I tried answering this question yesterday, but I had only sporadic internet access and when I hit submit to answer your question, my answer was lost. Boo!! I should preface this by saying that I am not an insurance agent, and I am not sure if any of the real estate agents on this forum double as insurance agents...however I have sold plenty of homes in flood zones, and zones in close proximity to flood zones.
Jim did give you a good answer...I think that if you are not in a flood zone, and flood insurance is not actually mandated by your lender, there is a 30-day waiting period for the flood insurance to take effect.
If you are looking to live in Midtown, Land Park, or East Sac (all fantastic choices, by the way!), flood insurance is a good idea, although in many neighborhoods it will not be required by your lender. FYI, several homes in those areas have basements, and flood insurance will only cover structural-type damage to a basement that may be caused in a flood...if you have a finished basement, you will be out of luck when it comes to replacing any "finishes" (carpet, drywall, etc).
You are correct - water flows where it wants to...and we do not have to have a Hurricane Katrina-like disaster here for homes to flood. When I was a kid living in Citrus Heights (not even close to a flood zone), there was a storm that flooded our street. Luckily our house sat up really high, and when my parents landscaped they installed lots of additional drainage measures. A neighbor across the street who sat lower and who had bad drainage flooded...just a couple of inches of water destroyed lots of belongings and did some pretty severe damage to that house. You can obtain basic flood insurance for about a dollar a day...definitely a small price to pay for that kind of security.
Looking at your other questions, you certainly seem to be doing your research! It is good to have the whole picture before you start your search! Good luck to you with your house hunt.