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Why Has the Price of D&O Insurance Increased?

Why Has the Price of D&O Insurance Increased?

As a result of the recent recession, it seems that the price of everything went up: gas, groceries, interest rates, you name it. We’re paying more for everything. In this increasingly litigious society, many lines of insurance have increased, but none more than Directors & Officers (D&O) Liability Insurance.  Have you ever wondered why? We did, so we did some checking around to find out why.   Directors & Officers Is Important Coverage D&O is often the most overlooked type of coverage.  Other lines of coverage like liability and property cover tangible things like slips & falls or a building lost in a fire. What does D&O cover?  Decisions. D&O is also called Professional Management Liability because it covers decisions made by board members, company owners and officers, and even upper management.  The decisions of these leaders can make or break the success of a business, but those leaders shouldn’t be held personally responsible for any fiduciary losses.  That is why D&O coverage is so important.   The Mortgage Bubble Burst Between 2008-2010 a number of banks, mortgage loan companies and other lenders were accused of predatory loan practices, leading to what is known as the mortgage or subprime mortgage crisis.  Home buyers were assured that the already high-priced homes they were purchasing would increase in value over time, but they didn’t. In addition, the home buyers themselves were purchasing 100% mortgage loans with poor or no credit and when the job market collapsed they found themselves upside down on their payments.  Those buyers had to default on their loans, causing even more financial upset in the home lending...