§ 336.2A-218 — Insurance and Proceeds
Plain-Language Summary
A lessee gains an insurable interest in the leased goods once existing goods are identified to the lease, even if those goods do not conform and the lessee could reject them. If the lessee's insurable interest comes only from the lessor's identification, the lessor may substitute other goods until there is a default, insolvency, or notice that the identification is final. The lessor keeps an insurable interest until the lessee both exercises an option to buy and takes on the risk of loss, and this section does not override insurable interests under other law. The parties may agree on who must obtain and pay for insurance and who receives the insurance proceeds.
336.2A-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 lessee.
(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 insurance.
History:
1989 c 232 art 1 s 2A-218
History: History: 1989 c 232 art 1 s 2A-218