[Fredricka Whitfield, Cnn Anchor:] A white Ford F-150 from model years 1998 to 2004. It was seen near the spot where the Santiago fires started in Orange County. A $250,000 reward is being offered in this arson case. The huge Santiago fire is now 35 percent contained. It has scorched more than 27,000 acres and destroyed 14 homes. The mandatory evacuation is still in place for some areas. Authorities are sure that this fire was, indeed, arson. And free Georgia's Genarlow Wilson is enjoying his first weekend out of prison in more than two years. Yesterday Georgia's Supreme Court ruled the Wilson's ten-year sentence for having consensual oral sex with another teen amounted to cruel and unusual punishment. Wilson was 17 at the time and the girl was 15. And Florida's Democratic Convention is now under way but the big- name presidential candidates are no where to be found. Only Democrat Mike Gravel showed up. Why? The Democrats are upset that Florida moved its primaries to January 29th, forcing other states to push up their primary date. I'm Fredricka Whitfield. I'll be back with news update in 30 minutes. Here now is
[Your Money. Ali Velshi, Cnn:] Welcome to YOUR MONEY, where we look at how the news of the week affects your wallet. I'm Ali Velshi.
[Christine Romans, Cnn:] I'm Christine Romans. Coming up on today's program, in the aftermath of the California wildfires, everything that you need to know before you call the insurance company about damage to your home.
[Velshi:] Whether it's a fire or some other disaster, plus, the tax revamp that they're building as the biggest ever and how it could play out for your pocketbook.
[Romans:] Why you don't need a mortgage to end up paying for the mortgage crises.
[Velshi:] But first these wildfires we are talking about, they raged across southern California earlier this week and they forced an estimated 950,000 people out of their homes.
[Romans:] Many have returned, some have found little left of their homes. CNN's personal finance editor Gerri Willis is in Rancho Bernardo, California, with more Gerri.
[Gerri Willis, Personal Finance Editor:] Christine and Ali, it is just amazing here. I have to tell you. 1,800 homes demolished. I mean demolished, completely leveled here. Estimates of damage started at $500 million and yesterday we talked to a representative of the insurance commissioner and she said that the damage will probably escalate to $2 billion and maybe even $2.5 billion. Now, let me make some comparisons for you. Previous disasters like this, previous wildfires. The Oakland wildfire was at $2.5 billion disaster back in '91 and wildfires that were here in '93 well they were about $2 billion. This could end up being the most expensive wildfire disaster in the state's history.
[Romans:] Tell us what you're seeing there and what people are telling you that they're worried about next.
[Willis:] I have to tell you, people are just now getting back to their houses, yesterday, today. They're just going through the rubble trying to find anything they can, any memento and especially any documents that they need. They're trying to figure out where they're going to go next and, of course, if they're going to have enough insurance coverage. For most of these folks, they'll cash out their entire policy because their houses are completely level. I'll tell you, the important thing here for everybody to know, not just people in southern California is that more than half of Americans, 58 percent of Americans don't have enough homeowners insurance coverage.
[Velshi:] That's the message to everybody who is not part of this particular disaster. Look at; use any of these opportunities to look at your own insurance. How is this different, Gerri than hurricanes, or floods or tornadoes that we often see?
[Willis:] Big difference, fire is covered under a standard home owner's insurance policy. That's the good news. Unlike hurricanes where we had all the problems with Katrina and people weren't covered, these folks should get some money. But the fact that many of them maybe are underinsured and they may not have to build their homes back and they may have to scale back and they may find problems getting what they need. And you know how this works, when you have a large-scale disaster like this, prices escalate and building material costs go up, contractors are more expensive. So you end up spending more than you originally thought.
[Velshi:] Gerri thanks very much, good talking to you. It is a good reminder to people to remind them how these things may affect them. Sometimes it is smaller claims in your house, but these weather- related events have been a much bigger issue. In fact insurance losses from weather events where the damages are more than $1 billion have shot up 15 fold in the last 30 years.
[Romans:] That got us thinking about what it means for homeowners in different parts of the country. CNN's Frank Sesno joins us now. Hi, Frank. We are building in dangerous places or we are building in beautiful places and that means the damage goes up.
