I recently contacted an attorney for legal advice for a similar situation due to subdivision developers clearcutting everything in sight right up to our forested property line. Here is what he said:
I am responding to the legal inquiry you recently submitted to our firm. Due to recent development around property adjacent to partially forested land you own, you have inquired about any potential legal liability to you should a tree fall on neighboring property.
Normal negligence law would apply in this case. Should a tree located on your property cause damage to neighboring property, the homeowner’s insurer for the damaged property would be responsible. That insurance company may seek subrogation from you for amounts paid to remedy the damage. You may be liable if you knew or should have known of damage to the offending tree that made it susceptible to collapse. For example, let us assume the tree is dead or dying from insect infestation and that the infestation has rendered the tree unstable and susceptible to collapse. In this situation you may be liable to repay the insurance company who satisfied the damage claim, particularly if the deterioration of the tree was readily apparent.
On the other hand, should a perfectly healthy tree or even an unhealthy tree with no apparent problems fall on neighboring property, it is unlikely that you would be responsible. In any case, you would also want to turn any claim for subrogation over to your insurance company for a defense and coverage. Whether your insurance company would provide a defense and coverage would depend of course on the terms of your own policy. Insurance policies, as you may suspect, have many exclusions and exceptions to coverage. Absent reviewing your own policy, I cannot comment as to whether the policy would provide coverage in this scenario. You may wish to consult with your agent or you are welcome to provide me the policy to review.