COUNCIL bosses have been hit by an insurance hike linked to September 11 which could cost them up to £15million.

The increase will leave Lancashire County Council without day-to-day cover against claims for things such as trips and slips on pavements.

And it comes despite a crackdown on fraudulent claims which has seen the council prosecute anyone trying to win money illegally from the authority.

The rising number of trips-and-slips claims coupled with possible payouts in connection with the police's Operation Nevada investigation into child abuse at county-run facilities has prompted insurance firms to warn that the council could be liable for the first £15million of claims from July.

County Hall chiefs have also blamed their insurers' decision on the aftermath of September 11.

It will mean that only major disasters will be covered by insurance. It is not expected that the £15million will be budgeted for, meaning any rise in claims will either hit existing budgets or council tax next year.

The liability rocketed from £4million to £6million last July as the council and the insurance companies found they were paying more out to 'no-win-no-fee solicitors' who sue over claims over faulty roads or pavements.

And Brian Aldred, the county's director of finance, said the council would have to hope claims could be successfully fought.

"The insurance market has hardened in the last year, partly because of the growing problems of third-party claims but also because of other factors, such as September 11.

"We are not in a unique position but it will mean the authority is effectively insuring itself for everyday claims. The insurance will really only cover a major disaster."

The financial bombshell was revealed to members of Lancashire County Council's cabinet as part of a budget-monitoring report.

An extra £2million was set aside in this year's budget to cover any payouts from victims claiming compensation as a result of Operation Nevada.

An extra £1million was dropped into the highways budget to pay for a new crack squad of road inspectors who will study claims and tour the county's roads looks for payout hotspots and make sure they are repaired quickly.

The County Hall insurance problem was revealed as Blackburn with Darwen Council reported it may have to slash some budgets in a bid to tackle its trips-and-slips payouts -- which have gone up 75 per cent in the last year.