Taking the Mystery Out of Tree and Landscape Claims

landscape tree insurance claimsTaking the mystery out of tree and landscape claims can be difficult! If you have had a tree or landscape claim come across your desk, you know the empty feeling associated with wondering just how the matter will be resolved. If only it were a car or a home, life would be so much easier. After all, those types of claims have a blueprint that can be followed to resolution. You always strive to be fair and honest with your determinations. But trees and landscapes? You simply don’t know where to begin. You either approve the claim based upon the provided information, ask for more information, give the claim to someone else, or place it at the bottom of your stack of claims hoping it will somehow disappear. But, it doesn’t go away. And you have a problem.

Perhaps a review of the most common mistakes made in claiming insurance money for trees and landscapes would be of benefit to you. Following are a few of the most common mistakes or misconceptions made regarding tree and landscape claims:

Contributory Value

Also known as “The Before/After Rule.” One common denominator among all tree and landscape claims is that the plant materials are claimed as separate cost items.

Let’s say someone’s oak tree got hit by a car. A nurseryman or arborist came out and placed a value on the plant. There is a worksheet attached (which you don’t understand). There are three bids from established nurseries attached to the claim. Labor is included. Transportation and shipping are also included. It’s a nice, neat package with everything the claimant thinks is necessary to get paid. But there is one significant issue that has been overlooked. Trees and landscape are not a separate element of the landscape, any more than a 24-carat-gold water faucet costing $10,000 is a separate value when selling a home.

By the great weight of authority, the value of a shade or ornamental tree or plant is the difference between the value of the real estate, immediately before and immediately after the casualty (the Before/After Rule). The tree and landscape value are in the real estate. Once the tree or the landscape is installed into the ground, its value is inexplicably tied to the real estate. The tree or landscape value is the contributed worth to the real estate value. There are but a few case laws that state otherwise and only applicable in certain situations. The insurance contract may call for an insured value of a tree or landscape, or perhaps the claim you’re working on does come under the authority of elasticity to the Before/After Rule. If this is the case, the matter is reduced to formulas or replacement costs.

Condition Rating

Yep, just like cars. You would not pay a claim on a car without first knowing the make and model, the year, the mileage, and other issues of diminution in value. The same goes for trees and landscapes. When the claimant or other produces a written estimate for a new tree to replace the damaged subject tree, that new tree is, in theory, in perfect condition. But the subject tree is like a used car. Condition rating must be applied. All trees and landscape have before situation condition ratings that are broken down and represented as health and structure. That condition rating expressed as a percent of perfect (100%) is applied as a diminution to the value of the subject tree.

There are even published references for the arborist or appraisers to follow when rating the tree or landscape for the pre-casualty condition. So, if there is a claim for the value of a tree or landscape of $100 but the pre-casualty condition rating of the plant is 60%, the value becomes $60 ($100 x 60% = $60). Do not pay for a brand-new showroom car if the damaged car is 20 years old with 100K miles on it.

Formulas

The dreaded formulas. Always with the formulas. You can’t begin to understand them. The math. In a recent exit poll of jurors across the nation in every conceivable legal case imaginable, over 80% of the jurors “gathered wool” moments after an expert witness started with the math. Tree and landscape valuation forms are confusing even for the initiated whom I have seen argue for hours, especially in deposition, as to the accuracy of the subjective parts of the formula.

However, one part of any formula is not subjective: That part or component is the open marketplace value of the replacement tree upon which value is determined when applying the formula. Finding the correct comparable price in the marketplace for the basis of the formula is imperative and seldom done correctly. Comparable pricing is the ultimate test of value. There is no doubt that you will need assistance from a qualified plant appraiser to arrive at a value construed from a formula, and there is help for you on the International Society of Arboriculture (ISA) or the American Society of Consulting Arborists (ASCA) websites. I also conduct desktop reviews as a professional courtesy.

I will present more on this subject in the future. In the meantime, what difficulty have you had in settling claims for trees or landscapes?

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