Given standard homeowner's policies don't cover flooding, do they even care? They still get to collect the premiums but aren't exposed to any additional risk.
Interesting the banks holding the mortgages don’t insist then. Didn’t people just walk in 2008 when their homes were worth less than mortgages, seems it would be a comparable situation. Maybe not, but there are a lot of ways to discourage risky ownership. One could improve standards too