Space Insurance Exclusions: What’s Not Covered in Space Missions

When you buy space insurance, a specialized policy that protects against financial loss from satellite failures, launch explosions, or in-orbit malfunctions. Also known as launch insurance, it’s the safety net for companies betting millions on rockets that blow up or satellites that go silent. But here’s the catch: not everything gets covered. Even if you pay a premium, your policy might leave you holding the bag if your satellite gets hit by space debris, suffers from a software glitch, or is damaged during ground handling. These gaps aren’t loopholes—they’re standard space insurance exclusions, specific conditions or causes of loss that insurers explicitly won’t pay for. And if you’re launching a CubeSat or managing a lunar lander, knowing these exclusions isn’t optional—it’s survival.

Most policies exclude damage from space debris, human-made objects orbiting Earth that can destroy satellites at speeds over 17,000 mph. Also known as orbital debris, it includes old rocket stages, broken satellites, and even paint flakes. You might think your satellite is safe in orbit, but insurers don’t care if you didn’t see that 10-centimeter bolt coming. They won’t cover collisions with debris unless you paid extra for enhanced coverage. Then there’s launch failure, when a rocket explodes on the pad or veers off course before reaching orbit. Even here, exclusions apply: if the failure comes from poor ground testing, improper fueling, or using unapproved components, the insurer walks away. And don’t assume government agencies like NASA are immune—when the Mars Climate Orbiter vanished in 1999 due to a unit conversion error, it wasn’t covered by insurance. Human error? Excluded. Software bug? Excluded. Deliberate sabotage? Also excluded. These aren’t edge cases; they’re the norm.

Another big one: intentional acts, including military actions, cyberattacks, or sabotage. If a satellite gets jammed by a foreign power or hacked by a rogue actor, your policy won’t pay. Insurers treat space like a war zone—unless you have a government-backed policy, you’re on your own. Even design flaws, like a solar panel that can’t deploy properly or a thruster that overheats, are often excluded if they were known during testing but not fixed. That’s why companies like SpaceX and Rocket Lab spend more on pre-launch simulations than on insurance. They know the policy won’t save them from their own mistakes.

What’s left? Only the big, unpredictable disasters: a launch vehicle exploding due to a manufacturing defect in the engine, or a satellite failing because of a rare cosmic ray strike. Even then, payouts come with delays, audits, and fine print. If you’re planning a mission, don’t just buy insurance—build redundancy, test everything twice, and assume the worst. The real protection isn’t in the contract. It’s in your prep.

Below, you’ll find real-world breakdowns of what went wrong—and what insurers refused to pay for—in recent space missions. These aren’t hypotheticals. They’re lessons written in lost satellites and empty bank accounts.