Easier said than done. If a family has a house that can't be sold and have to stay in the area, where do they go? They can't sell those houses and most probably have mortgages. Their best way out might be to keep paying their bills and holding on until an insurance company pays up, and that won't happen if they don't have flood insurance.
Going means taking the family, probably leaving all possessions they can't fit in the car behind, and deciding where to start over. Some people have financial resources, or jobs that can be done from anywhere, or family or a second home they can move to. Most people don't.
What I don’t understand is buying a house in the flood plain of a huge dam in the first place.
Why build a whole town in the flood plain of a huge dam?
Has no one ever heard of the Johnstown Flood . ?
You hang on and keep getting inundated until FEMA finally buys you out. I have acquaintances in West Virginia who have been flooded out by five 100 year events in the last 30 years. Once hardworking and self reliant, they turned into professional victims and procurers of government money. The trap of being trapped.