There are many factors that can greatly impact the cost of a tree removal. Having a basic understanding of the key variables affecting these costs will be helpful to effectively adjust what may be the most dangerous and potentially costly aspect of a claim. Obviously the size of the tree involved is a main factor in the cost of removal. However, it is also important to know the extent of damage the tree caused the roof of a structure. Even a large tree can be routinely removed if it is simply lying on the roof. By contrast, a small tree that has heavily impacted the roof can be very complex and costly. Another important variable is access to the site. Clear access enables a professional crew to utilize the most appropriate equipment and techniques for the job, which almost by definition means the most cost-effective. Poor access can require dangerous maneuvers or specialty equipment, such as a crane, to safely remove a tree.

In an effort to establish some realistic standards by which adjusters can audit tree removal costs, the chart accompanying this article was developed to describe "typical" tree loss scenarios and a price range for each. The pricing information was gathered from tree care companies that are members of the Tree Care Industry Association (TCIA), the niche's only self-regulating trade organization that subjects its members to codes of professional conduct and ethics. The work procedures described below and associated costs assume that the work is being completed by a professional tree service that is fully insured and that has five years or more of experience.

There will be cases where tree removal costs exceed $4,700, and there is no specific condition that will cause a tree removal project to escalate to this level. Generally speaking, claims of this size involve very large trees (48 inches plus DBH), or multiple trees that have caused extensive damage to a structure or are tangled in power lines or difficult to access.

Landscaping Replacement Costs

As previously mentioned, a growing number of residential and commercial insurers are increasing coverage for landscape losses. Traditionally, an average home owner's policy would cover between $250 and $500 per tree lost, and the covered perils were usually limited to lightning and fire. With the investment in landscaping surging to almost $75 billion dollars each year, however, insurers are taking steps to protect this valuable asset class. The result is enhanced coverage for landscaping and trees with sub-limits to $100,000, with limits going as high as 10 percent of the insured value of the property, and specialty landscape endorsements being underwritten for virtually unlimited amounts. Given the proliferation of this newly insured class of living assets, the need for adjusters to gain a greater understanding of adjusting for landscape losses and potential exposure for insurers is increasing.

In light of the foregoing, determining the cause of loss of landscaping may determine whether a significant claim payment is made. When living assets are involved, this may require special expertise. Two tests should be considered when pinpointing the cause of loss. First, what was the primary cause of loss -- for instance, lightning, wind, ice, flood, and so on? Next, you should determine whether it is a covered peril. The second test is commonly overlooked and includes an analysis of whether a pre-existing condition -- root or trunk rot, insect infestation, and the like -- was present and whether said condition was actually the reason the tree failed. Depending on the circumstances and the policy terms, determining whether a pre-existing condition was present may decide whether the loss is covered. The capability to establish the cause of loss may require special expertise. Additionally, in instances where the cause of loss is not obvious, an International Society of Arboriculture (ISA)-certified arborist is the best resource for procuring a professional opinion. Tree care experts will support that a vast majority (+75 percent) of trees fail because of pre-existing conditions.

In the event that the tree loss is covered, it would be necessary to establish its replacement cost in to process the claim. There are two primary cost methods for determining either the replacement cost or appraised value of a tree. The first method is the replacement cost method; replacement costs for trees are calculated by using median wholesale prices for trees that are commercially available (the industry standard is using the average of at least three different wholesale prices). If a tree is larger than what is generally available in a nursery environment, then the replacement cost is determined and extrapolated based on the Council of Tree and Landscape Appraiser's (CTLA) trunk formula method, which is a recognized industry standard. The replacement cost includes the cost of the tree and typical transportation and installation costs and generally is equivalent to 2.5 to 3.5 times the tree's wholesale price.

The second method is the appraisal method; there is no depreciation per se for trees, and trees actually appreciate in value over time. A consulting arborist will generally perform a tree appraisal and will use a species rating. This species rating is based on the species of tree, the geographic area where the tree is located, the species' ability to adapt to the geographic location and the species' desirability in the landscape. This rating is then combined with other information gathered on site -- including tree condition and location -- and applied against the replacement cost of the tree to determine whether the appraised value deviates from the replacement cost.

In most cases, the replacement cost analysis is the method used in adjusting an insurance claim, and a mature tree may have a replacement cost of $50,000 or more. Appraised values are more commonly used in legal proceedings or casualty loss claims. Appraised values are very subjective and it is not uncommon to have appraisal results that differ greatly from arborist. The replacement cost method is more aligned with a standardized method of cost analysis performance. Ultimately, it is the language of the policy that will determine the method to be used in a specific case.

It is clear that adjusting losses involving living assets have many variables and thus require specific expertise. The insurance industry has traditionally lacked firm guidelines for claims involving trees and landscaping. However, as underwriting exposure increases and a desire to reduce LAE becomes more predominant in the industry, it will be necessary for the green industry and insurers as a whole to work together to ensure professional work and standardization for adjusting tree and landscaping related claims.