This is the first article in a planned series on pricing and getting paid for storm-related tree work.
Dustin Meyers owns and operates Timber Ridge Tree Care, a 21-year TCIA member company based in Comstock Park, Michigan, near Grand Rapids. When he was younger, he’d travel for storm work, but says now, “I’m too tired and old for that.” But he’ll still respond when the storm hits his area, knowing it’s a good opportunity to make extra money while also helping people who need it.
As anyone who does emergency storm response knows, it’s rewarding work, but it comes with costs. There can be travel, lodging and food. Then there are potential costs at home when you need to reschedule previously planned work, possibly losing customers or damaging your reputation as a result.
And, as Meyers learned, with storm work, sometimes it can be tough to get paid what you’re worth.
In business since 1995, Meyers came under fire from the Michigan attorney general in January 2023 after consumer complaints on pricing. He says those complaints stemmed from a situation where an insurance carrier balked at charges for emergency jobs that homeowners had agreed to.
Meyers and his attorney met with the attorney general to discuss Meyers’ pricing. They provided the AG with rate comparisons from approximately 190 Midwest companies that provide the same or similar services for similar prices. The pricing comparisons establish that Meyers’ pricing was not out of the ordinary for storm work.
Room for agreement
The attorney general told them he believed that Meyers’ attempt to lien property when owners and insurers failed to pay him for storm work was improper, according to Meyers. While Meyers’ attorney says he had the right to place a lien on the property, since the work is considered a legitimate property improvement, the AG’s office requested that he refrain from placing liens. “They also have asked for written quotes whenever possible,” says Meyers. “We assured them of our willingness to accommodate their requests to avoid any disputes.”
When asked about the status of the case, a spokesperson for the Michigan AG’s office responded that, “Our review of Timber Ridge Tree Care remains ongoing.” However, Meyers remains confident that his willingness to listen to and work with the attorney general’s office will open doors to new work and will ultimately result in no action by the attorney general.
While those types of complaints may only occur in a minority of cases, it’s a scenario that seems to be happening more often in recent years with many companies that opt to do emergency work. As mechanization has become an industry trend, related expenses and other costs have gone up, and invoices have done the same. The result has been that some insurers are balking at the charges and refusing to pay.
Lively debate
The issue has sparked significant and lively debate, with some service providers offering new alternatives for dealing with storm-work invoicing and the insurance companies. At the heart of the issue is the age-old tug-of-war between some carriers and the tree care industry, exacerbated by the increased use of grapples to take down trees, as well as other cost increases that have created sticker shock for insurers.
“I’ve seen the (tree care) industry change drastically over the last four or five years because of these robotic trucks,” Meyers says. “We had a huge shortage of skilled labor, and it really drove the market for these grapple trucks. But with the grapple trucks, the costs are four to five times more than your typical crane truck.
“It’s much safer,” Meyers says. “OSHA likes the concept, because you don’t have a person up on the end of a boom with a chain saw at night. It takes a lot of danger out of it. But I own two robotic cranes (boom-mounted grapple saws), and I know the overhead and costs are a tough nut to crack every month when you’re paying for these expensive pieces of equipment. At the end of the day, it makes the invoice go higher, and the insurance companies (adjusters) can’t wrap their minds around it.
“I’ve found, and I’ve heard it from other people, that everybody’s charging more because the costs have gone up,” says Meyers. “Then, when insurance carriers balk at the amount being invoiced, it leaves the homeowner stranded in the middle. It puts the tree care company in a really bad situation.”
Contract with the client
“I spoke at length with an adjuster from one of the largest carriers in both personal and commercial lines,” says Brian Fain, a licensed insurance agent who specializes in the tree care industry and represents Tree Insure by Ferguson & McGuire, an agency licensed in 48 states and a six-year TCIA corporate member company based in Wallingford, Connecticut. “He reviewed your questions and followed up with a call. As I expected, he shared with me that, due to the vast differences in state-by-state regulations, filings, policy limits and exclusions, it would be very difficult to have a formula or algorithm that would fit every scenario. In other words, each claim is assessed on an individual basis and is usually based on ‘reasonable costs’ and other variables.
“When I discuss this with my clients, I always suggest that any contract, be it storm work, tree maintenance or removal, should be made directly with the client and not based on what a third party (insurance carrier) may decide to pay after the work is completed,” says Fain. “The client should be obligated to compensate the tree contractor based on the agreement after the work is finished. If the client is not satisfied with the reimbursement from the insurance carrier, they can decide to dispute the settlement or contact the department of insurance for further explanation. This keeps the tree contractor out of the middle of any disputes that may arise and allows them to get a fair value for the service they provided.”
TCI Magazine made an effort to contact a handful of insurance adjusters and insurance companies for this article to talk about their process for pricing storm work and settling insurance claims. No others responded in time to be included in this article. We were able to talk with a representative of Verisk, the company that provides Xactimate software, a claims-estimating platform used by many insurance companies for pricing storm work. We plan to bring you that conversation, along with input from insurance adjusters, in another article on this issue in the coming months.
Trying to respond
Traditionally, tree care companies have had two primary options. They have worked through intermediaries who get the work, assign the job and then deal with insurance companies to be sure the companies get paid. Or, they have found the work themselves and dealt with insurance companies on their own.
Arborist Joe Whitledge, owner of Whitledge Tree Service in Princeton, Indiana, earlier this year started teaching seminars and mentoring tree-company owners on the ins and outs of storm response and insurance billing. He’s sharing knowledge he had to learn himself in responding to storms within a 75-mile radius of his home.
“Our value was placed so low – and we didn’t have any ability to control it – that we were getting to a point where we were going to have to start direct billing homeowners,” he explains. “The homeowners couldn’t afford the service because during an emergency, they just don’t have enough cash lying around to do the service. So we either had to quit helping people or we had to come up with a better way.”
