Don't Be Exposed by Tree Removal Liability
January 18, 2010
It is estimated that last year the insurance industry paid approximately $4.5 billion in claims related to damage caused by fallen trees and tree limbs. Weather patterns, tree preservation trends, new construction and other factors are increasing this financial exposure.
In response, insurance companies are creating formal tree-removal programs and demanding that only qualified, professional tree care companies perform removals for their clients. Tree work is highly specialized and there are many rules and regulations which govern how it is to be performed but, amazingly, only a small portion of emergency tree work is performed by qualified companies, those with the necessary insurance, licenses and training.
Emergency tree removals increase liability and other financial exposure for general contractors and restoration companies that perform them without the requisite know-how, equipment and insurance to perform dangerous tree work but do so in any event.
Insufficient Resources and Collateral DamageTree work is rated as the fifth most dangerous profession in the United States. Safely removing trees from buildings and other property requires specific know-how and training. It is not unusual for seemingly simple tree removal jobs to become complicated by limited access, roof impaction, power line interference or even tree genetics.
Trees are living organisms, and each one has unique physical characteristics. Trees that have fallen can compress themselves against the ground or a structure, and the first cut will result in thousands of pounds of wood snapping up like a spring that can damage property or, worse, injure someone.
These factors, among others, may turn a simple tree removal into one that requires a crane, rigging, electrical specialist, or other specialized resources. Unfortunately, unqualified companies perform this dangerous work and risk creating additional damage at best and personal injury at worst.
At best, this leads to increased Loss Adjusting Expenses (LAEs) for insurance companies, a critical metric used by the insurance industry to evaluate contractors and contractor networks – beyond the damage caused during a tree removal, the result can be losing insurance company clients.
Insufficient LicensingMany general contractors that perform tree removals are not licensed to do so. Each state, and even each municipality, may have their own licensing requirements and may impose fines or penalties against the contractor and/or property owner for unauthorized work.
Some states even require a certified arborist to be on staff of any company performing tree work.
Violations of Tree Ordinances and Local RegulationsMany municipalities have adopted tree ordinances, local laws that require a permit for tree removals, even for damaged or dying trees. These ordinances are imposed by local government to preserve the environment.
Removing a tree that is damaged may require a permit, and a violation of this rule may result in fines to the contractor and/or the property owner. In certain areas, the fines imposed can be two times the replacement cost value of the tree removed; mature trees can have a replacement cost of tens of thousands of dollars.
These regulations are generally enforced by a municipal forester or other similar body, and the appropriate authority should be contacted prior to performing any tree work in order to ensure compliance with local laws.
Insufficient Professional Liability CoverageMany contractors are not properly insured to perform tree removals. This situation can result in coverage issues if something goes wrong. The issue may simply be an increase in future premiums or something more significant such as denial of coverage or cancellation of a policy.
Certain aspects of tree care work are not covered under standard General Liability insurance policies, creating exposure for companies that do not have the appropriate professional liability insurance. When doing emergency tree removals, contractors may be asked to opine on the viability of standing trees. An incorrect assessment of a situation that subsequently results in damage may not be covered by a General Liability claim, since professional arboricultural advice had not been rendered.
Unless a contractor has E&O insurance purposed for tree care work, such an instance may create direct legal liability for the contractor and its principals. Contractors that do not have the benefit of a tree care professional may create for themselves unnecessary liability; for example in a situation when a portion of a tree falls on a roof but the remainder of the tree is still standing, a contractor may remove the tree from the roof but, generally, does not have the arboricultural know-how to evaluate the structural integrity of the standing portion, and in the event that portion falls a professional liability claim may ensue.
Inability to Document Tree Work CorrectlyMany contractors do not know how to articulate or even document the potential for collateral damage when doing tree removal work; this is critical to discuss with insurance adjusters before work begins. There will be some instances when there is no way to remove a tree without causing some collateral damage, e.g. if the tree will damage hardscapes or foundation plants when it is removed from the roof.
In these instances damage waivers are required, and the risks must be communicated to the adjuster and insured before work commences. If the process is run correctly, many insurance policies will cover unavoidable collateral damage and there is no exposure for any of the parties, but if this is not handled properly it could result in exposure for everyone.
Use of Non-professional Subcontractors for Tree WorkMany general contractors subcontract tree removal work to unqualified tree-care companies that do not have the know-how, licensing or insurance necessary to provide professional and safe tree care services. Primary contractors generally bear full liability for the actions of their subs.
Insurance companies have become more prudent about auditing the tree work performed by service providers in order to evaluate if the work resulted in additional damage to property, or if the work was not fairly priced.
Damage to driveways, landscaping and roofs are not uncommon when removing a large tree but the primary contractor that uses a sub to perform the tree work will need to show that such damage was unavoidable and one of the most effective arguments is to highlight the fact that an experienced and qualified tree care professional performed the work. Following recent, major weather events like Hurricane Ike, insurance companies have a greater awareness and new found respect for qualified tree care companies and are requiring that the appropriate service provider be chosen. In an effort to further control the quality of tree care work, insurance companies have begun implementing national tree removal programs with qualified service providers.
Furthermore, insurance companies are implementing programs where dedicated tree crews are staged prior to a major weather event in order to ensure that their policy holders will have access to reputable companies and not the “storm chasers” which descend on affected areas.
These are only some of the exposures general contractors may face when performing tree work. The most effective way for general contractors, restoration companies and the like, to mitigate exposure is to work with qualified tree care companies. Tree care companies that have certified arborists and trained safety officers on staff as well as being accredited by the Tree Care Industry Association ensure a high level of work and safety.