A Boston-based insurance broker has come under fire from two army surplus companies after they launched a multi-million pound legal battle with the company.

Weller Russell and Laws Insurance Brokers is being sued by Ramco (UK) and Resource Industries after a huge fire destroyed millions of pounds worth of the companies' stock in 2001.

The two firms, which sell surplus stock for the Ministry of Defence's disposal sales agency, claim the broker failed to take out proper insurance.

Ramco sells a huge variety of stock, including aircraft spares, chemicals, tents and vehicles. It has more than fifty thousand different lines.

Ramco was set up after the MOD stopped selling its surplus items at auction in 1996.

The two firms claim that when fire broke out at their premises in Lincolnshire, they did not have suitable insurance to cover either their stock, or the stock they were holding for the MOD, according to a writ issued in London's High Court.

It said the firm negligently failed to discover the true nature of their businesses, failed to appreciate that both companies looked after stock and materials which it did not own, and failed to advise on the implications of this.

The companies are claiming damages for negligence and breach of contract, alleging the broker took out unsuitable insurance for them.

Weller Russell and Laws declined to comment.