Received Termites? Are you Protected Towards Injury to Your Dwelling Brought on by Termite Infestation? | Butler Snow LLP

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Allie Gaiter * has lived in Louisiana for life and has owned a modest house in Pierre Part, Louisiana for 20 years. Allie recently noticed damaged wood around her kitchen window and discolored sheetrock in the adjacent breakfast nook. She calls her good friend and local contractor, Bob Villa *, to investigate and repair damage. Upon closer inspection, Bob discovers that the problems are the result of an active termite infestation in Allie’s house. This termite infestation severely damaged the kitchen and breakfast area walls and floors and cost Allie thousands of dollars to repair.

Allie’s situation is not unusual. South Louisiana is a prime breeding ground for both subterranean dryland termites (Reticulitermes tibialis) and subterranean formosan termites (Coptotermes formosanus). These termites are among the most destructive urban pests in the United States, causing millions in losses.[1] Most homeowner insurance policies do not cover direct insurance claims for damage caused by wood-destroying insects.[2] Fortunately, Allie’s house has been covered by a standard termite contract with a local pest control company, Critter-Ritters, LLC * since it was built 20 years ago. Allie’s termite contract will surely cover the cost of follow-up treatment to clear the active infestation and repair the termite damage, right? Maybe.

Termite and other pest control contracts are regulated by the Louisiana Department of Agriculture & Forestry under the Louisiana Pesticide Law.[3] The law mandates that those authorized to treat property for underground termites must 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 the treatment of underground termites (the “Standard Contract”) for use in Louisiana.[6]

Although the standard contract guarantees the work performed by the pest control company and covers the cost of post-treatment and repairing damage, it contains limitations, exclusions, and certain obligations for the homeowner. The standard contract guarantees treatment or repair for a period of one year with the option of the customer to extend it for up to four years annually. However, the pest control company reserves the right to change the warranty terms from a warranty for repair and post-treatment of damage to a warranty for post-treatment if this is communicated to the customer at the time of an annual renewal.[7] In addition, the standard contract does not cover damage caused by the pest control company at the time the work is carried out, “with the exception of damage caused by gross negligence on the part of the company”.[8] The liability of the pest control company for property damage under the contract is also based on “the according to La. RS 3: 3367 required insurance limits “(100,000 USD) and must not exceed these.[9] Another limitation of the standard contract is that all claims for damages only need to be resolved through binding arbitration.[10] Damage caused by “air infestation by underground termites without visible ground contact” is also excluded.[11]

In addition to the above limitations and exclusions, the standard contract imposes certain positive obligations on the homeowner. The homeowner is obliged to “keep the treated areas free of any factors that contribute to infestation, such as wood, rubbish, sawn timber, direct wood-floor contact or standing water under pier structures”.[12] The homeowner must also inform the pest control company about “faulty pipelines, leaks and moisture from drains, condensation or leaks from the roof or in any other way in, on or under the treated areas” and rectify them immediately.[13] Finally, the homeowner must immediately notify the company in writing if the treated building is “structurally altered, altered or otherwise altered, whether the ground around the foundation is removed or added”.[14] If the homeowner fails to meet these positive obligations, all guarantees and warranties in the standard contract may become void.

Back to our earlier question: Will Allie’s termite contract with Critter-Ritters cover the cost of repairs and follow-up treatment? The answer is yes – assuming that: (1) Critter-Ritters did not choose to change Allie’s contract from a Damage Repair and After-Treatment Guarantee to an After-Treatment Guarantee; and (2) Allie’s property damage does not exceed $ 100,000; and (3) the infestation was not caused by aerial infestation of subterranean termites; and (4) Allie kept the treated areas free of infestation factors; and (5) Allie has provided Critter-Ritters with written notice of structural changes and / or the removal or addition of earth to the foundation of her home. If not, Allie could face a long and expensive arbitration on her claim against Critter-Knights.

* The names in this blog article are fictional. Any resemblance to real people, either living or dead, is accidental and not intended by the author.

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

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

[3] La. RS 3: 3201 ff.

[4] La. RS 3: 3370

[5] I would.

[6] You can find a copy of the standard contract online at www2.lsuagcenter.com/lahouse/termites/precsc.jpg

[7] Standard contract, general terms and conditions

[8] Standard Contract, Section 1 – Execution of 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