We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is Satellite Insurance?

Jim B.
By
Updated: May 17, 2024
Views: 10,597
Share

Satellite insurance is the insurance purchased by companies to protect against the failure of satellites launched into space. The costs of satellites and the rockets that launch them are extremely high, so companies and institutions dealing in space exploration need some sort of protection. As an industry, satellite insurance has become more prevalent as more companies from around the world get involved with launches. In some cases, however, it is difficult for actuaries, who determine the amount of risk involved with insurance policies, to judge satellite launches, because there are still too few launches for accurate risk assessments to be made.

It is nearly impossible to envision the modern world without satellites. Their capabilities play a large part in the fact that the world is such an interconnected society in terms of communication, and they also factor in space exploration, earth studies, and weather prediction. But they also come with large price tags, meaning that satellite companies run a great financial risk every time they launch them. For that reason, satellite insurance has become an essential part of the satellite phenomenon.

One of the most important concerns that an insurance company has when determining whether or not to give out satellite insurance is the huge cost of replacing a satellite. An insurance company has to be concerned with its own bottom line, which means that it must receive premium payments that compensate for the risk involved. Any type of space travel carries enormous risks, so the possibility of a satellite company cashing in on a policy is relatively high.

Actuaries are employed by insurance companies to assess the risk attached to each policy, and that risk helps determine the rates that are charged for the policies. In the case of satellite insurance, actuaries have to set a rate that covers the insurance company for huge potential losses. It is also common for insurance companies to set a maximum amount a company can receive for a lost satellite. If this amount falls short of the cost to replace the satellite, the satellite company must decide whether it is worth the cost of the policy.

Another facet of satellite insurance that causes difficulties for actuaries is that they rarely have much information to study when trying to determine the relative safety of a particular launch. With space travel becoming an international pastime, more and more companies are springing up with the idea of sending up satellites for various purposes. These new companies may have a hard time getting competitive insurance rates simply because the risk levels are too unknown for the insurers.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Jim B.
By Jim B.
Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own successful blog. His passion led to a popular book series, which has gained the attention of fans worldwide. With a background in journalism, Beviglia brings his love for storytelling to his writing career where he engages readers with his unique insights.

Editors' Picks

Discussion Comments
Jim B.
Jim B.
Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own...
Learn more
Share
https://www.wisegeek.net/what-is-satellite-insurance.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.