(MONEY Magazine) – The government is putting the millions of homeowners with flood insurance on notice: Rates may get higher and claims-paying stingier.

The Federal Emergency Management Agency (FEMA) underwrites insurance for 4.1 million structures, the vast majority single-family homes. FEMA is considering denying flood insurance to people who have filed two or more claims totaling more than their home's value and who refuse to elevate, floodproof or sell. As FEMA director James Lee Witt says, "People need to accept the responsibility and the consequences of their choice to live in high-risk areas."

--PETER KEATING