A staggering 7,125 homes are at 'significant risk' of flooding in and around Windsor and the owners could be left in limbo next year.
A national agreement made by insurance companies in 2000 not to drop their coverage of homes in high risk areas expires in June 2013.
The Association of British Insurers (ABI) has warned it will not be renewed and says the government must work with the companies to hammer out a long-term policy.
ABI spokesman Adeola Ajayi said: "The government needs to work with the insurance industry. We don't want pandemonium.
"We need to discuss options such as whether subsidies could be provided for high risk customers or a 'last resort' cover system agreed if costs got too high."
At the moment the average claim when a house floods is £20,000-£40,000.
Mike Smith, who is vice-chairman of Wraysbury Parish Council narrowly escaped disaster when his house in Ouseley Road was surrounded by water 10 years ago as the village suffered devastating floods.
He shopped around until he found a company that offered reasonable cover.
Mike said: "If you look hard enough you will find a company prepared to take a gamble."
Gillie Bolton, who lives with her husband Jim Wanamaker at Ham Island, Old Windsor, said the couple did not dare claim when their garage was flooded, for fear of the effect on their premium.
She said: "We do not feel we have the luxury of shopping around here and just hope our company won't penalise us."
Cllr Jesse Grey, who represents the Royal Borough on the Thames regional flood and coastal committee, warned insurance companies against penalising people living in flood risk areas.
He said: "They seem to be trying to push the government into giving more and more but it is their obligation to provide cover for people."
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