Mr. Cox said that under the law, in the event of a total loss, the insured is entitled to full insurance policy value on the structure without deduction or offset if the structure is partially damaged by a covered peril.

However, there have been many more decisions supporting the industry's stance on the flood exclusion, according to Mr. Maniloff, who represents carriers in civil disputes. He cited two recent federal court decisions–Chauvin vs. State Farm and Armand Richard vs. State Farm Fire and Casualty Co., (the latter decided on Dec. 1)–that rejected arguments extending the concept of valued policy law to excluded losses.

Valued policy law, he explained, is intended to prevent insurers from paying less for a property than what the policyholder insured the property for.

“Insurers can't change the value after the loss,” he said. “It was designed to prevent insurers from charging more [premium] than the property was worth.” He said the concept has been around for over 100 years and is well established in law.

He called Mr. Cox's argument applying the concept to an excluded loss–in this case flood–a “novel interpretation.”

In Florida, a court did rule that under valued policy law, a partial damage to a property meant the insurer was responsible for full coverage of the loss, but the legislature later stepped in and clarified the statute to its original concept.

While he said he is confident the Louisiana decision will be reversed on appeal, he does not believe it would go to the federal level since it does not entail federal questions.

However, he said he does believe recent federal decisions that support the industry's flood exclusion and valued policy law would guide the Louisiana appeals courts.