With the devastating Atlantic hurricanes last year and severewinter weather recently departed, homeowners, property owners, andinsurance adjusters are keenly aware of tree destruction that cansignificantly alter the appearance, enjoyment, and value of aproperty.

Natural events, however, are not the only cause of damage totrees. Fires, vehicle accidents, improper construction activities,and vandalism can all inflict permanent damage on them. In somecases, even simple confusion about boundary lines can lead aproperty owner to mistakenly remove a tree that actually belongs toa neighbor. Other cases involve intentional trespass, which mayhave more significant insurance implications.

Whatever the event, the loss or destruction of trees canrepresent a substantial claim requiring expert valuation. Evenpartial damage may require professional assessment of repairsnecessary to minimize the loss or mitigate potential risk to peopleand structures.

When a particular tree or group of trees is suddenly missing,the focus–and value–of a property's landscape design may be lost.In addition to their aesthetic benefits, trees provide naturalenhancements, such as shade and privacy, while also acting as windbreaks and reducing storm water runoff that might otherwise destroya property or threaten the health of nearby streams andwaterways.

Like any other insurance appraisal, an accurate and impartialassessment of the value of trees that have been damaged requiresthe right expert. Tree appraisal demands special experience andexpertise in arboriculture, current appraisal methods, andappropriate measures of damages.

Increasingly, insurance professionals are enlisting the help ofRegistered Consulting Arborists, tree industry experts who areamong the most highly trained professionals in arboriculture. Theseexperts, also referred to as consulting arborists, undergointensive training to earn the designation from the AmericanSociety of Consulting Arborists and therefore are highlysought-after resources for the insurance industry.

Components of a Good Tree Appraisal

An insurance tree appraisal typically begins with a consultationwith the adjuster, manager, or attorney handling the case and isfollowed by an on-site inspection and inventory of the damagedtrees. The consulting arborist will consider the species, size,condition, and location of the affected trees.

In the written tree appraisal report, the consulting arboristwill support the appraisal with specific calculations using one ofthe nationally recognized valuation approaches for estimating thevalue of damaged trees and plants. Frequently, the report will showa comparison of value using different appraisal methods.

The replacement cost method, trunk formula method, and the costof cure method are commonly applied to landscape and amenity trees.These methods take a depreciated replacement cost approach tovalue. Depreciation is an important step that recognizes, forinstance, when a dead, dying, or poorly located tree has reducedvalue. Establishing values for damage to orchards or forest standsmay require an income-based approach to determine crop or timbervalue. Similarly, loss to a commercial enterprise may require anincome approach. In other cases, where there may be a loss inproperty value, a market approach may be indicated. Consultingarborists may work with a qualified forester, real estateappraiser, or other expert in some cases.

The replacement cost method is usually applied to trees within asize range normally available through local nurseries. Typically,this method would be used for trees with a trunk diameter up to sixinches.

The tree's value is based on price quotes from various local orregional nurseries for a replacement tree of the same or similarspecies and size, including a one-year warranty. In addition to thecost of the replacement tree, other costs to consider in the finalappraisal include:

• Removal of the damaged tree
• Restoration of the ground around the damaged tree
• Transportation for the replacement tree
• Installation and maintenance for the replacement tree

The trunk formula method is used for trees that are too largefor typical replacement. A skillful application of this methodrequires even greater knowledge, expertise, and judgment than thereplacement cost method.

In applying the trunk formula method, the appraiser starts withthe cost to buy and install the largest, reasonably availablereplacement tree while also factoring in the same costs consideredin the replacement cost method. Then the appraiser calculates aunit cost for such a tree and applies it to the size of the larger,appraised tree to obtain a basic cost. This cost is adjustedaccording to species, condition, and location factors to reflectthe difference between the basic tree cost and the reasonable valueof the appraised tree.

The cost of cure method is most often used when there is damageto hardscape (walks, walls, etc.) in addition to trees. Likereplacement cost, this method can be used for trees of replaceablesize, and like trunk formula, can be used for larger trees. Somearborists prefer to use it to reflect a cure of a functional lossrather than depreciated size-for-size replacement.

For example, a number of trees might be used to cure the loss ofa larger one, or the loss of a large tree in poor condition mightbe cured by replacement with a smaller one. In any case, the finalopinion reflects the reasonable value of the appraised tree and anyhardscape loss.

Professional Judgment

Tree appraisal requires more than simply applying a formula in avacuum. Each appraisal must consider the individual claim as wellas state and local laws. Professional judgment is essential.

Consulting arborists encounter a wide range of property ownersentiments surrounding damaged or destroyed trees. The maple treethat shaded decades of family picnics, only to be lost when a drunkdriver swerved off-road; the towering oak that brought characterand beauty to a verdant college quad before being splintered bylightning; a prized historic tree in a small town square, damagedby utility work. While difficult to quantify, such human componentsof value should not necessarily be ignored.

Insurance professionals can render a valuable service to theirclients and policyholders by including the right professional onthe appraisal team to identify reasonable value for damaged trees.Registered Consulting Arborists can help insurance professionalsidentify and document, reasonable tree values in a wide range ofcases.

Scott Cullen is a Registered Consulting Arborist inConnecticut.