Some insurance claims have been denied because insurers believed damage in the Mallee town was caused by flooded rivers.
But insurers don't agree on the cause of damage. In one Charlton street those insured with RACV, APIA and CGU have had their claims paid after experts found rainwater had damaged their properties.
But people with AAMI and Elders Insurance were knocked back because experts blamed floodwater.
Charlton's flood recovery committee is discussing a class action with law firm Maurice Blackburn and Associates.
People would feel let down that they have to fight this and would feel really disappointed about the inconsistencies in the insurance companies' findings," committee spokesman John Harley said.
"Some residents' claims are being covered and some would feel angry that they live across the road and they are not covered.
"Mine was paid out and I actually feel guilty."
Charlton resident Andrew McGurk and his fiancee Abbey face an $80,000 repair bill for their home.
Mr McGurk said rain water damaged his home before the nearby Avoca River came through but Elders Insurance refused to pay.
"We only bought the house 18 months ago and there is no way we can afford (repairs). We will join the class action," he said.
Pensioner Graham Anderson, 74, faces a $100,000 repair bill after AAMI rejected his claim.
His daughter Kathryn Egan said: "The home's doors don't even close and half the home's power is out. Without the insurance I really don't know what we are going to do."
An Elders Insurance spokeswoman said it was "open to considering any new information" that may prove it was rainwater, not floods, that damaged its customers' homes. source www.heraldsun.com.au...