The policy covers trees up to $500 ea. if destroyed by fire.

The insured has other structure coverage with a limit of $10,000.00. The insured has a tree house which is bolted and nailed into a 40' tree. The tree house and tree are destroyed in a fire.

The carrier agrees that the tree house is "other structure". The insured agrees that the treehouse would cost $2800 to rebuild, not counting the tree.

Would you

a) pay for the treehouse and only $500 for the tree?

b) pay the full value of the tree and the $2800 because the tree was part of the "other structure" and the insured would not be restored to the pre loss condition if they only got enough money to build the structure to sit on the ground?

c) refuse to pay more than $500 for the tree but pay for additional framing and engineering that would allow the treehouse to be 20" up in the air, as high as it was in the tree?

d) other

There's a whole lotta "hurt" in the world.
With impartial, unemotional clarity, the adjuster surgically removed the non-payable portion of the loss from the loss settlement.

Leland, as you know from your time with State Farm, they (and many of the better carriers) might consider the "amount beyond a special limt" portion of the loss as a damage resulting from a covered peril that will go toward the deductible. There was an old thread on that subject, absorbing the deductible. Sometimes that aspect can help a lot.

I am not referring to "bury" the deductible, or anything unethical. It is like a $10,000 item that is stolen, but subject to a special limit of $2,500. It's a covered loss, and the payment is $2,500 but the deductible is not taken. It is absorbed by the amount of COVERED damage beyond a special limit.

I remember a claim I had years ago where an 18 wheeler in a parking lot took out a big tree.  We got estimates for big bucks to replace a full grown tree, as a 3rd party claim.  Next year there was a little seedling in it's place - nobody plants a huge tree back, but it has value.

Gotcha on all that - and again nice to see you at the NFIP thing.

So many things in life are negotiable. Some of this will always depend on the guy sitting at the desk who writes the checks. We make our recommendations.

What is odd to me, is that I report to so many different carriers over the years and watch them respond differently. I had one pay a water damage that had been leaking for years, another has very strict interpretation of long-term at 14 days.   Some carriers are deeply concerned about customer satisfaction, and some aren't.

But on the trees, for first party, 99.9% of claims examiners would not consider a dime over the special limit. Beyond that it can help absorb the deductible, but they can't issue payment beyond that special limit.

Caring deeply about customer satisfaction is not a bad thing, until the provisions of the policy are stretched too far and too often, and a precedent is established.  Just thinking out loud, what if it was a hammock stretched between 2 trees and they burn down.  A hammock between 2 shady trees is certainly alot nicer though than if it's between 2 posts, and it is not a structure like your example.  In that type of situation, there would not be any debate, I'd hope...and the presence of a treehouse shouldn't change the interpretation of limitations placed on trees.  I think it was said best, when said let the carrier/check-writer decide and then live with it.  It's little things like that that auditors stumble across and like to make an issue of.         

One issue that needs to be addressed as well is the value of all "other structures" on the property for as we all recall coverage limits are applied proportionately to the value of all "other structures" on the property. Any applicable deductible would easily be absorbed by the tree loss.

Usually 10% of the main structure limit is available for non-scheduled other structures (and of course that amount can be increased for an increased premium).

If the main dwelling is insured to value, and they exhaust the 10% available to other structures, then that is all they will receive. In that scenario I have not seen a co-insurance penalty applied, or any proportional adjustment. Pay the loss up to the limit for other structures.  I have had many claims where the main house was insured to value, and the other structures were grossly underinsured.  It's common.  But there isn't a penalty for it until you simply run out of money and the 10% limit is gone. 

Some Farm and Commercial policies will allow zero for non-scheduled structures, but that's different.

I have worked commercial claims for car dealerships where you count the inventory and pay percentages based on current value...   but that wouldn't be a tree claim scenario.

Auto hits large tree fights will always be around on 3rd party liability claims. In 04 I worked the West Palm Beach loss on the Zoo and it was a zoo. Saw something I had never seen before many palm and ficus trees were blown over with the large root ball exposed. A large tree company cut most of the canopy limbs back by about 1/3 used a square spreader bar with a 150 ton rubber tire crane with a zillion web slings and set the trees back up and they all lived and seem to flourish from the "root stimulation". No tree coverage and all this was on their dime. My tall 4 in 4 story.

A great example of how people become more "Reasonable" when it is their money that is on the line.

If those trees were blown over because of an explosion at your chemical plant next to the zoo, I'm sure the same owner would be asserting they were a total loss.