Working in the insurance industry, we know you can basically insure anything in the world: From your new puppy to J.Lo’s butt. But what if you need to insure something that is specifically out of this world? Luckily, there’s space insurance. That’s right, insurance for your rocket ship and other flying objects.
To learn more about space insurance, we sat down with Caleb Winterburn, a licensed insurance agent and VP of operations at Air1 Insurance. A pilot himself, Winterburn specializes in aviation insurance. Not surprisingly, space insurance is the next evolution of the well-established field of aviation insurance. Since there’s no need to reinvent the wheel (or the wing, in this case), Winterburn explained how space insurance functions just like aviation insurance in many ways, and he predicts it will be just as common at some point in the future.
Ready to go where no man has gone before? Here’s what we learned from the conversation.
What is space insurance?
Space insurance is a type of property and casualty insurance that’s primarily for satellites and rockets. To clarify these terms, rockets are the parts with engines that propel other things into space. Satellites are some of those “other things” that rockets carry into space and then release into orbit. Space insurance policies are written on other types of spacecraft, but by far the most commonly insured items are the satellites such as those used for telecommunication, GPS navigation, and weather (among other things), and the rockets that blast them off into space.
What does space insurance actually insure?
In insurance terms, space insurance is just like aviation insurance. You have hull coverage and liability coverage. Hull coverage is for damage to the body of the rocket or satellite itself. Liability coverage is for damages caused by the insured object to other people or property. For example, hull coverage would cover the cost to repair your satellite if it was hit by a meteor and damaged. Liability coverage would pay the injured party if your satellite came down from space and crushed someone’s car, or accidentally collided with the Chinese space station.
While space insurance might sound really “out there,” you can think of it as a long-distance aviation policy for things that are flying outside of the earth’s atmosphere instead of at a cruising altitude of 35,000 feet. The perils of blasting off into space may seem astronomically more complex than flying an airplane, but – at least as far as insurance goes – it’s not really that different.
One of the biggest differences between today’s aviation insurance coverage and space insurance is the chance to purchase coverage for passengers. Currently, space insurance only offers coverage for the physical hull of the craft, anything the craft is carrying (considered a payload), and liability for damages caused by the craft to others.
When it comes to both the passengers and the pilot, you’ll want to look at what other insurance coverage you have – and check for any space-related exclusions – before blasting off.
According to Winterburn, one of the biggest reasons this coverage isn’t currently offered is because the big private/commercial space launch companies haven’t yet asked for it to be included. He predicts in 10-15 years or so, when space tourism is much more evolved than today, passenger coverage will be readily available.
Who needs space insurance?
Anyone who plans to launch something into space could probably benefit from space insurance. Currently, the major players in the “space” space are governments, telecommunication companies, and super-rich individuals like Elon Musk. In some cases, the cost of insuring a spacecraft could be prohibitive or unrealistic. Someone who has the kind of money to spend tens of millions of dollars on their own spaceship may choose to self-insure by just absorbing any costs associated with damages their spacecraft causes.
For more routine space launches, like those to send GPS satellites up on a regular basis, having insurance is a good investment. One thing to keep in mind, if you’re planning to insure your satellite, is that hull insurance has a limited lifespan. At some point, just like an old “beater” car, space insurance companies will only cover liability and no longer repair damages caused to the spacecraft itself.
Even if you’re not dealing with antique satellites, Insurance Journal reports collision insurance is getting more difficult to find thanks to growing collision risks from space trash and overcrowded satellite orbits.
Is space insurance required?
Auto insurance is required to drive a car. So, you’d think aviation insurance would be required to fly a private plane, and space insurance required to launch a rocket. That’s actually not the case. At least in the U.S. and Canada, there are no federal laws requiring insurance for spacecraft and only a small number of states require insurance on private aircraft.
Where you might run into a space insurance requirement is on the local level (city or town) and with the launch facility itself. Some municipalities have minimum insurance requirements, as do some launch pads. Requirements vary from country to country, but regulations are few and far between since space travel is still in its infancy.
How much does space insurance cost?
The cost of space insurance can vary dramatically depending on a variety of factors. Winterburn explains that everything from the manufacturer of the equipment (and its safety track record), to the pilot’s own history and experience, to the location of the launch can influence space insurance premium pricing.
Current tensions related to pricing are because space insurance is still so niche that only a few carriers underwrite it and only a few customers purchase policies. A major accident could hypothetically wipe out a carrier’s entire collected space insurance premium across all customers, but they can’t necessarily charge more for the coverage and price out their clientele. Winterburn says 2 to 4 percent of the value of the insured spacecraft is a pretty typical premium. If you’re a new space pilot, you can expect your premiums to be higher. If that sounds like a lot of money, it is! It’s about $80,000 in premium as a starting point on a $4 million rocket. And don’t forget about your deductible, which could start around a quarter of a million dollars!
How is space insurance regulated?
Currently, space insurance is governed by the same laws as other types of property and casualty insurance. To sell space insurance, an agent or broker must be licensed and appointed by a carrier. However, unlike other types of very specialized insurance products that have grown to have their own unique requirements, space insurance is still so new (and rare compared to other types of policies) that there aren’t laws written specifically for it.
Does space insurance cover losses due to alien invasion or abduction?
If your satellite, rocketship, or international space station suffers a loss due to alien activity, you may actually be able to file a claim. “I’d have to read the policy,” says Winterburn, “but usually policy exclusions get put into place after the first time something happens.” So, good news: if you’re the first person to file an alien invasion claim, you might just get it paid!
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