As they shouldn't, unless the storm (and not the flooding) damaged the property.
How do you determine what was damaged by wind, and by water. Something with water damage, could have been conceivably damaged by the wind first.
If the storm pushed the water into the house through the storm surge, Allstate should pay, unless a rider specifically excludes 'wind driven water' or all water damage.
If it's a levee break or a river flood, then Allstate shouldn't have to pay.
Seems pretty cut and dried to me.
But they'll certainly be paying out a lot of "fire" claims from the Katrina stricken region.