In the latest Weekly Wright Report:
- Do You Operate A Drone Or Use Drone Services In Your Business? Better Check Your Insurance Coverage – read now
- When You Undertake Workplace Training, Don’t Forget to Get Your Board Members on that Train Too!- read now
Do You Operate A Drone Or Use Drone Services In Your Business? Better Check Your Insurance Coverage
A happy couple was enjoying their wedding with their family and friends when disaster struck. The couple hired a wedding photographer to record the wedding and reception. In the course of performing his services at the wedding, the photographer used a drone to take pictures and record video. The drone accidentally hit one of the wedding guests causing the guest to lose her eye. A claim was made against the wedding photographer’s commercial general liability (CGL) insurance policy. However, the insurance company denied the claim asserting that the claim was excluded under the aircraft exclusion provision in the policy.
Eventually, the injured wedding guest filed suit against the photographer asserting negligence and the photographer sought a defense under his CGL policy. The insurance company initially provided a defense under a reservation of rights, but then filed a declaratory judgment action asking the court to declare that the insurance company was not liable under the policy and that it had no obligation to provide a defense to its insured for the injury caused by the drone.
The court in Philadelphia Indem. Ins. Co. v. Hollycal Prod., Inc., No. EDCV18768PASPX, 2018 WL 6520412, at *4 (C.D. Cal. Dec. 7, 2018), noted that the CGL policy specifically excluded any bodily injury arising out of the use of an “aircraft” operated by an insured. While the policy did not define the term “aircraft,” the court held that the word was unambiguous and its ordinary meaning, as defined by Merriam–Webster’s Collegiate Dictionary, is “a vehicle (such as an airplane or balloon) for traveling through the air.” The court held that the definition of aircraft included a drone. Accordingly, the court granted summary judgment in favor of the insurance company finding that the policy did not cover the claim and that there was no duty to defend the claim. The court even awarded the insurance company the costs of defense it incurred while providing a defense under its reservation of rights.
Drone use is steadily increasing commercially with virtually limitless applications and limitless possibilities for causing personal injury or property damage. However, many CGL policies may exclude coverage under the aircraft exclusion. Accordingly, if you are using a drone or contract the use of drone services, make sure you contact your insurance agent about coverage and determine whether an endorsement to an existing policy or a specialty policy is required to cover your drone related activities.
When You Undertake Workplace Training, Don’t Forget to Get Your Board Members on that Train Too!
What kind of training does your company provide to its board of directors? Does your on-boarding process consist of merely providing a copy of the by-laws, a recent budget, and a request they sign a conflict of interest form? Following that, do you assume the new board member will simply slide right into their advisory roles without further training or orientation?
Board members are expected to imbue their knowledge, experience and expertise at board meetings. They are expected to attend meetings and sometimes contribute financially. Most times, the time and financial commitments are made clear before new board members are nominated.
But companies often overlook sharing expectations of the board member’s fiduciary and legal obligations. Board members are expected to report all potentially damaging or harmful information about operations, finances, audits, leadership, employees, consumers, volunteers, vendors, board members or other business partners of the organization. Unfortunately, more often than not, companies fail to orient or train new board members about what to do, where to go or how to report concerns that are brought to their attention.
Think: USA Gymnastics. Scott Blackmun, CEO of the U.S. Olympic Committee dictated that the entire USA Gymnastics board be replaced for, at first, ignoring, and later failing to take sufficiently swift action to protect the gymnasts from Larry Nassar’s sexual abuse and other unlawful actions. Blackmun said replacing the entire 21-member board of USA Gymnastics would guarantee a fresh start. “We do not base these requirements on any knowledge that any individual USAG staff or board members had a role in fostering or obscuring Nassar’s actions,” Blackmun wrote in an email. “Our position comes from a clear sense that USAG culture needs fundamental rebuilding.”
According to NAVEX Global’s 2018 Training Benchmark Report, based on survey responses from more than 1,200 ethics and compliance professionals globally, 65% of board members are not trained at all. When it comes to other top risk areas, the percent of directors who never receive training is startling: code of conduct (25 percent), workplace harassment (44 percent), cyber security (25 percent), conflicts of interest (23 percent) and bribery and corruption (20 percent).
But how effective is training in reducing a business culture of harassment or sexual abuse? Dr. Eden King, an associate professor at Rice University who was interviewed by Maya Rhodan for her 2017 article published in Time said, “Learning about a law may not actually change anybody’s behavior.” Ultimately, it’s the factors of the training that make the difference, such as who attends, where and when the training occurs and whether the company’s leadership is involved. King’s research suggests that when leaders come to the training or endorse the training, people take more away from the experience. Some have also suggested that having more women in leadership positions also helps, as the Harvard Business Review noted.
According to the EEOC’s 2016 report on sexual harassment in the workplace, effective anti-harassment trainings need to be a part of a holistic, company-wide strategy to prevent it from happening. When workplaces make clear through training and leadership modeling how they expect board members, staff, volunteers, members, and business partners to be treated, culture will follow. Everything, though, starts at the top, which is where the Board members are seated, driving finances, setting the strategy, and establishing culture.
So this year when you schedule workplace harassment for your management and staff, don’t forget your board of directors. Schedule a special session at an upcoming board meeting to remind members not only of their fiduciary obligations to address claims of impropriety, misconduct and wrongdoing, but also of their legal obligations. Each board member should know when, to whom, and how to handle claims. Creating cultures of mutual respect go a long way to prevent harm to individuals. But where there is a breakdown, board members should know how to report and aid the organization from incurring corporate or personal liability.
(This article was previously published in The Daily Record and reprinted with permission.)
Want more? Visit the Weekly Wright Report page to browse past issues.