A combination of poor knowledge and ignorance has led to only 18% of UK companies buying directors' and officers' (D&O) cover, according to research by Zurich.

The nationwide survey found that 39% had not heard of the cover.

Only 51% of those who purchased it felt it was essential or very important. And just over one in three (37%) thought it was quite important, while 12% said it was of little relevance.

Roger Thrift, underwriting and marketing director of Zurich's commercial business unit, urged brokers to change this perception.

“The growth of legislation affecting the growing minefield of employment practices with which companies have to comply makes it increasingly likely that directors and officers will be exposed to legal action,” he said.

“However, some small firms make the mistake that, because they do not have shareholders, there is no need for cover.

“Increasingly, claims are being generated by regulatory bodies, employees and merger and acquisition activity.”