Storm surge is flooding. It's flooding in the other 48 states and always has been. It was flooding in MS and LA until about six months ago, as well.
The surge and impacts from Katrina were unprecedented. I have family that was flooded as well as a number of friends who suffered the same fate. My folks at least had flood insurance, but many were in an area wher it never flooded before and thought they had sufficient buffer, but when the water rises some 30 feet, it obviously wasn't sufficient enough.
Now will they ever be able to rebuild along the coast? You are talking thousands of homes that were "surged" (in my view) and not necessarily "flooded" as the insurance companies claim