Ask Mike
# 09-06
Subject: Trees and the Homeowners Policy
Q. Our Personal Lines Department is trying to come up with a streamlined, simplified
summary of how the Homeowners Policy responds to various types of losses involving
trees. As we see it, the two main issues are: (1) how much the policy pays for the trees
themselves (as covered property), and (2) how much debris removal coverage is
provided. However, we get a little confused when we look at specific situations, such as
why a tree falls, where it falls, and what it hits (if anything). For example, how does
coverage apply if the tree falls due to windstorm vs. lightning vs. insects (such as borer
beetles)? And what if it falls onto the house, or just the driveway, or only in the yard?
For that matter, does the tree have to fall to be covered? Under what circumstances
does the policy pay debris removal of trees? Lastly, how is the deductible applied? Any
help you can provide would be greatly appreciated.
A. My hat is off to you for having laid out virtually all the seemingly convoluted issues
with trees. As I was reading your question, I was thinking that all these issues involving
trees actually look more like a twisted Wisteria vine! Since you’re looking for something
that can serve as a quick reference document for the staff, see the Summary section at
the end of this coverage analysis.
First, as a quick overview, here are two excerpts from the HO-2000 policy that provide
policy language regarding trees.
Excerpt #1 deals with your first question, about how much the policy pays for the trees
themselves.
E. Additional Coverages
3. Trees, Shrubs And Other Plants
We cover trees, shrubs, plants or lawns, on the "residence premises", for loss caused by the
following Perils Insured Against:
a. Fire or Lightning;
b. Explosion;
c. Riot or Civil Commotion;
d. Aircraft;
e. Vehicles not owned or operated by a resident of the "residence premises";
f. Vandalism or Malicious Mischief; or
g. Theft.
We will pay up to 5% of the limit of liability that applies to the dwelling for all trees, shrubs, plants or
lawns. No more than $500 of this limit will be paid for any one tree, shrub or plant. We do not cover
property grown for "business" purposes.
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This coverage is additional insurance.
Excerpt #2 deals with your second question, about debris removal.
E. Additional Coverages
1. Debris Removal
a. We will pay your reasonable expense for the removal of:
(1) Debris of covered property if a Peril Insured Against that applies to the damaged property
causes the loss; or
(2) Ash, dust or particles from a volcanic eruption that has caused direct loss to a building or
property contained in a building.
This expense is included in the limit of liability that applies to the damaged property. If the
amount to be paid for the actual damage to the property plus the debris removal expense is more
than the limit of liability for the damaged property, an additional 5% of that limit is available for
such expense.
b. We will also pay your reasonable expense, up to $1,000, for the removal from the "residence
premises" of:
(1) Your tree(s) felled by the peril of Windstorm or Hail or Weight of Ice, Snow or Sleet; or
(2) A neighbor's tree(s) felled by a Peril Insured Against under Coverage C;
provided the tree(s) :
(3) Damage(s) a covered structure; or
(4) Does not damage a covered structure, but:
(a) Block(s) a driveway on the "residence premises" which prevent(s) a "motor vehicle", that
is registered for use on public roads or property, from entering or leaving the "residence
premises"; or
(b) Block(s) a ramp or other fixture designed to assist a handicapped person to enter or leave
the dwelling building.
The $1,000 limit is the most we will pay in any one loss regardless of the number of fallen trees.
No more than $500 of this limit will be paid for the removal of any one tree.
This coverage is additional insurance.
Issue #1: Tree as covered property. As you can see in Excerpt #1, the Homeowners
Policy considers “trees, shrubs and other plants” to be a class of property which is
covered by the policy. However, they are covered for only the 7 perils listed in a. – g:
fire, lightning, explosion, riot or civil commotion, aircraft, vehicles not owned or operated
by a resident of the resident premises, and vandalism or malicious mischief, or theft.
And regarding your question about whether or not the tree has to fall in order to be
covered, note that the form language only refers to “loss caused by”…perils a. – g. In
fact, a tree stuck by lightning, or damaged in a fire (often in conjunction with a house
fire), more often than not does not fall, but it is clearly damaged (thus a “loss”).
