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Who pays if Elon Musk's SpaceX launch fails?

Rizky Triputra
Rizky Triputra

Long-life insurance learner and an avid reader

Jakarta  /  Thu, February 8, 2018  /  02:19 pm
Who pays if Elon Musk's SpaceX launch fails?

The SpaceX Falcon Heavy launches from Pad 39A at the Kennedy Space Center in Florida on Tuesday on a demonstration mission. On its highly anticipated maiden flight, the world's most powerful rocket, SpaceX's Falcon Heavy, carried CEO Elon Musk's Tesla Roadster to an orbit near Mars. Screams and cheers erupted at Cape Canaveral, Florida, as the massive rocket fired its 27 engines and rumbled into the blue sky over the same NASA launchpad that served as a base for the US missions to the Moon four decades ago. (AFP/JIM WATSON)

Billionaire entrepreneur Elon Musk, considered one of the most influential geniuses in the world today, launched the powerful “Heavy Falcon" rocket at the Kennedy Space Center in Cape Canaveral, Florida, on Tuesday. The rocket propelled the Tesla Roadster and a dummy astronaut called Starman to outer space to begin a journey to Mars.

The successful launch brings Musk closer to his aim of making humans an inter-terrestrial species that can live on Mars and explore the deep space.

However, in an interview before the launch, Musk admitted that, given the challenges of developing a new rocket, the odds of success of the first outing might be only 50-50.

This raises the obvious question: What happens when a SpaceX launch fails? Who must bear the losses, SpaceX alone or some other party, too?

Amid all the uncertainties of the universe, even Elon Musk must consider an insurance policy for his space projects.

Have you heard of aerospace insurance? Perhaps it’s not popular, but aerospace insurance is the answer as technology becomes more advanced and dynamic. Fortunately, in its basic function of a risk transfer mechanism, insurance can still provide peace of mind for owners and operators involved in space projects.

The following are must-have features of aerospace insurance:

1. Cover loss of revenue for the owner or operator of a space project

Insurance could provide coverage to the equipment manufacturer for the failure of a piece of equipment to perform to the manufacturer’s specification. If the manufacturer is responsible for the faul during assembly, then insurance will cover the consequential loss suffered by the owner or operator of a space project.

2. Protection of the satellites

Satellites are covered by insurance during launching and when in orbit. Insurance policies for launching would provide coverage against any damage or failure from the moment of launching when the satellite is separated from the booster and the final stage of the launch vehicle reaching orbit.

Meanwhile, insurance policies in orbit provide coverage for every scenario that can happen in orbit, such as drifting out of orbit, an anomaly in orbit, or collision with space debris.

3. Coverage of legal liability from uncertain third-party claims

Legal liability is the important thing here. Insurance will cover the damage that might be caused by launch failures. With such a space insurance, SpaceX would transfer the obligation to pay for any losses to a third party, as obliged in two international space treaties.

Article 7 of the Treaty on Principles of Governing the Activities of States in the Exploration and Use of Outer Space in 1967 states that “each stated party (or third party) from whose territory or facility an object is launched, is internationally liable for damage to another stated party to the treaty.” The Convention on International Liability for Damage Caused by Space Object in 1972 also mentions that “the launching state is liable for any damaged caused to third party property or person from space object, whether the third party property is in space, on the earth’s surface or is a passenger aboard an aircraft in flight.”

4. Help clear space debris falling onto Earth

There are so many cases of space debris falling onto the Earth. Cleaning it up, from land or from the ocean, can be a nuisance. Thus the process of removing it is also part of the insurance coverage. Insurance also pays any financial losses claimed by a third party if satellite junk causes injury or damage to people’s lives or property. (dev/kes)


A lifelong insurance learner, Rizky Triputra has earned a bachelor degree in the Trisakti Insurance Management Institute (STMA Trisakti) 2017 and a Young Expert in General Insurance award from AAMAI, 2016. He works at Tugu Pratama Indonesia, handling marine, aviation and satellite insurance policy. He is also a member of the Indonesian Insurance Writer Community at In his spare time, he loves reading and traveling.

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.