§ 83.24a - Gross receipts.

The annual gross receipts figure of a business is used as a significant factor in calculating the annual premium and for determining the deductible applicable to any loss. It is therefore material to the issuance of a policy and must be correctly stated. Misstatement of gross receipts at the time of application or any subsequent renewal will cause the policy to be voided and any claim denied. Gross receipts must be verified at the time of adjustment of any loss. Renewal payment of a Commercial Crime Insurance Policy will not be accepted and the policy renewed unless the current gross receipts figure is submitted with the premium payment. Failure to submit the gross receipts figure may result in a lapse of coverage. The following guidelines are applicable in determining the correct annual gross receipts figure to be reported.

(a) The annual gross receipts figure should be taken from the most recent annual Federal Income Tax Return (or comparable tax return in Puerto Rico and Virgin Islands) filed prior to the date of the application or renewal date. The figure is applicable to the policy for a period of one year and the policy can be changed in term to reduce or increase the premium because of a reduction or increase in gross receipts provided there are no incurred claims.

(b) A new business that has not as yet filed an annual Federal Income Tax Return (or ventas netas in Puerto Rico) shall insert an estimated projection of gross sales. However, an applicant is not considered to be a “new business” if any of the owners or officers of the business have been owners or officers of any similar business previously operated at the same address. In such a case the annual gross receipts figure as listed in the most recently filed income tax return of the former business should be used, if available. If such figure is not available, an estimate by the insured's accountant of the annual gross receipts reasonably anticipated during the first year of operation will be accepted.

(c) A non-profit or public entity that has no gross receipts (ventas netas in Puerto Rico) or whose annual operating budget exceeds the gross receipts shall report its operating budget rather than gross receipts.

(d) The gross receipts figure for a bank or other financial institution shall be the total income line of the tax return (ventas netas in Puerto Rico) as derived from dividends, interest, investment income, capital gains and other income. If several branches of one business are covered, the total income shall be divided equally among the branches insured.

(e) The gross receipts figure (ventas netas for Puerto Rico) for a real estate, property management or similar type of business shall be the “Total Income” line of the tax return as derived from interest, rents, capital gains, other, etc.

(f)(1) A warehouse operated as a distribution center for store(s) under common ownership and management shall report the total gross receipts of the store(s) it supplies. If a warehouse supplies more than one store, it shall report the sum of the gross receipts figures for all the stores it supplies. If more than one warehouse supplies one store, the gross receipts figure applicable to the store shall be apportioned among the warehouses according to the percentage the value of merchandise supplied by each warehouse bears tothe total value of merchandise supplied.

(2) A warehouse operated as a distribution center for store(s) not under common ownership and management shall report the total gross receipts of the warehouse only, if the business is taxed on gross receipts.

(3) A warehouse operated as a distribution center for store(s) not under common ownership and management shall report the “Total Income” line of the tax return as derived from interest, rents, capital gains, other, etc., if the business is not taxed on gross receipts.

(g) If an insured has multiple premises as defined in § 83.22, the gross receipts of the total business shall be divided among the various locations in accordance with the percentage of the total gross receipts generated by each location.

(h) If an insured premises is regularly utilized as a collection center for performing accounting or bookkeeping functions with respect to the receipts delivered from two or more other premises, resulting in the accumulation of the combined receipts from such other premises at one location, the gross receipts for such location shall be determined by using the sum of the gross receipts amounts of all the other premises from which receipts are received. Further, if such insured premises is regularly utilized as a collection center at which there is accumulated money or property for distribution to one or more other insured premises, the gross receipts for such location shall be determined by using the sum of the gross receipt amounts of all the other insured premises to which distribution is made.

(i) Any questions regarding gross receipts or unique or unusual risk requiring special rating treatment shall be submitted to the servicing company listed in § 80.6 of this chapter for rate quotation.