What Happens When Insurance Companies Flee California Fire Zones?

SACRAMENTO (CBS13) — "It's a scary thing each summer when you know it's that time of year, you have that idea in mind...you see the wind, and it's a hot day," said Sarah Fugate.

"Within the last four years we've had four forest fires visible from our house," her husband Tom said.

Their house in the foothills of Placer County is located in a high fire danger zone. But Sarah and Tom Fugate say their property carries a low-fire risk.

"In addition to keeping the local premises free we also have a house that is 95 percent stone," Tom said.

They say that design and defensible space has kept their house from burning down. But it hasn't stopped their insurance provider from canceling their policy, after 15 years.

This is going to be a problem that's going to continue to persist," said Senator Ricardo Lara (D-Bell Gardens).

Lara says he's heard from hundreds of homeowners like the Fugates when their insurance companies bail. Now he's proposing legislation that bans those insurers from denying coverage in disaster areas.

"What you'd probably see is insurance companies no longer writing in the state," said Kara Cross, general counsel for the Personal Insurance Federation of CA.

Kara Cross represents insurance companies. She says they won't stay in California if it doesn't pay off for them.

"If they're not able to be responsible to all consumers and be solvent, then you're not going to have that much insurance in the state," she said.

"Essentially that's what's happening now. What happens is people are already being relegated to secondary insurance products which don't have the same protestations that we have here in California," Lara said.

That's what happened the Fugates. They've since found a new homeowner insurance company.

But there's a catch. Their premium is 45 percent higher than what they previously paid.