PHILADELPHIA -- Federal-Mogul Corp. insurers may have to pay more than $500 million for asbestos damages under the Chapter 11 plan that got the company out of bankruptcy last year, a bankruptcy judge has ruled.

Judge Judith Fitzgerald of the U.S. Bankruptcy Court in Pittsburgh, ruled against more than two dozen insurance companies, who were fighting to avoid paying claims for damages linked to Federal-Mogul's asbestos products. The insurers argued they had bargained to cover damage claims against the company, and shouldn't be forced to pay into a trust Federal-Mogul set up in Chapter 11.

Peter Van N. Lockwood, an attorney for the asbestos plaintiffs, said the face amount of the insurance policies at stake in the dispute is more than $500 million.

Fitzgerald's decision resolved an issue left open when the Southfield company exited Chapter 11 in December. Federal-Mogul was allowed to get out of bankruptcy while insurers and asbestos claimants awaited her ruling on the coverage issue.

Fitzgerald's ruling was made public Thursday. She told the insurance companies to pay claims now being handled by the Federal-Mogul asbestos trust, just as they would have had to pay the company itself if it had never filed for bankruptcy.

The insurers include Ace Property & Casualty Insurance Co., AIG Casualty Co., Allianze Global Corporate & Specialty AG, Firstman's Fund Insurance Co. and Hartford Accident and Indemnity Co.

They challenged Federal-Mogul's right to make them pay into the asbestos trust on the grounds the company was motivated to defend itself against potentially worthless claims, but the trust was not.

Lawyers for insurers said plaintiffs' lawyers dominate the asbestos bankruptcy trust process, exposing the insurers to excessive damage payments.

Fitzgerald's ruling preserved a favored strategy for corporations troubled by massive tort liabilities. Companies that want to divert damage claims away from themselves and into trusts often use their insurance policies as part of the trust funding.

If Fitzgerald had let Federal-Mogul's insurers off the hook, companies looking for ways to resolve huge damage claims would have lost the right to tap their insurance policies if they took the way out offered by Chapter 11 trusts.

A ruling in favor of Federal-Mogul's insurers would have been a blow to people with asbestos disease linked to the company's products, who voted to back its Chapter 11 plan and took the risk of winning the coverage dispute.

Estimates of their damages ran into the billions, but they would have been left chiefly with what they received by selling the equity that was used to fund the asbestos trust. In addition to its insurance policies, Federal-Mogul put half the equity in the reorganized company into its asbestos trust.

Billionaire investor Carl Icahn, who swapped a big stake in the company's debt for 25 percent of the post-bankruptcy Federal-Mogul, paid $900 million for the equity in the asbestos trust, according to Securities and Exchange Commission filings.

That purchase made him 75 percent owner of the company.