Trim the Risk: Professional Liability for Tree Care Companies

Author, Rory Anderson, Partner, Account Executive, Rancho Mesa Insurance Services, Inc.

Whether you have a consulting arborist on staff or not, every tree care company has a professional liability exposure. Your general liability policy will likely exclude professional liability claims. A misdiagnosis of tree disease, damage to property, or an injury resulting from an error or miscalculation can be extremely costly. So, it is important to understand the risk, then make a decision on whether or not you would like to transfer that risk by purchasing a professional liability policy.

Many tree care companies have certified arborists on staff that offer consulting and expert advice related to the health, safety, and management of trees. This type of work clearly has the highest need for professional liability insurance to cover any errors or incorrect advice that leads to financial loss, property damage, or bodily injury. A professional liability insurance policy would help protect the arborist by covering legal defense costs, settlements, or judgements if the arborist is found liable for errors or omissions related to their consulting work.

If you do not have a certified arborist on staff and you are simply performing tree care contracting work, you still have exposure to professional liability. General liability policies are in place to cover third party property damage and bodily injury that occurs as a result of your work. They do not, however, cover your work itself. If your tree care business removes the wrong tree or the tree that you pruned died from over-pruning, and your client sues for the cost of the tree and emotional distress, you would need faulty workmanship coverage to cover your work. For many of these instances, you may choose to absorb these costs internally; but, if the mistake was on a mature and rare tree, paying out of pocket may severely impact your balance sheet.

Although there are more examples, these are the two main professional liability exposures that tree care companies face. In a field as specialized as tree care and arboriculture, protecting your business is crucial.

Talk with your insurance agent about purchasing a professional liability policy to transfer your risk and give yourself peace of mind, knowing that you are covered for any unexpected or unpleasant surprises.

If you have any questions, please reach out to me at (619) 486-6437 or randerson@ranchomesa.com.

Top Three Professional Liability Exposures for Tree Care Companies

Author, Rory Anderson, Account Executive, Rancho Mesa Insurance Services, Inc.

Professional tree care companies must have a general liability policy that will cover incidents that cause bodily injury or property damage resulting from their operations. However, there are situations that will not be covered under a typical general liability policy and would require professional liability coverage, or, in the tree care industry it would specifically be Arborist Errors and Omissions coverage. Here are three exposures that tree care companies face that a professional liability policy would address.

Tree Work

At times, tree care companies could inadvertently remove the wrong tree or prune a tree incorrectly causing various issues. As a result, the client may bring action against the tree care company for a number of reasons, including:

• The loss of the intrinsic value the tree provided – shade, design, look, etc.;

• The dollar value of the tree for replacement;

• Mental distress suffered by the client.

Adjacent Trees

A professional tree care company can also be held responsible for damage caused by a failed tree that they did not even touch, but was on or nearby a recent jobsite. To be held liable for a failed tree (when a tree experiences structural collapse or breakage of any part of the tree: trunk, roots, or limbs) that they did not perform work on may seem unfair, but the client may claim that the arborist is the specialist and has a responsibility to point out any trees on a jobsite that could be dangerous.

Professional Tree Advice (Consulting)

Most tree care companies have a certified arborist who offers tree consulting and will give a professional opinion on whether or not a tree is safe.  This leaves the tree care company potentially responsible in the event a tree that was deemed safe actually fails and causes property damage, or even worse, bodily injury to a human.

Tree work, adjacent trees and consulting are three common exposures not typically covered by a general liability policy; therefore, professional tree care companies must strongly consider some form of professional liability coverage. Work with your trusted insurance advisor and have them thoroughly assess your exposure to these concerns.  To learn more about professional liability coverage for the tree care industry, listen to our StudioOne™ Safety and Risk Management Podcast Episode 99.

Contact me for a complete risk analysis of your operations at randerson@ranchomesa.com or (619) 486-6437.

Optimizing Risk Management While Reducing Gaps in Coverage

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

Working within the construction unit at Rancho Mesa for over 15 years, I have developed strong long-term business relationships with my clients. As an insurance advisor, I have an obligation to insulate clients from exposures and liabilities. Many of which may remain the same from year to year. However, it is vital that business owners meet with their insurance advisor frequently, especially prior to an insurance renewal, to avoid potential gaps in coverage.  Below are a few key topics that should be reviewed on a regular basis by a company’s insurance advisor. 

Review and Discuss Business Operations

It’s always a good business practice to have the insurance advisor review the business’s operations to see if there have been any changes that could affect its risk profile.  For example, I once had a client in the construction industry that specialized in commercial tenant improvement work. The company wanted to start a residential construction division. By understanding this change before it actually took place it provided us the time to adequately access the differences in the insurance exposures between the commercial and residential marketplace.  As a result, we were able to proactively and affordably place their coverage with an insurance carrier that was comfortable with both exposures.

Review Financial Projections

With the economy fluctuating year to year, it is vital that you meet with your insurance advisor and go over your financial projections for the coming policy term.  These items should include projected; annual sales, payrolls, subcontract costs and any changes in your surety requirements. These factors will help in not only negotiating the most favorable renewal terms for you but help to avoid any unforeseen expenses like a large final audit

Discuss Business Assets

Businesses routinely buy, sell, and upgrade their tools, equipment, and vehicles. While most are conditioned to notify their insurance advisor of any changes, it is always a good business practice to review assets with the insurance advisor at each pre-renewal meeting. It is common that there are items that were either sold (that need to be removed) or new (that need to be added to policies). By reviewing the assets on a regular basis, it minimizes the chance that items are missed and you either are paying premium on an item you no longer have or have an uninsured loss.

Discuss and Revisit Recommended Coverages

Recommended coverages may include an Umbrella, Pollution Liability, Professional Liability, Employment Practices Liability, and Cyber Liability policies. Even if you have discussed these coverages in the past with your insurance advisor and have declined them, they should not assume you will do so again in the future. The business climate is constantly changing; therefore, so are the risks you are facing.  Understanding where you have gaps  in your risk management profile and making informed decisions to either transfer the risk to an insurance carrier (purchase insurance) or retain the risk yourself (don’t purchase insurance) is always a Best Practices standard.

If you would like to discuss and learn more about Rancho Mesa’s proprietary risk management tools and explore our help in developing a Risk Management program based on your specific business needs, you can reach out to me at 619-937-0174.