How To Detect Price Gouging in Tree Claims

In the days following tornadoes, hurricanes, severe storms, and other catastrophic (CAT) events, it’s not uncommon to see attorneys general issue warnings about tree care companies and price gouging—with good reason. 

A quick Google search elicits pages of results that detail settlements, payouts, or pending lawsuits regarding price gouging by unethical tree care companies. The National Council of State Legislatures (NCSL) defines “gouging” as increasing prices for necessities after disasters or declarations of states of emergency. 

Adjusters shouldn’t ignore these warnings or media coverage because such practices could happen in the regions they cover for property claims. It is not uncommon for tree care companies to form “storm chasing networks” and converge on areas after a CAT event. These bad actors charge exorbitant prices for emergency tree removal work, use expensive, specialty equipment on every job, regardless of need, and they place mechanical liens on properties if carriers refuse to pay their invoices. 

But vigilance during claim reviews and working with reputable vendors can help keep price gouging at bay. 

Indicators of Predatory Pricing Practices 

While evaluating the details of a claim or looking into a company’s business practices, adjusters should keep an eye out for certain indicators that may suggest the presence of predatory pricing. 

These signs include, but are not limited to: 

• Charging eight-hour minimums regardless of the amount of time spent at the site 
• Billing for every piece of equipment, such as traffic cones, hammers, saws, and other items 
• Billing debris haul-off as a fixed percentage of the cost to remove a tree from a structure, regardless of actual labor and equipment costs 
• Including hidden fees, such as administrative costs, emergency call-out fees, etc. 
• Charging high hourly rates for owned equipment 
• Deceptive practices, such as providing a price list, rather than an actual estimate, to the insured 
• Submitting an excessive number of photos in an effort to create confusion and overwhelm reviewers with information 
• Embedding costs for non-insurance work in tree removal bills 

Price gouging may appear as a tree care company billing for use of common items like traffic cones. Reviewing invoices and questioning charges can help prevent this predatory practice. 

Some companies even lean on technology in hopes of legitimizing aggressive pricing. They will develop business tools and billing software, or hold business classes, with the sole intent of increasing revenue. Any time there are unnecessarily high line items in a tree claim, adjusters should question what led to their inclusion and if they were legitimate or not. 

The lack of a unified federal standard outside of the Occupational Safety and Health Administration’s (OSHA) general guidelines also leaves the tree care industry prone to “bad actors” who are unethical and take advantage of homeowners during CAT events. Best practices, licensing requirements, and certification obligations largely vary from state to state, which means that there is little oversight of vendors who try to unethically inflate their cost estimates. 

However, careful review on the part of adjusters and managers can help prevent price gouging in tree claims. 

Preventing Price Gouging in Tree Care Claims  

Education and research are the cornerstones of deterring dishonest practices that can negatively affect policyholders, carriers, and the green industry. 

Adjusters and managers can share information among themselves and with policyholders to help dissuade bad actors from following through on unethical activities. Consider distributing an informational newsletter or handout that details warning signs of artificially inflated pricing.  

Tree care companies that follow OSHA, industry, and state guidelines or statutes are considered more reputable and trustworthy. 

A more proactive approach would include setting thresholds for pre-approval or advising insureds to take their own photos of tree-related damage and the tree removal process. 

If unscrupulous practices are noted after a claim has been filed, adjusters can urge policyholders to file a complaint with their state attorney general. A majority of states, four of the five inhabited U.S. territories, and the District of Columbia, have statutes or regulations related to price gouging across industries, not just tree care. Penalties could be civil or criminal, depending on the state or territory. 

Just remember, the ability to hold companies accountable through the legal system doesn’t negate the fact that the industry itself operates without standards of professionalism and without a single, specific federal standard. 

This means the best-case scenario would be to cut off price gouging in tree claims at the origin.  

Managers and carriers can engage with reputable vendors, such as HMI, which has its own vendor network in which 100% of participating companies have certified. 

HMI has a reputation for ensuring ethical practices in emergency tree work, and they publish their own tree removal cost guide annually. They also specialize in emergency tree removal, tree removal estimate reviews, outdoor property consulting, and disaster response solutions for the insurance and risk management industry.  

To partner with HMI, which is committed to providing fair, transparent, and market-based pricing, submit an assignment today. 

Alpine Intel’s content is meant to inform and educate readers using general terms and descriptions. They do not replace expert evaluations that determine facts and details related to each unique claim.