Guest author Darrell W. Pierce of the law firm Dykema Gossett explains why lenders providing financing for power production facilities need to examine the unique characteristics of these properties to avoid substantial gaps in title insurance coverage.

Lenders have typically relied on heavily-qualified legal opinions of outside counsel regarding the attachment, perfection and priority of a security interest. A UCC insurance policy provides a significant advantage over a legal opinion, offering greater protection to the lender and limited liability to outside counsel.

For working capital or term loan transactions, an insured lender is making a loan to a business looking to expand or enhance its operation. These loans are typically secured by all assets of the business, but usually focus on accounts, inventory, equipment and the general intangibles of the company.