Rocketing insurance costs are threatening the existence of hundreds of small firms.

The 170,000-member Federation of Small Businesses (FSB) is warning a substantial number of firms could go under this autumn because of rising premiums.

FSB members are reporting the premiums are increasing by an average of 200 per cent and in some cases more than 500 per cent.

Although the cost of all commercial insurance cover is going up, businesses are finding it particularly difficult to secure employers' liability and public liability insurance.

Employers' liability insurance is a legal requirement in the UK.

David Perry, from the FSB's insurance brokers Warren Hill, said: "We are receiving at least one call a day from businesses that have been unable to get employers' liability cover elsewhere.

"Small firms can often adjust their business practices to limit the liability and allow them to purchase cover."

Among the small firms that are under threat are a thermal insulation business which has seen its premiums rise from £1,200 last year for £10 million cover, to £8,000 this year for £1 million cover. And an engineering company with ten employees whose premium for employers and public liability has risen from £5,500 to £13,000.

The FSB is meeting with ministers at the Department of Trade and Industry to put pressure on the Government to act.

FSB chairman John Emmins said: "Small firms are going out of business and jobs are at risk.

"The Government intervened after September 11 and we are looking at them to do the same now."