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This entry was published on 2014-09-22
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Insurance and Proceeds
Uniform Commercial Code (UCC) CHAPTER 38, ARTICLE 2-A, PART 2
Section 2-A-218. Insurance and Proceeds.

(1) A lessee obtains an insurable interest when existing goods are
identified to the lease contract even though the goods identified are
nonconforming and the lessee has an option to reject them.

(2) If a lessee has an insurable interest only by reason of the
lessor's identification of the goods, the lessor, until default or
insolvency or notification to the lessee that identification is final,
may substitute other goods for those identified.

(3) Notwithstanding a lessee's insurable interest under subsections
(1) and (2), the lessor retains an insurable interest until an option to
buy has been exercised by the lessee and risk of loss has passed to the

(4) Nothing in this section impairs any insurable interest recognized
under any other statute or rule of law.

(5) The parties by agreement may determine that one or more parties
have an obligation to obtain and pay for insurance covering the goods
and by agreement may determine the beneficiary of the proceeds of the