More than a dozen residents were notified on Friday that their insurance claims would not be paid.

Recovery centre co-ordinator Kay Cossar said legal firm Maurice Blackburn and Associates had offered support to AAMI and Elders insurance customers whose claims had been rejected while neighbours insured with different firms had already been paid out.

“On Menzies Street for example there’s families insured with Apia and CGU who are being told they’ve been flooded by local water, but AAMI clients in the middle have been told they were flooded by river water and won’t be paid,” she said.

“It’s coming from conflicting hydrologists reports... that residents are yet to see.” Ms Cossar said insurance worries were making residents miserable and it was another blow to a community already struggling to get back on its feet.

Charlton supermarket owner John Tormey said his home and business had been insured with two different companies and neither would pay.

He’s one of a group in town who have had their claims disputed and are looking at recourse through the insurance ombudsman or legal action if they don’t get the result they’re after.

“What irks us is that others have been paid for the same thing but their policy has different wording,” he said. “Given the evidence, we think we’ve got a pretty good case.

“We’re lucky because we’ve got a business. Even though we’ve been set back a few years, we can still trade. Older residents have been left with nothing... some of the older ones are a bit more keen to pursue legal action straight away.”

The group will meet this week to discuss their plans.

An AAMI spokesman said payouts for flooding depended on the specific wording in individual policies.

“These are not decisions we take lightly... we do our research and get reports from hydrologists,” he said.

“If customers aren’t happy with the decision, the letter they receive will have details of how they can appeal.”