Even though a homeowner's insurance policy said floods were not covered, leaving that statement out of the application left the company liable for damages to a house destroyed by Hurricane Rita's winds and floods, a judge has ruled.

If higher courts uphold the decision by District Judge Edward Rubin, companies could be responsible for billions of dollars in additional hurricane-related claims. The judge ruled in a case brought by Mark and Barbara Landry of Vermilion Parish, who had insured their house for about $55,000.

"It means that if there is not a floodwater exception in the application, insurers have to pay the full amount of the policy if there is wind damage," Paul J. Cox, their attorney, said Tuesday.

Homeowners policies typically exclude coverage for damage caused by floods, high water, waves and storm surges. That meant that the $28 billion paid in insurance claims from Hurricanes Katrina and Rita actually covered only a small amount of the total damage.

Cox argued that that the Louisiana Valued Policy Law, which applies when a home is destroyed, requires insurers to include the water-damage exclusion in the application as well as the policy.

Rubin ruled Monday that Louisiana Citizens Property Corp. _ Louisiana's insurer of last resort _ must pay for the Landrys' home, but the judge had not handed down a written decision, Cox said.

"He did not give any reasons for his ruling. But that was my whole argument," Cox said Wednesday. "The statute requires that if you want to pay less than the full value of a policy in the event of a total loss, you must put the method of calculating the loss in both the policy and the application."

Theodore M. Haik III, who defended Citizens, said the ruling could potentially apply to all the homeowners insurers in the state. Citizens, the state's third-largest homeowners insurance company with 135,000 policyholders, will appeal, said Terry Lisotta, secretary for the insurer.

Robert Hartwig, executive vice president and chief economist of the Insurance Information Institute, said valued policy laws were never intended to pay for "noncovered perils."

"This is yet another attempt to try to circumvent the ironclad water-damage exclusions that have existed for decades in all homeowners insurance policies," Hartwig said.

In the past, state courts have upheld the water-damage exclusions, or state legislatures have prohibited valued policy lawsuits, Hartwig said.

A Mississippi federal judge ruled in August that standard homeowners policies cover damage from wind but not rising water.

If the New Iberia ruling stands, Citizens would be forced to make another assessment and issue more bonds to pay claims, Lisotta said. The bond issue could be substantially more than the $1 billion Citizens borrowed to cover its Hurricane Katrina costs.

Citizens paid about $15,000 per Katrina claim and around $9,000 per Rita claim, Lisotta said.

Rubin's ruling is the second in Louisiana against the insurance industry in Louisiana. In November, U.S. District Judge Stanwood Duval Jr. found that the wording to exclude water damage in some insurance policies was ambiguous.

The rulings suggest Louisiana courts are willing to ignore the terms of insurance contracts and are willing to rewrite the contracts retroactively, Hartwig said.

"That could have a very chilling effect for private insurers, and in the case of Louisiana Citizens, which has nowhere else to go, could only serve to increase the cost for everybody in the state," Hartwig said.

Spokesmen for State Farm Insurance Co. and Allstate, the state's largest insurers, said they were not familiar with the ruling and had no comment.

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