Update 1/6: They will pay me for it. Now is just a question of how much. I am in the process of gathering together documentation from nadaguides.com and autotrader.com to figure out a general price. Then adding on the price of my new tires and rims and the 2" lift. I will ask them for $4300 which I think is fair replacement value.
They told me that the whole thing is very complicated. The tree was on city property, but the landscapers messed up and cut its roots, so there are two insurance companies involved. I told him that it's not my problem, and I just wanted their insurance company to pay me out first. Then they can do whatever they want with the other parties involved, which he agreed.