Nearly eight months after Hurricane Katrina devastated large areas of the gulf states, debates over what policyholders were covered for are becoming a public issue.

Mississippi Attorney-General Jim Hood raised the temperature yesterday, accusing insurers of being “in lockstep, like Nazis locking arms”.

In a speech in the state capital of Jackson, he said insurers “hope they can bob and weave and drag it out and our taxpayer money will hit the ground down there and the pressure will be let off, and they can walk away”.

Mississippi has filed a lawsuit against the insurers in an attempt to clarify exactly what claimants can expect from their policies. Many claimants in Mississippi, Louisiana and Alabama have also gone to court against their insurers.

Market leaders State Farm and Allstate are among the insurers named in the Mississippi Government lawsuit because they have refused to cover damage caused by storm surge, which has left a damage bill of as much as $US4 billion ($5.44 billion) in the state.

But in a separate Federal Court lawsuit, a judge has ruled that Allstate policies which contain storm surge exclusions under the term “tidal water” are valid and enforceable.

A couple claiming $US100,000 ($136,000) – Allstate paid $2600 ($3535) – said the wording of their policy’s “flood exclusions” are ambiguous and cannot be enforced.

But in a three-page ruling Judge LT Senter Jr says the exclusions “are drawn quite broadly, and they have the clear purpose of excluding damage caused by inundation from coverage”.

Allstate still faces a struggle to answer the question of how much damage to the couple’s home was caused by wind and how much by storm surge – a fact their lawyer says is a “huge hill to climb”.

American Insurance Association spokesman Julie Rochman says the judge’s ruling should end the debate over the rights and wrongs of Allstate’s exclusions of wind-driven water or storm surge. “It’s a big step toward ensuring that a contract is a contract in Mississippi.”