if
this is included in their termite bond.
-Agreement for home
inspections
A termite bond will consist of regular inspections until the
contract lasts. Inspections can take place quarterly or annually depending on
the risk of your home.
-Agreement for
repairs or re-treatment only
This part clarifies if the pest control company will treat the area or provide damage repairs as well. Moreover, the pest control company will decide if your home qualifies for the repair bond or not.
➡️ Cost of termite bonds
Like insurance policies, the cost will depend on the
inclusions. Usually, termite bonds will cost around $700 to $1,000 per home in
the initial year. After that, prices will start to relax, which will cost
homeowners about $400 on yearly fees.
Pest control companies may also offer loyalty discounts if
you signed up for a longer contract.
➡️ Transferable vs. non-transferable
Like what we mentioned earlier, termite bonds can be transferable or not. For a transferable agreement, the pest control company will honor the same coverage if you happen to transfer to a new home.
If possible, always opt for transferrable bonds since it’s
more convenient and flexible. It may cost more, but if you foresee moving in
the future, this will pay off.
➡️ Termite bonds vs. termite warranties
Take note that termite warranties aren’t the same with
termite bonds. The termite warranty is signed before the purchase of the
treatment. Mostly, it vouches for the efficacy of the termite treatment and
other pest control services for a certain period.
Meanwhile, termite bonds act like insurance where
compensation will be triggered under specific situations. Also, termite bonds
may include inspection, repair, and re-treatment clauses as agreed between the
homeowner and the pest control company.
Who should get a
termite bond?
If you want added peace of mind for your home, a termite
bond is an excellent investment. Also, if your area is prone to termite
infestations, this bond is a must-have along with comprehensive insurance
coverage.
You can refer to the Termite Infestation Probability Zone Map that gets published in the International Residential Code publication annually.
This highlights the areas based on the infestation probability. Such a risk level will help you decide if a termite bond is for you. Also, if you’re at a high-risk location, it’s best to purchase a termite bond with a wholesome inclusion of termite species.
A pest inspection is
a must if you’re buying a house
If you’re purchasing a home, you must ask for pest
inspection before you ink the deal.
Most homes purchased with a mortgage will undergo a pest inspection first. The lender will usually require this step to ensure that the investment isn’t subject to termite damages.
Pest inspection for mortgage
For homes purchased in cash (no mortgage), a pest inspection
is often skipped for the sake of saving money. This is where the problem
starts. If you discover a termite infestation, you can’t make the seller
accountable unless there’s a contingency clause on the contract.
Aside from that, overlooking the pest inspection prior to the purchase of the house will affect your insurance coverage. Insurers will usually exclude more perils if they observed that the house is at risk for more potential damages.
Before you purchase:
So before purchasing a house, ask the seller to pay for a
professional pest inspection first. You can also shoulder the expenses.
Even if you’re going to spend your own money on the inspection, you can actually re-negotiate the cost of the property if termites are present in it. Also, you can demand that the seller fix the problem first before you proceed with the purchase.
In this video, James Mouyassar shows us the common pest inspection checklist before buying a house:
What if I already
have termites at home?
Uninsured termite damage means one thing: you have to
shoulder the out-of-pocket expenses for the repairs and treatment. The only way
that you can reduce the cost is by getting rid of the pest in the soonest
possible time.
Termite exterminators will inspect your home and assess the
extent of the infestation. Most infestations may go unnoticed for months, which
mean that your house might have more damages than what you see from the
outside.
Professional termite treatment will range from $500 to
$5,000 depending on the extent of the infestation, the treatment used, and your
location.
How to prevent termites from damaging your home?
Since homeowner’s policies don’t cover termite damage, you
must prevent the pest from invading your home. You can get a termite bond and
practice the following habits:
➡️ Be on top of every leak
Don’t let pipe leaks sit without getting proper repairs. The
moisture that comes from this will attract Subterranean, Formosan, and Dampwood
termites into your home.
Aside from that, the excess moisture will start to form
molds and mildew. This will be a double blow on your home, which will require
separate treatments.
➡️ Build your mulch away from your home
The rule of thumb is to place your mulch at least 15 inches
away from your home’s foundation. The farther the mulch is, the better.
Also, mind what you put in your mulch. It’s best to use
cedar and redwood chips as these are termite-resistant. Aside from that, avoid
over-watering your mulch and garden. This unnecessary moisture is an open
invitation for an infestation.
➡️ Store your firewood properly
Don’t let woodpiles touch the ground. Make sure that you
store it at least five inches from the soil and at least 12 inches away from
any wall surface. Aside from that, don’t let woodpiles be undisturbed for long
periods. You should literally shuffle it up to check if there are inspect pets
harboring in between.
➡️ Always keep your yard clean
Subterranean termite harbor below-ground before invading
your home. They thrive on unkempt gardens with sustainable sources of moisture.
Aside from that, Dampwood termites like to forage on dead
wood, branches, and tree stumps. Also, Drywood mites will crawl on the ground
and hide in your untrimmed bushes.
➡️ Invest in regular inspections
If you have a termite bond, you’ll receive regular termite
inspection from your chosen pest control company. This professional examination
will diagnose any potential infestation even before it becomes a big problem.
Final words
So is termite damage covered by insurance? Even if it’s not, you still have alternative protection by purchasing a termite bond. This is an additional expense, but every cent is worth it to guard your investment against the destructive termites.