In addition, the list of 7 covered perils does not include borer beetles (such as pine
beetles, ash borer beetles, etc.), or any other insects. And, to the dismay of every
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homeowner who experiences a windstorm or hurricane, windstorm is not a covered
peril.
While trees are covered property under the Homeowners Policy, and are covered for
damage caused by the 7 perils, there is a limit as to how much is payable. The last
paragraph in Excerpt #1 provides a total aggregate limit for trees of 5% of the limit that
applies to the dwelling (Coverage A), with a sublimit of $500 per tree. For example, if
Coverage A is $200,000 – there would be up to $10,000 available for all covered tree
losses, but no more than $500 for any one tree.
Lastly, note the last sentence in Excerpt #1: “This coverage is additional insurance.” If
the insured’s home was completely destroyed by fire, for example, and the entire
$200,000 Coverage A limit was paid, there would still be available the additional
$10,000 aggregate limit for covered fire damage to trees (but only $500 per tree).
Issue #2 – Debris Removal. Refer to Excerpt #2 for policy language that governs
debris removal coverage. There are several situations described in this provision,
discussed below.
Debris Removal Situation #1: Trees damaged by one of the 7 perils listed in a. – g. in
Excerpt #1. In the coverage grant for debris removal in section 1.a. of Excerpt #2,
coverage applies as follows: “We will pay your reasonable expense for the removal of:
(1) Debris of covered property if a Peril Insured Against that applies to the damaged
property causes the loss.” The short version of debris removal coverage is that it
applies for removal of debris from covered property, damaged by a covered peril.
Therefore, if trees (covered property) are damaged by one of the 7 covered perils listed
in a. – g. of Excerpt #1, then debris removal coverage applies.
However, as with any covered loss (not just to trees), debris removal coverage is
limited. In the first sentence of the last paragraph of Section 1.a. in Excerpt #2, the
following limitation is stated: “This expense is included in the limit of liability that applies
to the damaged property.” Thus, the Coverage A limit on the dwelling ($200,000 in our
previous example) includes not only the value of the house itself, it also includes the
expense for removing the debris. For example, if the house sustained a fire loss of
$50,000 and $25,000 in debris removal expenses, the policy pays $75,000. Thus, the
value of the damage to the home, plus the debris removal costs, are included in
Coverage A.
Likewise, the $500 that is available for the value of any one tree (Excerpt #1), includes
not only the value of the tree, but the debris removal of the tree as well. (Recall that
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trees are only covered for damage by the 7 perils.) In addition, the 5% of Coverage A
that is available in the aggregate for the value of all trees ($10,000 in our example), also
includes both the value of all the trees, and their debris removal expenses.
The debris removal provision does have a small amount of extra coverage, however, as
stated in the second sentence of the last paragraph of Section 1.a. in Excerpt #2: “If the
amount to be paid for the actual damage to the property plus the debris removal
expense is more than the limit of liability for the damaged property, an additional 5% of
that limit is available for such expense.” [Emphasis added.]
If the value of the covered loss plus debris removal expenses combined exceeds the
limit of liability for the damaged property, the policy provides an additional 5% of “that
limit” for debris removal expenses. Thus, in the case of a total loss to the house, the
policy would pay the full Coverage A limit of $200,000, with an additional 5% of the
Coverage A limit ($10,000 in this case) available for additional debris removal
expenses. If the cost of debris removal following a total loss to the house was $30,000
– bringing the total expenses to $230,000 – the policy pays $210,000 ($200,000
Coverage A + $10,000 [5% of Coverage A] additional debris removal expense). Note
the last line at the end of Excerpt #2: “This coverage is additional insurance.”
However, in the case of covered damage to trees, 5% of the tree limit (which is $500
per tree) would only be $25 per tree towards debris removal. In the case of multiple
trees damaged, recall that the aggregate limit for damage to trees is 5% of Coverage A,
which is $10,000 in our example. Thus, 5% of “that limit” (5% of $10,000 = $500)
applies for additional debris removal expenses of all damaged trees. (Recall once
again that in this part of the discussion, debris removal coverage only applies if the
damage is caused by one of the 7 perils in Excerpt #1 – covered property damaged by
a covered peril).
