Alabama Custom Application of Pesticides and Termite Eradication and Control Work Bond

What Is the Purpose of These Bonds?

The State of Alabama Department of Agriculture and Industries (ADAI), Pesticide Management Division, requires that all persons doing the custom application of pesticides or performing termite eradication and control work to obtain a surety bond. Both bonds serve the purpose of protecting the ADAI and the public from principals using harmful chemicals in a matter not consistent with the regulations.

Who Needs a Bond to Perform Custom Application of Pesticides and Termite Eradication and Control Work?

Any person applying for a license to perform the custom application of pesticides must first secure a surety bond. Exclusions from this requirement are listed in the Code of Alabama 1975, Section 2-27-5

Persons involved in subterranean termite eradication and control work are required to file a bond, pursuant to the Code of Alabama 1975, Section 2-28-10.1.

What Do Surety Underwriters Need to Know About These Bonds?

Surety companies rarely see claims on either bond, but they do happen. Risk occurs when a custom pesticides applicator or person performing termite eradication fails to follow the applicable regulations and statutes.

For both bond types, there is disciplinary action taken prior to the bond being used for a payout. For example, the Custom Application of Pesticides Bond is generally only used after a person has been found guilty of a misdemeanor and fails or refuses to pay fines imposed by the ADAI and court. Revocation of the license or certification is also considered. Due to the enforcement of regulations and mitigation by the Department of Agriculture and Industries, these bonds pose low risk. 

The bond limit for the Termite Eradication and Control Work Bond is $2,500. The Custom Application of Pesticides has a minimum bond limit of $3,000. It is $3,000 for each applicant utilizing ground equipment or two or fewer aircrafts. If an applicant operates more than two aircrafts, the bond amount increases by $3,000 for each aircraft thereafter, with a maximum limit of $12,000. 

Surety underwriters typically review the credit as a way to analyze the risk involved with each individual applicant. However, some surety companies choose to write the Termite Eradication and Control Work Bond freely, due to the low bond limit.

What Do Surety Claims Handlers Need to Know About the Custom Application of Pesticides and Termite Eradication and Control Work Bonds?

Bond claims can come from any person financially harmed by the principal. When a principal does not complete a job according to the regulations and then fails to correct issues or make payment to complete the job, a payout on the bond may be requested by the ADAI. 

Although there is no timeline for surety bond claim handling in Alabama, insurance carriers are to acknowledge receipt of a claim within 15 days of receiving notice and either accept or reject the claim within 30 days of receipt of proof of loss.

Are There Any Alternatives to the Bonds for Custom Application of Pesticides and Termite Eradication and Control Work?

In lieu of the Custom Application of Pesticides Bond, principals are able to file a liability insurance policy in an amount no less than the bond limit.

How Much Do These Bonds Cost?

The price for either bond generally starts at $100 and goes up based on the credit of the applicant. The bond limit also is a cost factor for those applying for the Custom Application of Pesticides Bond.

How Are the Bonds Filed to the Department of Agriculture and Industries?

The Termite Eradication and Control Work Bond can be emailed to Bridget Pope: bridget.pope@agi.alabama.gov or filed to the address below.

The original bond for the custom application of pesticides must be signed by the principal, surety company, and Commissioner of the ADAI and filed to the following address:

Alabama Department of Agriculture and Industries
Pesticide Management Division
1445 Federal Drive
Montgomery, AL 36107

Can Termite Eradication and Custom Application of Pesticides Bonds Be Cancelled?

Yes, both bonds can be cancelled with a 15-day written notice to the Alabama Commissioner of the Department of Agriculture and Industries. The bond is active during this time, so it should be calculated into any pro-rata refunds to the principal.

How long is the bond still active once the obligee receives cancellation. Is there typically a return premium available (pro-rata, minimum earnings)?

Do These ADAI Bonds Renew?

The bond is necessary for as long as the principal is doing work. The bond is continuous and must be renewed to line up with the license or certification.