KRS 355.2-501: Insurable interest in goods -- Manner of identification of goods.

(1) The buyer obtains a special property and an insurable interest in goods by

identification of existing goods as goods to which the contract refers even though

the goods so identified are nonconforming and he has an option to return or reject

them. Such iden tification can be made at any time and in any manner explicitly

agreed to by the parties. In the absence of explicit agreement identification occurs

(a) when the contract is made if it is for the sale of goods already existing and

identified;

(b) if the co ntract is for the sale of future goods other than those described in

paragraph (c), when goods are shipped, marked or otherwise designated by the

seller as goods to which the contract refers;

(c) when the crops are planted or otherwise become growing crops or the young

are conceived if the contract is for the sale of unborn young to be born within

twelve (12) months after contracting or for the sale of crops to be harvested

within twelve (12) months or the next normal harvest season after contracting

whichever is longer.

(2) The seller retains an insurable interest in goods so long as title to or any security

interest in the goods remains in him and where the identification is by the seller

alone he may until default or insolvency or notification to the buye r that the

identification is final substitute other goods for those identified.

(3) Nothing in this section impairs any insurable interest recognized under any other

statute or rule of law.