People who live in flood zones should be mandated to buy NFIP flood insurance or be inelligible for any bailouts afterwards. Homes that have had multiple payments for flooding well beyond the hope of ever being an actuarially viable location should not be rebuilt. The person being interviewed in this episode of Planet Money has had 3 large checks from the NFIP program. Records show that before he purchased the house there were 2 more large payouts. He bought the house knowing, or at least could/should have known, that it routinely goes underwater because he loves the neighborhood. Grew up there, blah blah blah. He actually pays for flood insurance ($4,800/year) but lots of people don't. His premiums would be sufficient if he lived in a 100 year flood zone. Clearly he doesn't. He lives in more like a 1 year flood zone.
http://www.npr.org/sections/money/20...97-flood-money
And honestly, terrorist destruction of property isn't the same thing. Since 2002 everyone who buys property insurance has had a small chunk of their premiums going towards TRIA, the terrorism risk insurance act. If another 9/11 event happens and it gets declared an act of terror the money that we've all been paying will get used for rebuilding, not government handouts.