Ms Kerridge's lesson plans and hundreds of thousands of dollars worth of Mr Lawn's stock were gone.
Mr Yule said her claim wasn't quite what it sounded like and a council official was only trying to be helpful.
"As she didn't have business interruption insurance a staff member was working out a solution to tide her over until council worked through its insurance claim."
Council went to the Ministry of Social Development and asked them if there was a benefit that would help Ms Kerridge get through, he said.
"MSD said there was a benefit available so we were just trying to help her look at all her options, she just took it the wrong way."
Mr Yule said council would be talking with its insurers today to see what other assistance could be offered.
In the art classroom Ms Kerridge had 14 A3 folders filled with papers and without those she was unable to teach.
Ms Kerridge said in her dismay she spoke to a Hastings District Council staff member and was horrified by the response.
"I am self-employed, just lost my income and years' worth of work is ruined and all they could tell me was to go on the dole. I found it rude and insulting."
Ms Kerridge said despite what council told her she was going to get everything back up and running as soon as she physically could.
"I have been salvaging what I can, ironing and drying out the individual papers and although they are wrinkled and muddy I am just so lucky to still have them."
She thanked her students for helping her with the clean-up and their ongoing support.
"They have been amazing and my heart goes out to them. They are bringing me food and offering me hours of their time I have been overwhelmed."
Hastings District Council water services manager Brett Chapman said council was very sympathetic to those whose properties suffered damage.
"Council has quickly responded to see if it can help people address their immediate needs while it looks at all other possible options. In cases where damage results, it is dealt with through our insurers," Mr Chapman said.
Building owner Bob Howe said council had been on the property assisting with some damage but it was more the content owned by Mr Lawn and Ms Kerridge that was affected.
"I am absolutely devastated for both Mike and Helen as the place was flooded right out so they lost nearly everything."
Mr Lawn said he wouldn't be able to re-open the store for a while with most of his stock ruined.
He has contents insurance but has to go through every item before he is able to make a claim.
"This could take me up to a week so we will be out of business for a while yet."