Maurice Blackburn principal and consumer advocate on insurance issues John Berrill said he hoped insurers would use a 'case-by-case' approach to resolving flood-affected residents' insurance claims.

"Many householders and businesses wanting to claim for losses will find it confusing to work out if they are covered, because insurance companies have poorly worded clauses," Berrill said. "It's a dog's breakfast with a variety of wording covering flood damage in policies."

Berrill said many people do not realise there is an important, but artificial, distinction between flood and storm damage. "Policies should cover damage caused by a storm, rain, wind and runoff from rooves of guttering, but many insurers explicitly exclude flood damage - that is, a property being inundated from a river, creek or dam."

Last year Berrill was part of a push to reach agreement between consumer representatives and the insurance industry over a form of standardised wording in insurance policies that described what a flood was and whether damage caused by a flood would be covered under the policy.

"They had the chance to fix this and they walked away from the process of creating something better for consumers," he said.

Maurice Blackburn is one of the law firms providing free legal advice to people affected by the Victorian floods.