Working With Insurance Companies on Storm-Damage Claims

Providing storm-damage cleanup is challenging work for tree-service companies. What can make it even more challenging is being properly paid for that work, particularly when insurance companies are involved, which they usually are. Determining a fair price for this challenging work can be open to interpretation, and sometimes the higher-than-usual fees are considered price gouging.

At least two TCIA corporate member companies have made a business out of being a go-between for insurance companies and tree-service providers, arranging for tree companies to do the work and then working with insurance companies to make sure the tree companies are paid. We asked them to weigh in, and here is their two cents.

“The insurance industry likely represents the largest vertical market for the tree care industry to sell its services,” says Doug Cowles, president and CEO of HMI, a 14-year TCIA corporate member company based in Cary, North Carolina.

Through HMI’s national network of professional tree care companies, certified arborists and other subject-matter experts, HMI has been supporting insurance claims involving damage to trees and other “green assets” since 2003.

“While the company’s initial focus was consultative, providing replacement-cost data on damaged/destroyed plants, in 2008 we expanded into emergency tree-removal services. Today, we support emergency tree-removal claims for 20 of the top 25 residential insurers,” says Cowles. “Our success has been driven by a commitment to providing our insurance-adjuster clients with clear, concise and accurate costs, their clients with superior customer service and our network members with profitable and reliable access to storm work.

“Through the years, we have maintained a philosophy of only working with the best companies in both the green and insurance industries. Our network consists of the premier tree care companies in each market we serve; more than 80% of the crews in our network are with TCIA-accredited companies.

“We are a great fit for tree companies that want to be fairly paid for storm work and insurance adjusters who value quality, customer service and professionalism over low costs. I’m pleased to report that this is, in our experience, the rule and not the exception in both industries.

“We have found that the vast majority of adjusters want to pay the fair-and-reasonable price for all covered costs incurred by their clients, full stop. However, adjusters need to be confident that the costs they are incurring are for expenses covered by the policy and are, in fact, fair. The best way to communicate that is through clear photographs and a detailed explanation of the work being completed,” says Cowles.

Show the work required through photos, including pictures that illustrate the size of the tree, as well as logistical characteristics of the job that impact costs: access issues, hazards, obstacles, traffic-control requirements, etcetera. Descriptions of the cost should include the number of crew on site, labor hours and rates and costs for specialty equipment such as cranes, aerial lifts, loaders, etcetera. All of these details will enable the adjuster to better understand the scope of work, how it impacted the resources required and, ultimately, the cost.

“Unfortunately, the professional tree care community has been negatively impacted by companies that charge both far too little and far too much for the work they do. Both scenarios disrupt and threaten what should be a highly profitable and collaborative relationship between the insurance and tree care industries,” says Cowles.

HMI has spent years educating its clients and the greater insurance industry about the real cost of working with professional tree care companies.

“Working with companies in our network, we establish current cost guidelines for our clients that support these costs,” Cowles says. “It is our expectation and experience that 100% of the claim files we submit to our clients will be approved. That should be your expectation as well, if you are clear in the description of the required work and your costs for labor and equipment are fair and reasonable.”

“I would say there are many arborists or tree companies taking advantage of the insurance industry during storm cleanup, just as there are many tree companies with little or no arborist training,” says FJ Runyon, president and CEO of Timber Warriors, LLC, an eight-year TCIA corporate member company based in Saint Charles, Missouri, that, like HMI, serves as a go-between for insurance companies and tree care providers.

But, Runyon says, whether the prices a tree company charges might be considered price gouging is open to interpretation.

“What does price gouging look like to the adjusters?” poses Runyon.

“A good portion of all homeowner policies only give $500 for tree-debris-removal services. As an example, say a homeowner has a red oak with a 36-inch DBH (diameter at breast height) trunk fall on their home. This homeowner then calls the local tree service they have used for years and contracts with them to remove the tree. When they arrive to do the job, they see that 75% of the tree’s canopy is on the roof. They cut the canopy off the home and then raise and lower the trunk, chip all the brush, remove all the logs and rake the yard clean.

“A few days later, the adjuster shows up to the location and reviews the damage, reviews the homeowner’s pictures and all is well until the adjuster reviews the invoice. Now they are upset and assume that the tree company is price gouging.

“The company is just providing good service. But who is paying for the service? The adjuster is not supposed to pay in excess of the policy limits. The policy limits all tree debris (the limbs and logs) to a maximum payout of $500. That is for the labor, equipment, fuel, transporting the chips and logs to the dump and returning back to the location. All for $500,” says Runyon.

“So, when we tree-company operators put on our invoice to the homeowner $3,200 for the tree removal and $500 for the debris removal, then by definition this is price gouging. But did that tree service intend to gouge the homeowner?”

The expenses involved with storm work also need to be taken into consideration, Runyon says.

“It’s hard to find a time when there was a major storm event that hotels were not being investigated for price gouging. That hotel expense is then transferred to the out-of-town tree service,” says Runyon. “Last month, with Hurricane Ida, electricity was out. That means gas pumps don’t pump, and we may have to travel miles out of our way just to find a station with diesel or gas. The dump fees can be five times higher and may even close because they are too full. The list of added expenses go on and on.

“Most tree services have regular daily rates as well as storm rates. What is the percentage increase necessary for a storm event? Document this percentage-rate increase on your website and then, in my opinion, it cannot be considered price gouging. There is a department store near us that my wife won’t go to. Is it because there is price gouging? No, it’s because their prices are too high, and she won’t use them.

“The insurance companies are working on this issue,” says Runyon. “They are trying to use only vetted and approved tree-service companies to perform the work, and this is why Timber Warriors and other companies like it exist.”

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