Is business interruption insurance a separate policy?

Usually it is a section of a commercial combined or package policy rather than a standalone contract, and it is normally triggered by insured damage under the property section. It still deserves separate attention, because the sums insured, definitions and indemnity period are set independently of the property cover.

What indemnity period should we choose?

Long enough for the business to return to the trading position it would have been in without the loss — not just to reopen the doors. For most businesses that means thinking through reinstatement, re-fitting, re-tendering for lost contracts and winning customers back. Twenty-four months is a common starting point; businesses with long rebuild times, specialist premises or slow customer win-back often need thirty-six.

What is declaration-linked BI cover?

Instead of a fixed sum insured, you declare an estimated gross profit and the policy typically allows a margin of uplift above it. Provided your declaration was made honestly and updated at renewal, it substantially reduces the risk of an underinsurance penalty. It does not remove the need to calculate the declared figure on the insurer’s definition.

Does BI cover losses where there is no physical damage?

Standard BI needs an insured damage trigger. Some policies include limited non-damage extensions, such as denial of access or infectious disease cover, and the wording of those extensions determines exactly what they respond to. The FCA’s COVID-19 test case showed how much the precise words matter, which is why they should be read before you rely on them, not after.

Insurance case law

Quadra Commodities SA v XL Insurance Company SE [2022] EWHC 431 (Comm)

Case law summary · Reviewed by the Apex broking team · Last reviewed 2026-08-22

In short: The first English decision to consider section 13A of the Insurance Act 2015 — the implied term that insurers pay valid claims within a reasonable time. Butcher J held that the insured had an insurable interest in grain that was physically present in Ukrainian warehouses despite a fraud in which the same goods were sold repeatedly, and that a reasonable time to investigate and pay on these facts was not more than about a year from notice of loss. No damages were awarded under section 13A, because the insurers had reasonable grounds for disputing the claim.

Citation

Quadra Commodities SA v XL Insurance Company SE [2022] EWHC 431 (Comm) — High Court of Justice, Commercial Court, 2022.

Citation, court and year verified against the official judgment text published by The National Archives, Find Case Law (https://caselaw.nationalarchives.gov.uk/ewhc/comm/2022/431).

Neutral citation: [2022] EWHC 431 (Comm)
Court: High Court, Queen’s Bench Division, Commercial Court
Judge: Mr Justice Butcher
Judgment date: 4 March 2022
Bailii URL: https://www.bailii.org/ew/cases/EWHC/Comm/2022/431.html
Appeal: [2023] EWCA Civ 432, Court of Appeal, 21 April 2023 — insurers’ appeal dismissed

Facts

Quadra Commodities SA is a commodities trader. It bought consignments of grain from companies in the Agroinvestgroup group, paying against documentation including warehouse receipts which purported to record grain held on its behalf at storage facilities in Ukraine.

The arrangement collapsed in 2019. It emerged that Agroinvestgroup had been operating a fraud in which the same physical grain was sold, and warehouse receipts issued, to multiple buyers over and over again. When Quadra and other buyers attempted to take delivery there was nothing like enough grain to satisfy the paper.

Quadra claimed under a Marine Cargo policy underwritten by XL Insurance Company SE and other insurers. The policy included a Misappropriation clause and a Fraudulent Documents clause. Insurers declined the claim. Quadra sued for the indemnity and, in addition, claimed damages under section 13A of the Insurance Act 2015 for the insurers’ failure to pay within a reasonable time.

Issues

The case raised three questions of general interest. First, whether Quadra had an insurable interest in the grain at all, given that no title had passed under the Sale of Goods Act 1979 because the goods had not been sufficiently ascertained out of a bulk. Second, whether there had been a physical loss of goods covered by the policy, as opposed to a purely paper or economic loss. Third, whether the insurers were liable in damages under section 13A for late payment.

Decision

Insurable interest. Butcher J held that Quadra did have an insurable interest. It had paid under the purchase contracts, and it had an immediate right to possession of goods corresponding to its purchases under the applicable law. Insurable interest is a broader concept than legal title: a party may have an insurable interest where it stands in a legal or equitable relation to the property such that it benefits from its preservation and is prejudiced by its loss. The absence of a passing of property under section 16 or section 20A of the Sale of Goods Act 1979 was not decisive.

