A UCC insurance policy is issued for many types of loan transactions. It is especially valuable to any lender to whom a security interest is granted in collateral specifically described in Articles 8 and 9 of the Uniform Commercial Code.

Most typically, a UCC insurance policy is underwritten for real estate mezzanine loans, power-production facility loans or other types of related energy transactions, and working capital or term loans for businesses.

The policy can range from insuring a single piece of equipment or single pledge of equity to insuring all assets of a corporation or other entity. In all of these transactions, personal property is typically either the sole asset that the lender is relying on to recover their loss if a default occurs or is a significant portion of the collateral relied upon by the lender to secure the loan.

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About the Author

Gary M. Zimmerman is Senior Vice President and Chief Underwriting Counsel for UCCPlus, a division of Fidelity National Title Group.