Will Homeowners Get Burned Again?

The smoke had barely cleared when insurance adjuster Dan Gil began working on claims, CBS News correspondent John Blackstone reports.

"This house is a total loss," he said about one burnt-out estate.

He's part of an army from every major insurance company that moved quickly into southern California, even hanging out some early checks.

Consumer advocates say the industry's initial response to disaster is usually good - but that can change.

"As you get further away from the disaster, the insurance companies seem to get tighter and tighter as they squeeze harder and harder," said taxpayer and consumer rights advocate Doug Heller.

From wildfires to landslides to earthquakes insurance companies face plenty of risks in California.

Still the state's a huge population has given companies $6 to $7 billion in profits in the last three years.

And nationally the industry made nearly $65 billion last year alone.

But there have also been some record payouts:

  • Hurricane Katrina - $42 billion (2005)
  • Hurricane Andrew - $22 billion (1992)
  • The World Trade Center - $21 billion (2001)
  • The Northridge Earthquake - $17 billion (1994)

    Compared to that, the estimates for the Southern California fires are barely a blip.

    So even if the insurance companies had to pay $1 or $2 billion for these fires, they'd still be making money?

    "There's plenty of money in the insurance companies' coffers here in California to cover these claims, and still be walking away with several billions of dollars in profits," Heller said.

    In the end all those billions come down to individuals depending on insurance to make things right . And disasters like this remind everyone, eveywhere to check their coverage, because the worst can happen.

    • John Blackstone

      From his base in San Francisco, CBS News correspondent John Blackstone covers breaking stories throughout the West. That often means he is on the scene of wildfires, earthquakes, floods, hurricanes and rumbling volcanoes. He also reports on the high-tech industry in Silicon Valley and on social and economic trends that frequently begin in the West.