Whitledge says, as an example, he was invoicing in the low teens, but the insurance adjusters would come back with a check for an amount from $800 to $3,500.
“Sometimes we might be on a tree for seven hours, through the night, with six people and a crane. And we would get a check for $2,700,” he recalls. “We would actually lose money.”
Teaching classes
Whitledge began doing research, talking to lawyers and adjusters, reading case law and learning how to handle things differently. With his new company, Emergency Tree Responders, he began to teach classes on the weekends. He started in Indiana, then branched out to Oklahoma, Minnesota, New Jersey, Virginia and elsewhere. At the time of this interview in early summer, he’d taught approximately 119 students, with another 150 signed up for future classes. Additionally, he mentors tree care-company owners interested in this area of the business.
His classes address the importance of having the right certifications and following OSHA requirements. They cover the rights and responsibilities of the various parties and the importance, and elements of, a contract. They cover the need to document and explain your work, and the importance of pictures. Lots of pictures.
“We keep hammering down on the ethical part of it, too,” Whitledge says. “While we want to get paid, we want to be genuine in our service. If we don’t need a crane, we don’t use a crane. We just use a skid steer. If we don’t need five people, we use three. You’ve got to be right on both sides of it. You can’t just be out doing a money grab.”
Finally, he discusses dealing with insurance adjusters and their bosses.
“I tell [my classes] that 20 to 30% of adjusters just write checks. It’s not a big deal. They just send you a check, ‘You’re done, you’re good,’” Whitledge says. “I think 80% of adjusters want to pay you. They just have to (justify the payment); it’s a job for them, too. So I’m always saying, ‘Be nice. They’re doing their job.’ They’re not necessarily the bad guy, but they have to be able to explain value to their supervisor. Like, ‘Why did you write an $18,000 check?’ ‘Well, I did it because they provided all this documentation.’
“Then, maybe 20% of them just don’t want to pay you. It’s almost like they get a kick out of (saying), ‘I’m not paying you.’”
As Whitledge sees it, when there are problems with adjusters or their managers, often it is because the guidelines insurance companies use – including the pricing structure – to pay for emergency work is not set up for tree work. He says they are set up for other trades, such as roofing, that don’t deal with the uncertainty and complications that come with tree work in emergencies.
“They try to comp my labor out at $42 an hour a lot of times,” Whitledge says. “But my crew members out on storm work, they make $60 an hour. That’s before I pay in the extra 50% in benefits, taxes and all that. The guy who mows my yard charges $85 an hour.”
Multiple estimates
Joseph B. Pipitone is owner of Topnotch Tree Care, a nine-year TCIA member company based in Kingsley, Pennsylvania. He notes that insurance companies often want a homeowner to get three estimates, which is not always appropriate or expedient when there’s a tree that’s fallen on the house.
When there’s a dangerous tree in a precarious situation, Pipitone proposes, why is it acceptable for a homeowner to have to wait for three quotes? If you broke your arm, he says, “You wouldn’t go to three hospitals asking for the best price. You would say, ‘I have an emergency, I need help, you are qualified and you’re a professional and you’re certified. Would you please take care of this?’
“Then they entice a customer to work with the low-cost provider,” he adds. “What is the low-cost provider? Maybe that provider doesn’t have the right insurance. Maybe they don’t have the best equipment and the best staff and all that kind of stuff.”
Establishing costs
FJ Runyon is president and CEO of Timber Warriors LLC, a 10-year TCIA corporate member company based in Lake St. Louis, Missouri, “The largest tree and tarp network in North America,” he says. He runs a network of emergency storm responders, coordinating jobs and then handling the billing and payments to the companies in his network. He deals solely with insurance companies, not homeowners, billing hourly for time and materials.
While he’s aware of others’ problems getting paid, that has not been the case with Timber Warriors, Runyon says. Runyon agrees that rising costs have driven up prices in even the day-to-day residential work, citing increases in employee costs, workers’ compensation and fuel. The cost for machinery parts, he says, has tripled. “We are considerably higher in 2023 than we were six years ago,” he says. “Our carriers know it, and it’s (usually) not an issue.”
Runyon, a second-generation arborist, makes it clear that he has no interest in criticizing other industry operators specifically. However, at times he’s been asked by insurance companies to do a peer review of the pricing for other jobs compared to the same types of jobs his company has completed. He won’t put a price on it, but he might say, “Here’s the equipment we had out there, and here’s the number of people and the number of man hours it took us.” Then the insurance companies will put their price on it.
For those who aren’t working in a network such as his, Runyon recommends that if a company can, it should try to finish up the job at the time the adjuster comes to inspect the site. That way, the team leader can answer any questions the adjuster might have, which could speed up the payment process.
Summary
To recap, make sure your company has all appropriate licenses, certifications and insurance. Second, have a strong contract and track your work through the process – and take lots of pictures. Third, be prepared to educate your homeowner’s adjuster (and the adjuster’s boss) in the complications of emergency tree work for storm remediation.
Whether this is an issue that will dog the industry for decades more, or if change will come through some combination of education or revised policy and practice, remains to be seen.
In future installments of this series over the next several months, TCI Magazine intends to:
- Get input from insurance adjusters on pricing practices and software being used.
- Look at job-costing best practice.
- Explore what constitutes price gouging and consider its legal ramifications.
David Rattigan is a former correspondent for The Boston Globe and People magazine who has written for the Tree Care Industry Association for 19 years. He’s received 15 awards for journalism and is currently an adjunct communications professor in Massachusetts. His work has appeared in seven national magazines including Sports Illustrated, The Sporting News, The Robb Report, The Christian Science Monitor and Lawyers’ Weekly USA.
