When I think about businesses/people working out of their homes, the first picture that comes to mind are people working on their computers — in virtual offices, remote offices, and oftentimes offices outside of the United States.
That is why it came to me as a surprise when Yahoo recently proclaimed all their employees had to "come back to work." One news line read "work at home and you will be fired." Clearly this is a change, especially for a high tech company. Marissa Mayer, the president and CEO of Yahoo as of 2013, defends her stance and says it will "separate out the truly productive workers from stay at home slackers who abuse the system." Needless to say, the news is buzzing about this, so time will tell if she sticks to her guns.
While Yahoo is "going back to the workplace," more and more people are choosing to work from their home. The current economy has redefined how people cope with the unemployment dilemma, and many businesses encourage staff to work from home to better maximize their production and as a means to better deal with the demands of work and family.
Now home-based bakeries and cooks are getting a new incentive to work from home with the passage of a new law in California. Other states may have or may adopt similar laws. The California Homemade Food Act has created a new category of food producers called "cottage food producers" which will allow people to cook their food items in their kitchens at home. Up until this law was enacted, food producers had to use commercial kitchens. These food producers could include: caterers, suppliers to organic markets or farmers markets, and bakeries that supply local restaurants with breads or desserts.
Not all foods are approved to be cooked out of a home — only foods that are considered to be "safe" fall under this law. Approved items include: baked goods, cookies, coffee, nuts, vinegar, candy, and dried pasta.
"We talked with the different health departments and various scientists, and these products are 99.9% safe," accords to Mike Gatto, California Assemblyman. The state will require cottage food producers to take a food handling class and pass an exam that is created by the California Department of Public Health.
While the categories of the types of food that can be produced under this law are limited, at this time, it does open opportunities for some homeowners to work from their homes. From the broker/agent standpoint, we have to look more closely at the exposures and determine if the Homeowners Policy will pay for losses these home-based businesses might sustain. Here are some questions we need to ask our insured:
- Are they cooking in a kitchen in their dwelling?
- Are they cooking in a kitchen they have put in a detached structure?
- Have they installed commercial cooking equipment in either their home or other structure?
- Are they required and, if so, have they installed approved fire detection and suppression devices for their cooking equipment?
- Are they operating the business in their personal names (as they appear on the homeowners policy) or have they formed a business and filed for a business name?
- Do they have any employees?
- How do they deliver the goods that they cook? In their personal vehicle?
- Have they purchased a vehicle in the name of their business to deliver their goods?
- Do they have customers come to their home for any reason?
- How are they storing their food supplies and finished product?
- Do they have a website for their business?
- Do they sell product via the website?
These are just a couple of questions in a long list of considerations. The answer to these questions will direct the broker/agent as to how the Homeowners policy should be endorsed, not to mention the concerns relating to the personal auto used for delivery purposes or perhaps a truck purchased in the company name.
While the new law creates new opportunities for the home-based business, it also adds a responsibility to all of us in the insurance field to identify risk and suggest creative solutions. The insurance community center conducted a two hour class on insuring businesses operating out of a home in January of 2013. That archived webinar is available to all Insurance Community University members and the new Business in the Home audio presentation is now available in the Insurance Community University Library.
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