Debris Removal Situation #2: Trees damaged by other than one of the 7 perils listed in
a. – g. in Excerpt #1. In Excerpt #2, Section 1.b., debris removal coverage is provided
up to $1,000 aggregate, specifically for debris removal of trees (further limited to $500
per tree). Section 1.b. broadens this standard provision of debris removal to include
removal expenses for trees damaged by perils other than those that normally apply to
trees – which are the 7 perils in a. – g of Excerpt #1. This additional coverage must be
specifically added, since standard debris removal coverage only applies to covered
property which has been damaged by a covered peril.
Note in Section 1.b. of Excerpt #2 that subsection b.(1) provides expenses for debris
removal of the insured’s own trees, if the trees are felled by Windstorm, Hail, Weight of
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Ice, Snow or Sleet. In subsection b.(2), removal expenses are provided for neighbor’s
trees if they are felled by any of the perils that apply to our insured’s Coverage C.
However, debris removal of these trees is provided only if the trees damage a covered
structure [section b.(3)], or they block a driveway [subsection (4)(a)], or a handicap
access ramp [section (4)(b)]. Note that a “covered structure” includes not only the
dwelling, but any other structures on the residence premises, such as a detached
garage, workshop, greenhouse, gazebo, fence, mailbox, etc.
Debris Removal Situation #3: Tress that are blown down in the yard. This one gets
insureds riled up. In this situation, there is no coverage for the value of the tree, or for
the removal of the tree. While trees are covered property, they are covered only for
damage caused by perils a. – g. in Excerpt #1. As to debris removal for trees felled by
windstorm, section 1.b. of Excerpt #2 only pays the $500/$1,000 debris removal
expense if the trees damage a covered structure, block the driveway or block a
handicap access ramp. So if a tree is merely blown down in the yard, no debris removal
coverage applies.
Debris Removal Situation #4: Debris Removal vs. removal of debris. Removing a large
tree is surprisingly expensive, and the Homeowners Policy provides meager amounts
toward that expense. In the case where a very large tree has been blown onto a house,
a mobile crane is often necessary to lift the tree off the house, which can run into many
thousands of dollars. For that reason, it is important to distinguish between “debris
removal coverage” and the costs of removing debris.
The Debris Removal provision for trees felled by windstorm (Excerpt #2, section 1.b.)
pays for “reasonable expense, up to $1,000, for the removal from the residence
premises." [Emphasis added.] However, most experts believe that in the case of a large
tree falling onto the house, which must be moved off the house by a crane in order to
repair the house, such expenses to simply get the tree off the house are covered, and
are not limited to the $500/$1,000 limit. Here, the large tree isn’t “removed from the
residence premises,” but is simply removed from the house, and dropped into the yard,
to facilitate repairs. One additional argument supporting this view is found in the
Section I Conditions – Duties After Loss, which requires the insured to “protect the
property from further damage…” and “…make reasonable and necessary repairs to
protect the property.” There is no limit in the policy for that expense, subject only to the
policy limit for Coverage A (which includes debris removal expenses). However, the
costs to remove the large tree (that is now laying in the yard) from the premises would
be subject to the $500/$1,000 limit.
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Issue #3 – Deductible. The Section I deductible applies to any and all losses involving
trees (as property), and tree debris removal expenses, discussed above. In the HO2000 policy, a Deductible clause was added, which had not appeared in previous
editions of the Homeowners Policy. However, prior to this, the declarations page did
have a deductible statement that was essentially incorporated into the HO-2000 polices,
as follows: “Subject to the policy limits that apply, we will pay only that part of the total
of all loss payable under Section I that exceeds the deductible amount shown in the
Declarations.” However, in losses where a policy sublimit applies, as is the case with
trees, care must be used to apply the deductible properly. Here are two examples.
