The Final Frontier… in Insurance Coverage

Insurance giant Lloyd’s of London is in negotiations to provide insurance for nascent space tour provider Virgin Galactic. According to the Lloyd’s site, Bruno Ritchie, director of the aerospace division at Hiscox Global Markets,

says that insurance is likely to be sought for the hull value of the
spacecraft, with the price of cover dependent on the safety and reliability of
the venture established through its testing phase, which will reportedly
comprise 50 to 100 test flights.

He added that third party liability cover may also be required to
protect Virgin against claims from people living nearby the launch site in case
of pollution or a crash occurring over their homes, while the many potential
passengers who have registered an interest in paying $200,000 each for the space
flights would require personal accident cover.

However, Ritchie says that initially passengers may have to travel at
their own risk as insurers could be reluctant to provide personal accident cover
until a safety record for the flights is established.

While there have been insurance contracts for private satellites and such , what is so interesting here is that this is the insurance industry having to grapple with a new situation: manned private space flight. The rise of new technologies has often caused an expansion and evolution of the law: railroads, automobiles, television, and the Internet were not only technological revolutions but also caused jurisprudential revolutions in areas ranging including jurisdiction, conflicts of laws, and tort law.

Whether the space tourist industry itself is robust enough to spur a similar evolution remains to be seen. However, the commercialization of space, a process which began about three decades ago but is really picking up speed today, is likely to bring changes to how we think about property, risk, and (no pun intended) common spaces.