LOS ANGELES -- Despite reassurances from state officials, homeowners in Southern California might have plenty to worry about when it comes to home insurance.
With damage estimates reaching $1 billion Wednesday, homeowners fear that insurance companies will raise rates or even cancel policies in the wake of the fires.
State officials and consumer advocates say that's not likely, but the scope of the fires and past tussles with insurers make many Californians skeptical.
Officials say they'll be able to rein in rates, pointing out that insurance in California is highly regulated, and authorities aren't likely to approve any increases in premiums, especially after pushing companies to reduce premiums this year.
Also, California remains the nation's largest market for homeowner insurance, which is a profitable business despite the risks.
That didn't stop Allstate Corp., the United States' second-largest property-casualty insurer, from announcing earlier this year that it no longer would underwrite new California homeowner policies, citing wildfire and earthquake risks. The company also seeks a 12 percent rate hike for existing customers.
Major insurers are inspecting homes in high-risk areas throughout the West and are threatening to cancel coverage if owners don't clear brush or take other precautions.
"Yeah, it's pretty worrisome. They might start not insuring us, that's pretty scary," said Bruce Fowler, a resident of San Diego's Scripps Ranch neighborhood who was evacuated to Qualcomm Stadium this week.
Fowler's home narrowly escaped destruction in 2003, the last time fires swept Southern California with such ferocity. More than 3,600 homes were destroyed then, and insured losses surpassed $2 billion, according to the Insurance Information Institute.
So far, about 1,500 homes have been lost across Southern California because of the fires. The number is expected to rise.
Insurers said they have sufficient reserves to pay claims likely to surpass $1 billion.
"Insurance companies are in the business of taking these types of risk," state Insurance Commissioner Steve Poizner said.
Poizner said he has talked to several insurance company chief executives in recent days and has been assured they are taking steps to pay claims swiftly.
Wednesday, he declared an insurance state of emergency, allowing out-of-state claims adjustors not licensed in California to come to the state to handle claims.
But the likelihood of companies taking a harder look at underwriting and pricing policies increases with the price tag of the fire, said Donald Light, a senior analyst with Boston-based financial consultant Celent. "The higher the final reckoning, the more likely companies are going to act."
Recent insurance history reinforces the skeptics' view.
California had to form a special authority to sell earthquake coverage when insurers threatened to leave after the 1994 Northridge earthquake.