HUNDREDS of tradesmen in East Lancashire face going to the wall because of crippling rises in insurance costs.

The hike in premiums, some by as much as 400 per cent, means many companies can no longer afford to pay for insurance cover and have no choice but to stop operating.

The problem is worst in the building and roofing trade, where companies say spiralling compensation claims, and insurance companies refusing to offer cover, mean prices are rocketing.

The roofers' organisation, the Confederation of Roofing Contractors, has described the problem as nothing short of a crisis.

They have blamed much of the problem on the "compensation culture" which means many are reluctant to insure risky or dangerous trades.

One of those affected is Burnley businessman Wilfred Dolman, who set up Burnley Roofing Contractors 13 years ago with £200 redundancy money he received after losing a his job.

Mr Dolman, who is insured by Blackburn company Sumners Insurance, says his premiums have risen from just over £6,000 last year to more than £23,000 this year, a hike of 400 per cent.

Mr Dolman, 54, of Rossendale Road, Burnley, says his company, which employs eight people in Accrington Road, Burnley, will have to close.

He says many other companies are facing the same situation and that as reputable businesses go to the wall ,cowboy builders will step into the vacuum.

He said: "Nothing could have prepared me for the total shock and dismay at finding my insurance had gone up so much. The increase of 400 per cent is despite the fact that I have never had a claim in all my years of trading.

"To a small company this increase in my overheads is impossible to meet and I will therefore have no option but to put my present employees on the dole. I am not the only roofing contractor facing this dilemma and this could be the end of the line for many businesses in my calibre."

Mr Dolman said he had written to both Prime Minister Tony Blair and Leader of the Opposition Iain Duncan Smith, to appeal for assistance.

Iain Lancaster, who has run Craftsman Roofing in Burnley for 30 years, said: "This is a massive problem. Insurance is something we all need but many simply can't afford to pay for it.

"Without help from the government I feel a lot of contractors will go out of business."

He said the cost of insurance would force the closure of the flat-roofing part at the firm's Clitheroe branch, where costs were two-and-a-half times higher than in Burnley.

Alan Buchan, of the Confederation of Roofing Contractors, said: "This is an absolutely ridiculous situation and nothing short of a crisis for the roofing industry.

"So many insurance companies have dropped out of the market that the ones who are left can charge whatever they like. Without help from the government, hundreds of companies will go out of business."

A spokesman for Sumners Insurance, based in Preston New Road, Blackburn, said: "The insurance market for roofing contractors is virtually non-existent with very few companies underwriting that sort of business, so insurance companies charge the rates they think are reasonable for the risk."

A spokesman for the Association of British Insurers said: "This is a problem for businesses and for insurers, who have seen unprecedented losses over the last few years, as well. This is mainly due to the rise in the number of personal injury claims, as it is easier to sue."