Unfortunately, I will have to side with the Goat on this one. Because flood insurance can only be purchased by one source (the National Flood Insurance Program), there is no competition for better rates or better services, and, in the past 10 years, I've watched flood insurance for even seldom flooded areas in California (called 100 year flood plains--meaning that every 100 years there is the likelihood of a flood) increase dramatically--almost four times what they were in 1998.
Having had a lot of experience with homes next to creeks, I know that creek beds and creek flooding is terribly unpredictable. While the home may seem perfect now, consider how you might feel when it's flooded and you're knee deep in dirt and silt deposits from the creek. Unfortunately, it only takes one good flood to completely destroy the interior of your home, all of your possessions, and all of the appliances and items inside. It can be pretty inconvenient as well as expensive. So, in addition to the insurance cost, you need to ask yourself if you're prepared to live through the consequences that will most assuredly come from a creek flood.
Finally, if the $2700 flood insurance policy is a deterrent for you now, it will likely be a deterrent for another buyer in the future.
Before buying the home, check the maps and records of your town or city to determine how many times, within a 10 year period, the creeks have flooded the surrounding areas. This will help you determine if you're prepared to live next to a creek or any body of water.
Grace Morioka, SRES, e-Pro
Area Pro Realty
San Jose, CA