The U.S. oil and gas industry is paying a hefty price to protect its top brass against potential bankruptcy and investor lawsuits.

Oil companies are shelling out as much as 75% more to renew insurance liability coverage for directors and officers, as the sector prepares for a wave of bankruptcies brought on by collapsing oil and gas demand and plunging prices during the coronavirus pandemic.

Companies at risk of insolvency have been looking to purchase additional insurance to cover claims against directors and officers in cases where the company cannot do so, known as a ‘Side A’ policy, according to brokers.

“Oil and gas companies were not thinking ‘How much insurance should I buy if both debtors and equity holders come after me?’ at their last renewal,” said Jon Janes, an insurance director at Willis Towers Watson.

These policies can prevent directors from having to pay out of pocket if their company becomes insolvent or in judgment of a shareholder derivative lawsuit.

Companies take out directors and officers insurance as courts in the past have found executives liable in class-action suits for poor governance or failed mergers.

Numerous oil-and-gas producers have been cutting spending while others have declared bankruptcy as prices cratered in recent months.

Insurers are adding creditor exclusions and some exclusions specific to COVID-19 to some policies, Sebastian Swain, a director at CRC Insurance Services, said.

Among the most notable Chapter 11 filings so far have been Whiting Petroleum Corp and Diamond Offshore Drilling Inc , both of which filed in April. Shale pioneer Chesapeake Energy Corp said in May it has no access to capital and is considering a bankruptcy filing.

The industry is particularly watching for any Chapter 7 bankruptcies, said Matthew Raymer, vice president in management & professional solutions at Alliant Insurance Services, noting these are generally associated with class-action lawsuits.

“The energy sector has performed better than average when it comes to class-action lawsuits in years past,” he said. “But these are unprecedented times.”