Policyholders who need repairs carried out after a claim have been left high and dry because contractors have seen payments from Independent Insurance dry up.

Some contractors themselves face financial ruin because they were dependent on the insurer for business.

Brokers and loss assessors have said that contractors are walking off jobs for Independent policyholders, although liquidator PricewaterhouseCoopers (PWC) has promised contractors they will meet all reasonable fees and expenses for work done after the liquidation date of June 17.

Borehamwood broker Brian Hyman said one of his clients was unable to insure his house because the contractor, who had not been paid by Independent for his work on the client's subsidence, would not provide a certificate of completion.

Hyman said insurers should be discouraged from forming direct contracts with preferred contractors to avoid such situations in the future.

“If the debt was ultimately that of the consumer, the consumer could then seek redress from the Policyholders' Protection Board,” he said.

Claims consultant Gary Lane reported a similar situation, in which an unpaid contractor has walked off a £150,000 fire-damage repair job after completing £25,000 worth of repairs.

Lane said the insured was living in a one-room cottage while the repairs were done and now has no idea when he would be able to move back into his house. He said: “It could be a year before anything is sorted out.

What does he do – keep paying to stay out or move back into the damaged house?

“We're hitting a brick wall and have no idea how to assist our client.”

Birmingham broker Gary Carroll, who attended Insurance Times' broker briefing last week, said one of his clients had been about to make

a £3m-plus commercial claim when Independent went into liquidation.

Carroll's client will receive no help from the Policyholders' Protection Board (PPB), but must wait for up to a year while PWC finalises the scheme of arrangement for creditors.

“Obviously somebody with a £3m claim is likely to be slightly more concerned with the livelihood of his 70 or 80 employees and his own livelihood, as opposed to somebody with a £200 third-party claim,” Carroll said.

A Northern England contractor, who declined to be named, said his own business would be put into liquidation next week as he suffered without money from Independent.

The contractor said he was owed about £200,000 by the insurer and, although he received a fax from PWC agreeing to pay him for future works, the payment will not be soon enough to save his business.

He said he had been in contact with at least 40 other contractors who were owed varying sums.