Errors & Omissions Coverage for Tree care Companies
From the October issue of TCI Magazine. Read the magazine online!

By Mike Rook

Does this situation sound familiar? Joe’s Tree Care Service was called to perform a tree removal from the property at 2 Smith St. The homeowner told Joe the tree he needed removed was on the property line with the home located at 4 Smith St. The homeowner stated the tree being removed was on his property so Joe went ahead and took the tree down.

Two weeks later Joe received notification of a lawsuit against him, stating that he wrongfully removed the tree without the true owner’s permission.

This happens more times than you might think. This is deemed to be an intentional act and is an “Error and Omission” (E&O) on the part of the tree care company. Most standard General Liability insurance policies exclude coverage for intentional acts, or Errors and Omissions. The exclusion also extends to taking down too many trees, removing the wrong tree, and any type of consulting. This exclusion applies to all types of work performed by the insured and can be very damaging to a company if they are unaware of the exclusion.

Some General Liability policies that do include coverage for E&O only provide limited coverage or minimal limits of liability. Your E&O coverage limit should be $1 million and nothing less because the cost of these types of claims can be surprisingly high. The devaluation of a residential property due to diminished privacy can be quite high in some affluent neighborhoods. Some towns actually have laws or ordinances that protect trees from being removed without an approval from city hall. Some policies also only provide limited coverage for tree work only and do not cover any landscape, lawn maintenance or pesticide work.

Consulting is another area of concern when talking about E&O coverage. Almost all E&O coverages exclude or fail to mention “consulting” and the exposures that exist for an arborist. Consulting can be as simplistic as offering professional advice about a tree or as complicated as offering valuations on damaged trees or acting as an expert witness in a trial. Whatever the type of consulting you perform and the amount of consulting, you should have proper coverage for all the services you offer.

How to reduce the likelihood of an E&O claim

To reduce the likelihood of an E&O claim, work with an experienced insurance agent that knows the tree care industry, the exposures you face and the coverages you need. Also, know the local laws and ordinances pertaining to tree removal. Get written permission from the property owner, and check with the adjacent property owner(s) to confirm property lines. If you cannot get written permission and confirm the property line, do NOT perform the work.

Mike Rook, CPCU, is the ArborMAX program manager for General Agency Services.