> the insurance rates in Pacific Palisades or on the Florida coast would be so high that no one could afford to live there

I'm not so sure. The Pacific Palisades have astronomical real estate prices. (actually costly property in Florida isn't cheap either). I think the insurance costs would come out of the property prices.

I say this on the basis that the prices the real estate sells for is already what the market will tolerate, if there are other costs to owning it-- then the remaining part the market will tolerate will be less.

Perhaps a result of this is that it may only be realistic to construct lower costs 'disposable' cabins in areas with higher disaster risk... if so, that wouldn't sound like an unreasonable way to allocate resources.