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When Orbital Sciences' Antares rocket exploded at Wallops Island just six seconds after launch, the loss of the rocket and spacecraft was estimated at more than $200 million, not including damage to the launch pad.

According to Forbes, some of the loss was insured, although Forbes did not say how much of the loss was covered.

How much risk of commercial spacecraft launches are insurance companies willing to take, and how much of the potential losses must be considered a cost of doing business for the new commercial space industry?

Also, how much of the cost of a commercial launch goes for insurance premiums?

Finally, what conditions have insurance companies placed on the commercial space industry as a prerequisite for underwriting launches?

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    $\begingroup$ As far as I know (article in a German magazine back in the 1990s), launches are insured using so-called reinsurance scheme. Let's say a particular launch is worth 1 billion dollars. No insurance company can take such risk. Therefore, a reinsurance company takes the risk of 1 billion dollars, splits it into manageable parts (let's say 1000 parts each worth 1 million dollars) and then signs reinsurance contracts with smaller insurance companies. $\endgroup$ – DP_ Dec 24 '14 at 17:18
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    $\begingroup$ You can imagine it in the following way: Let's say, the launch of a Space Shuttle costs 500 million dollars. If we want to insure it, we could distribute that amount among all Americans (approx. 300 million people). Then, each American citizen would risk 500M/300M=1.7 dollars (i. e., if something is wrong with the launch and the insurance must be paid, every citizen pays 1.7 dollars, which is bearable). $\endgroup$ – DP_ Dec 24 '14 at 17:19
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You may want to read: Legal Aspects of Space Commercialization - K. Tatsuzawa. A few quotations follow...

Costs have been insured:

In 1982, ESA insured the Marecs-A and B satellites for \$90 million, for a premium of \$6.7 million (7.5% of the insured capital). Insurance would cover only a second failure, meaning that payment would occur if both satellites malfunctionned or were de stroyed during launching. Thus, having successfully launched Marecs-A, the second satellite was not covered.

Profit loss has been insured:

Japan's Space Communications Corp. (SCC) was forced to shut down its Superbird-A which has been used by 20 companies and was providing TV for a 100,000 homes in Japan, in December 23, 1990, and is filing a \$150 million insurance claim for the vehicle and additional insurance filings are likely by users of the satellite. The inability to provide communications services could cost the SCC millions of dollars in revenue.

Risks insured are actually various and multiple:

The first client to take an insurance policy was a telecommunications satellite — COMSAT's Early Bird in 1965. COMSAT had taken a third-party liability, for damages during the satellite's launching and its orbital life, and a pre-launch insurance for damage before launching, while the satellite was still on the ground.

Life insurance has existed since Apollo program:

There has even been a life space insurance policy, insuring the crew of the Apollo 11 mission. This “astropolicy”, made by a Greek insurance pool was hailed by the insurance industry for its inventiveness and innovation.

Space insurance is comparable to maritime insurance, with reinsurance:

Insurance companies usually insure the space risk and then reinsure themselves through insurance pools.

Types of contracts that have been reviewed by the authors:

  • Pre-launch, and in-orbit insurance.
  • Economic losses insurance.
  • Damages to third parties.
  • Re-entry liability.

Other elements you mention (e.g. constraints for launch) seem to be the result of a negotiation between the owner and the insurer, as explained in the document.

From OECD (2011), “Insurance market for space activities”, in The Space Economy at a Glance 2011, OECD Publishing:

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