Physical loss. On the evidence, grain of the relevant description had been physically present at the warehouses at the times the receipts were issued. That grain was subsequently misappropriated. There was therefore a physical loss of goods in which Quadra had an insurable interest, and the claim fell within the Misappropriation cover.

Section 13A. The section implies into every contract of insurance a term that the insurer must pay sums due in respect of a valid claim within a reasonable time, and gives the insured a remedy in damages for breach. Butcher J accepted that the section applied and considered what a reasonable time would be on these facts, concluding that a reasonable time for investigating and paying this claim was not more than about a year from the notice of loss. However, section 13A(4) provides that if the insurer shows there were reasonable grounds for disputing the claim, the insurer does not breach the implied term merely by failing to pay while the dispute continues. The judge held that these insurers did have reasonable grounds for disputing the claim — the fraud was complex, the underlying facts were in a foreign jurisdiction and were genuinely difficult to establish, and the coverage arguments were properly arguable. No damages were awarded under section 13A.

On appeal

The Court of Appeal dismissed the insurers’ appeal on 21 April 2023 ([2023] EWCA Civ 432), upholding the findings on the existence of the goods and on insurable interest, and rejecting the argument that insurable interest required the bulk-identification analysis of section 20A of the Sale of Goods Act 1979. The section 13A findings were not disturbed.

Ratio and significance

Two points matter for insureds and their brokers.

Insurable interest is wider than title. A buyer who has paid for goods forming part of an unascertained bulk may still have an insurable interest in goods physically present, and a cargo policy can respond to their misappropriation. The decision, and the Court of Appeal’s endorsement of it, is now the leading modern statement of that principle in a commodities context.

Section 13A has teeth, but they are not sharp. Quadra is the first case in which an English court considered section 13A in substance, and its practical message is cautionary for insureds. The section does impose a real obligation and the court was prepared to say what a reasonable time looked like. But the defence in section 13A(4) — reasonable grounds for disputing the claim — is a substantial one, and an insurer that genuinely and reasonably disputes coverage will not be liable in damages merely because it ultimately loses. An insured relying on section 13A therefore has to show not just delay and not just that it won, but that the insurer’s position was not reasonably arguable, or that the insurer took an unreasonably long time even accepting the dispute.

For anyone building a claim strategy, the sequence in Quadra is instructive: establish the indemnity first, and treat section 13A as a supplementary argument rather than the engine of the case. The related decision in MS Amlin v King Trader (The Solomon Trader) deals with a different aspect of the 2015 Act, and our entry on section 9 of the Act covers the treatment of warranties and representations.

Frequently asked questions

What does section 13A of the Insurance Act 2015 require?

It implies into every contract of insurance a term that the insurer will pay sums due in respect of a valid claim within a reasonable time, and it allows the insured to claim damages if that term is breached. What is reasonable depends on the type of insurance, the size and complexity of the claim, compliance with any relevant regulatory rules and factors outside the insurer’s control.

Did Quadra recover damages for late payment?

No. Butcher J considered that a reasonable time to investigate and pay would have been not more than about a year from the notice of loss, but held that the insurers had reasonable grounds for disputing the claim within the meaning of section 13A(4). Because of that defence, no damages were awarded for late payment even though Quadra succeeded on the indemnity.

Why did the insurable interest point matter?

Because no property in the grain had passed to Quadra under the Sale of Goods Act 1979 — the goods were an unascertained part of a bulk. Insurers argued that without title there was no insurable interest and no recoverable loss. The court held insurable interest is broader than title: payment under the purchase contracts and an immediate right to possession were enough.

Was the decision appealed?

Yes. The insurers appealed on the existence of the goods and on insurable interest. The Court of Appeal dismissed the appeal on 21 April 2023 ([2023] EWCA Civ 432) and upheld Butcher J’s reasoning.

References

[2022] EWHC 431 (Comm), Commercial Court, 4 March 2022
[2023] EWCA Civ 432, Court of Appeal, 21 April 2023
Insurance Act 2015, section 13A
Sale of Goods Act 1979, sections 16, 20A and 20B
Marine Insurance Act 1906, sections 4 to 6 (insurable interest)

This page is general insurance information, not legal advice, and describes the position as at August 2026. Cover depends on the wording of the policy actually in force.

A claim that is being disputed is a broking problem, not just a legal one

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.

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