ALSBTALK:

The UCC separated the need to know who has title from the need to know who has risk of loss (ROL) to facilitate insurance.  

Either title or ROL creates an insurable interest.  Only one person has title at one time; but title is very difficult to pin down:  this makes parties less likely to buy insurance.  More importantly, exact knowledge of who has title is not needed in the context of insurance until after the insured loss (a low probability event) has occurred.  

Thus, both the buyer and the seller, at different moments, have easily determined ROL and accordingly legally cognizable insurable interests in one "goods".  Accordingly, together the buyer and the seller can purchase the same insurance policy to cover the time and the risk between seller unquestionably has title to buyer unquestionably has title.  The public policy consequences of the buyer and the seller jointly buying insurance on the goods are several:  [1] joint purchase reduces each party's insurance expense nearly in half; [2] lower insurance costs (both individually and in total [only buy one policy, not two] increases the frequency of losses being insured; [3] the insurer must pay someone thus can act as a party selected neutral in resolving their disputes, reducing the frequency of litigation; and [4] ROL increases the scope and frequency of insurable interest, at low prices, thus increasing the frequency and scope of purchased insurance, which in turn reduces the both the frequency and magnitude of insured events disrupting the economy (assuming insurers act like insurers rather than gamblers [e.g., AIG]). 

Michael

Professor  Michael  J.  O'Hara, J.D., Ph.D.    
Mammel Hall 228                                                           
Finance, Banking, and Real Estate Department               
College of Business Administration 
University of Nebraska at Omaha 
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