Can termite inspectors say they are not responsible for termites that were hidden under insulation or wood?

Do not sign until you have talked to a lawyer and found out exactly what's happened. Everything can wait until you have amasses the facts.

Make notes of the events to date. Write up a time line of events and take copies of all documents (so you don't lose originals).

If the original inspection was done before you bought the place, then there were strong limitations on what the inspector could do. They normally wouldn't be allowed to do more that look and use non-destructive tools. The report should have several paragraphs of exclusions covering this.

If you hired them after you'd bought the house, then there's less excuse for not having checked as fully as possible, even opening up surfaces as required (with your permission).

The critical argument is whether there was visible evidence or identifiable signs of the infestation at the time that the inspector incompetently missed.

You could run the argument and ask them for a payout covering repairs and costs, but it is likely that will end up in court.

It may pay you to get an independent expert to assess the site, history and the inspection reports (I do a lot of these jobs). It is much easier to get a settlement if you have expert backing.

On the other hand, if your building inspector tells you that the damage isn't severe and the new contractor can keep the termites at bay without too much expense, you may well be better off to chalk it up to experience and carry the loss.

Sometimes court arguments cost marriages.

So, talk to the lawyer, ask other pest managers, make sure you know the full amounts of money involved, do what you can to reach an agreement without court and try to find the best outcome for your family.

Hope this helps

DO NOT SIGN ANYTHING or AGREE to anything without getting a lawyer first. You may be entitled to have the inspection company pay for the removal of the termites if that is even an option depending on the damage. Protect yourself by getting a lawyer.

Most termite inspectors I have dealt with have a disclaimer that they will not remove any part of the house to investigate. For example, they will not remove any part of an exterior wall to determine if there is any wood damage behind it. If they did they would have to fix it at their own cost. Their inspection is limited to what they can visually see. If there is something that indicates to them there might be an issue they will recommend additional investigations at an additional cost.

they do not have ex ray vision. As stated it is based on a visual inspection and in most cases sounding as well (hitting floor joist and walls etc) There may be cause for a suite but it will be hard to prove just how long the infestation has been there as no one Truly knows