The flood insurance gap poses significant risks to homeowners, particularly in flood-prone states like Texas, Louisiana, Florida, and North Carolina, which rely heavily on federal disaster aid. Local governments face financial strain due to reduced property tax revenue after flooding events, impacting their credit ratings and ability to fund recovery efforts. Aging levees and insufficient flood insurance coverage increase the likelihood of widespread damage during extreme weather events. Smaller, less affluent counties are particularly vulnerable to long-term economic impacts.