United States: Got Termites? Are You Protected Against Damage To Your Home Caused By Termite Infestation?

Allie Gaiter* is a lifelong resident of Louisiana and has owned a modest home in Pierre Part, Louisiana for the past 20 years. Allie recently noticed damaged wood around her kitchen window and discolored sheetrock in the adjoining breakfast nook. She calls her good friend and local contractor, Bob Villa*, to investigate and repair any damage. Upon close inspection, Bob discovers that the problems are the result of an active termite infestation of Allie's home. This termite infestation has caused extensive damage to the walls and floors of the kitchen and breakfast area and will cost Allie thousands of dollars to repair.

Allie's situation is not uncommon. South Louisiana is a prime breeding ground for both Arid-Land Subterranean Termites (Reticulitermes tibialis) and Formosan Subterranean Termites (Coptotermes formosanus). These termites are among the most destructive urban pests in the United States causing millions of dollars in losses.¹ Most homeowner's insurance policies do not cover first party claims for damage caused by wood destroying insects.² Fortunately, Allie's home has been covered under a standard termite contract with a local pest control company, Critter-Ritters, LLC*, since it was built 20 years ago. Surely, Allie's termite contract will cover the costs of retreatment to eliminate the active infestation and to repair the termite damage, right? Well, maybe.

Termite and other pest control contracts are regulated by the Louisiana Department of Agriculture & Forestry pursuant to the Louisiana Pesticide Law.³ The law requires those who are licensed to treat property for subterranean termites to enter into a standard written contract with the owner of the property.⁴ The contract must be in a form acceptable to the Louisiana Structural Pest Control Commission.⁵ In fact, the Commission has issued an approved Standard Contract for Treatment of Subterranean Termites (the "Standard Contract") for use in Louisiana.⁶

Although the Standard Contract warrants the work performed by the pest control company and provides coverage for the cost of retreatment and damage repair, it has numbers limitations, exclusions and places certain obligations on the homeowner. The Standard Contract warrants treatment or repairs for a one year period with a customer option to renew annually for up to four years. However, the pest control company "reserves the right to change the terms of the warranty from a damage repair and retreatment guaranty to a retreatment guaranty only" upon notice to the customer at the time of any annual renewal.⁷ Additionally, the Standard Contract does not cover damage caused by the pest control company at the time the work is performed "except those damages resulting from gross negligence on the part of the Company".⁸ The pest control company's liability for property damage under the contract is also limited to and shall not exceed "the limits of insurance required under La. R.S. 3:3367" ($100,000).⁹ Another limitation found in the Standard Contract is that it requires all damage claims to be resolved only through binding arbitration.¹⁰ It also excludes damage caused by "aerial infestation of subterranean termites with no visible ground contact".¹¹

In addition to the above limitations and exclusions, the Standard Contract places certain affirmative obligations on the homeowner. The homeowner is required to "maintain the areas treated free from any factor contributing to infestations, such as wood, trash, lumber, direct wood-soil contact or standing water under pier type structures".¹² The homeowner also must notify the pest control company of and promptly eliminate "faulty plumbing, leaks, and dampness from drains, condensation or leaks from the roof or otherwise into, onto or under said areas treated".¹³ Finally, the homeowner must immediately notify the company in writing in the event that the treated building is "structurally modified, altered or otherwise changed, of if soil is removed or added around the foundation".¹⁴ Failure by the homeowner to undertake these affirmative obligations may void all guarantees and warranties under the Standard Contract.

Returning to our earlier question - will Allie's termite contract with Critter-Ritters cover the costs of repair and retreatment? The answer is yes — assuming that: (1) Critter-Ritters did not elect to change Allie's contract from a damage repair and retreatment guaranty to a retreatment guaranty only; and (2) Allie's property damages do not exceed $100,000; and (3) the infestation was not caused by an aerial infestation of subterranean termites; and (4) Allie maintained the areas treated free from factors contributing to infestations; and (5) Allie notified Critter-Ritters in writing of any structural modifications and/or the removal or addition of soil around the foundation of her home. If not, Allie may be in for a long and expensive arbitration of her claim against Critter-Ritters.

Footnotes

1. USDA, Agricultural Research Service, Technical Bulletin No. 1917, January 2008.

2. Couch on Insurance, §153.85 (3^rd Ed.); see also Davidson v. United Fire & Casualty Co., 576 So.2d 586 (La. App. 4^th Cir. 1991).

3. La. R.S. 3:3201 et seq.

4. La. R.S. 3:3370

5. Id.

6. A copy of the Standard Contract can be found online at www2.lsuagcenter.com/lahouse/termites/precsc.jpg

7. Standard Contract, General Conditions

8. Standard Contract, Section 1 – Performing the Work

9. Standard Contract, Section 3.e. - Damage

10. Standard Contract, Section 3.g. – Damage

11. Standard Contract, Section 3.a. – Damage

12. Standard Contract, Section 3.c. – Damage

13. Standard Contract, Section 3.c. – Damage

14. Standard Contract, Section 3.d. – Damage

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.