Deductible example #1: Lightning damage. A large tree is hit by lightning. A new tree
costs $800, and the debris removal expenses are $2,500. The policy has a $500
deductible.
Since lightning is one of the 7 perils covered for damage to trees (see Excerpt #1), up to
$500 is available for a new tree. (Up to 5% of Coverage A is available in the aggregate
for new trees.) Since the Debris Removal provision applies to damage to covered
property by a covered peril (see Excerpt #2, section 1.a.) the limit that applies for trees
($500 for one tree) includes debris removal expenses. In addition, an additional 5% of
the limit for trees (5% x $500 = $25) is available for additional debris removal expenses.
Loss payment calculation: Covered loss ($800 + $2,500 = $3,300) – deductible ($500)
= $2,800 payable, subject to sublimits. Amount paid is $525 ($500 maximum for the
tree and debris removal, plus an additional $25 for debris removal). The deductible has
been absorbed in the loss, and is not subtracted from the $525.
Deductible example #2: Tree blown down onto the house by a windstorm. A large tree
is blown down onto the house. A new tree costs $800, and the debris removal
expenses are $2,500 to remove the tree from the premises. In addition, it costs $9,000
to repair the roof damage, $ 5,000 to remove the tree from the roof with a crane. The
policy has a $500 deductible.
First, note that windstorm damage to trees is not covered (trees are only covered by the
7 perils a. – g. in Excerpt #1), so none of the cost for a new tree is covered.
Loss payment calculation: Covered loss ($9,000 + $5,000 + $2,500 = $16,500) –
deductible ($500) = $16,000 payable, subject to sublimits. Amount paid is $14,500
($9,000 + $5,000 + $500 (sublimit for removal of the tree from the premises). The
deductible has been absorbed in the loss, and is not subtracted from the $14,500.
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Deductible example #3: Tree blown down into the yard by a windstorm. A new tree
costs $800, and the debris removal expenses are $2,500. The policy has a $500
deductible.
First, note that windstorm damage to trees is not covered (trees are only covered by the
7 perils a. – g. in Excerpt #1), so none of the cost for a new tree is covered.
Loss payment calculation: Amount paid is $0 – no debris removal coverage for
windstorm damage to trees that did not damage a structure, or block a driveway or
handicap ramp.
Issue #4: HO-2000 vs. HO-91. There are only two differences between these two
editions of the Homeowners Policy, and both deal with debris removal for trees felled by
windstorm, hail, etc.: (1) HO-91 provides $500 total, while HO-2000 provides $500 per
tree, with an aggregate of $1,000. (2) HO-91 only covers debris removal for trees that
damage a covered structure, while HO-2000 also covers if the tree blocks a driveway or
handicap assist ramp.
Summary: Key point #1 – Coverage for the value of a tree. Trees are covered as
property only if damaged by fire, lightning, explosion, riot or civil commotion, aircraft,
vehicles not owned or operated by a resident of the "residence premises," vandalism or
malicious mischief or theft. Limit $500 per tree, aggregate limit of 5% of Coverage A.
Key point #2: Debris removal. (A) For trees damaged by one of the 7 perils listed in
Key Point #1, the limit of $500 per tree/aggregate of 5% Coverage A, includes debris
removal expenses. An additional 5% of that limit is available for additional debris
removal (5% of $500 = $25, or 5% of the aggregate limit for all trees).
(B) For trees damaged by other perils such as windstorm, etc., the policy pays
$500/$1,000, so long as the tree damages a covered structure, or blocks a driveway or
handicap assist ramp. If a tree simply is blown down in the yard, nothing is payable for
debris removal.
By the way, there is an excellent article on the IIABA Virtual University which discusses
trees and debris removal issues in detail, titled “Debris Removal and Trees.” You can
access the VU from our web site (www.iiabl.com). The articles on the VU are free to all
members, but an ID and password are required to log on. Just follow the instructions on
the VU home page. In conclusion, all this discussion of the ins and outs of tree
coverage makes one wonder: If a tree falls in the forest, how does the insurance
apply?!
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