[Frank Sesno, Cnn Special Correspondent:] Yes and yes and yes. I mean, as it goes up a lot, in fact, one insurance study that I was reading that said the property value, the assessed property value just in the coastal areas has doubled in the last decade and now totals some $7 trillion. You know, when people look at these fires out in California, they wonder whether this is going to be a harbinger of things to come. It seems like every time you turn around, there is another billion dollar disaster out there. What if we keep building like this? Places like the Tinder Dry Canyons of California, the hurricane-prone coasts of the Carolinas, the below sea level neighborhoods of New Orleans. Places that can go from this to this charred, wind-swept and water logged. What if these places keep getting hammered? It will affect more people, cost more money and we could find ourselves in an insurance nightmare.
[Sen. Dianne Feinstein,  California:] Just think about what it would be like to have four children to stand in front of a television camera and say, my house burned down, with it all my possessions. And we have no insurance. Think about it. Think about how you would feel if you were in that situation.
[Sesno:] It's a growing danger. Allstate has quit insuring homes in California and it has dropped earthquake coverage across much of the country. What if that continues? We'll need some kind of government-backed catastrophic insurance Senator Dianne Feinstein says.
[Feinstein:] Companies must not be allowed to cherry pick the United States and only insure areas that are safe and secure and, say to other areas, you're on your own.
[Sesno:] What if the disasters keep coming, get worse. They will many scientists argue as climate change, drought and development collide. In 2003 the San Diego fires burned nearly 400,000 acres and destroyed 3,000 homes and businesses, nearly 4,000 vehicles. California's fires that season cost close to $2 billion in damages. This year's fires could be even worse. What if the disasters continue? They will. California's fires like the hurricanes back east and tornadoes in the Midwest are as regular as the seasons, part of the natural landscape.
[Unidentified Female:] Yeah, we'll come back. We'll rebuild.
[Sesno:] A risk we take. A risk we take, it seems a risk more and more people are taking. Go and look at the census numbers and you see some of these sensitive areas have exploded with population just in the last decade. Los Angeles County more than 400,000 people added just since 2000, as a matter of fact. San Diego County up about 200,000. More people, less space, more expensive. It's a recipe for real problems, as we're seeing.
[Velshi:] Now Senator Feinstein in that story that you just told us, said that insurance companies shouldn't be able to cherry pick where they go, if the risk is increasing and scientists sort of back that up, what then do they do? Because in some cases insurance companies pass that risk on in terms of higher premium and in other cases they just entirely say we're not insuring this region or this state, both of which come under some criticism from some people.
[Sesno:] It leaves consumers in a terrible place. You either have to pay the higher bill, you have to pay the higher bill or you're uninsured. And that is not much of a choice at all. I went back and looked at what some of the insurance companies have been saying in their speeches by their CEOs and their releases and all, that's what really changed. Their whole assessment of the situation, they have a parade of statistics that they put out there that are chilling. For example, they say over the past 30 years insured losses from catastrophic weather events, those totaling over $1 billion have increased 15 fold. That's just an amazing thing between the '60s and the '90s, the number of these sorts of catastrophes have doubled. They see this trend going up and in fact the chairman of the Lloyds of London in a speech earlier this year said that he thinks it's possible to save $100 billion catastrophe twice the size of Katrina anywhere along the Atlantic coast.
[Romans:] Frank, I guess a lot of people like to knock the insurance companies and say hey they're raising my rates and oh they are not going to pay for this. Some people had to rebuild or fix their homes several times. I'm thinking in Florida and I'm thinking wildfire-prone places. I mean at some point with FEMA and the federal government and insurance companies sort of bailing people out, I mean, is there a moral hazard there? Might we come to a point where there are some places in the United States where we shouldn't rebuild?
[Sesno:] Well that actually has happened a couple years ago, actually when James Lee Lived was FEMA director he tried to have this buyout thing where in some of the very sensitive coastal communities FEMA would actually help you, would buy your property or try to help you redirect out of the area. But, no, there is no end in sight. People have been moving in increasing numbers to these coastal areas and increasing numbers to these vulnerable places and again you get the situation where you look into the situation and read the insurance companies and what they're saying is that the vulnerability of these communities is increasing because of warmer waters and global warming. That is to say that the prospects for hurricanes and the prospects for these wildfires are intensifying. So, it really looks like a one-way street to more and more expensive disasters.
[Velshi:] Frank, good to see you. Thank you for introducing this topic to us. One we'll be talking about a fair amount. Frank Sesno, CNN special correspondent.
[Romans:] All right. Up next on where YOUR MONEY, it doesn't take an extreme event like a wild fire to destroy your home, what every homeowner needs to know about their insurance, next.