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Orbcomm said it will be filing an insurance claim of $10 million to cover the prototype satellite as well as the cost of the launch and insurance policy

Orbcomm's prototype second-generation satellite, OG2, has fallen out of orbit after SpaceX's Falcon 9 rocket failed to launch it into the correct trajectory.

Orbcomm, a satellite messaging service provider, had sent its OG2 prototype into space aboard SpaceX's Falcon 9 rocket during the Oct. 7 launch to the International Space Station (ISS). The main mission was to send the Dragon capsule to the ISS for supplies, but NASA and SpaceX agreed to let Orbcomm send a satellite high into orbit on the Falcon 9 as a secondary part of the mission. 

However, a small mishap occurred during the Oct. 7 flight: one of the nine Merlin first-stage engines on Falcon 9 shut down. 

The Falcon 9 was still able to lift the Dragon to the ISS successfully on Oct. 10, but it was unable to launch the OG2 prototype far enough into orbit to collect an optimal amount of data. It wandered for four days before falling out of orbit. 

However, Orbcomm said that wandering satellite gathered enough data in the nearly four-day period to proceed with the full constellation launch next year. The constellation launch consists of sending 18 second-generation satellites into orbit aboard two Falcon 9 rockets. 

Orbcomm said it will be filing an insurance claim of $10 million to cover the prototype satellite as well as the cost of the launch and insurance policy. If the insurance underwriters accept this, Orbcomm will not need to launch another prototype. Rather, it would be able to launch all 18 satellites starting next year thanks to the amount of data collected during the recent launch. 

SpaceX added that Orbcomm knew that there was a chance that OG2 wouldn't make it into the correct orbit beforehand. 

"It is important to appreciate that Orbcomm understoof from the beginning that the orbit-raising maneuver was tentative," said Katherine Nelson, SpaceX spokeswoman. "They accepted that there was a high risk of their satellite remaining at the Dragon insertion orbit. SpaceX would not have agreed to fly their satellite otherwise, since this was not part of the core mission and there was a known, material risk of no altitude raise."

SpaceX's Dragon is currently at the ISS unloading 882 pounds of cargo, and will bring twice that amount of cargo back to Earth near the end of October. 

Source: MSNBC

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Insurance policy
By futrtrubl on 10/15/2012 5:11:29 PM , Rating: 5
Since when has an insurance policy ever covered its own premium? That just makes no sense. Did Orbcomm actually claim that or is the writer of the article claiming that?
Also regarding them getting a full payout for the cost of the launch/satellite I think the insurer may balk at that a bit since the mission was technically successful, ie they got the data they needed.

RE: Insurance policy
By DanNeely on 10/15/2012 6:42:25 PM , Rating: 5
High end insurance is a boutique product, and you can get almost anything you want written into the contract if you pay enough. Unlike your Chevy or Toyota there's no book value involved; you tell the insurer what conditions you want covered and to what dollar amount and they tell you how much it's going to cost. You or I can get similar policies for collector cars or heirlooms with large sentimental value; although depending on what the items are the policy may have to be bought through a specialty insurer rather than the company our default car/property coverage is through.

If XYZ Insurance Co's underwriters decided that they needed a premium of 10% of the payout in order to cover their risks and Orbcom's satellite/launch costs were $9m; then for $1m they could get a $10m policy covering the cost of the satellite, the launch, and the policy itself.

Likewise, the degree of failure threshhold for a payout would be negotiated in advance. IF the policy was written against the amount of data they'd like to have vs the absolute minimum necessary to avoid a second test launch then it's entirely possible they'll be getting a payout. The reason they'd do it that way would be to cover additional simulation testing for less critical functions they didn't get to test with real hardware, the increased risk of failure in production models due to reduced hardware testing, and to cover overtime work by all the engineers working 15 hour days in the brief time the satellite was in orbit

RE: Insurance policy
By foolsgambit11 on 10/15/2012 7:48:51 PM , Rating: 2
It's doubtful even a boutique insurer would make a business model out of covering the cost of the insurance policy in the insurance - it actually puts an incentive on this insured party to cash in on their policy. Look at this scenario, for example:
Say Orbcomm had that $10mil policy with the $1mil premium. Should the launch go perfectly to plan, the insurance policy is just a $1mil loss. If the launch is a complete failure, there are no losses (except maybe time to relaunch a new prototype). And if the launch is a semi-failure like this, they get the data they wanted, and have no losses. So the worst-case scenario for Orbcomm was a successful launch, and no insurer is going to survive long giving out policies like that; the incentives are backwards.

RE: Insurance policy
By Rukkian on 10/16/2012 9:38:27 AM , Rating: 2
Unless they offer the option, and charge 3Mil. It all depends on how the insurance is written. This is not a standard off the shelf insurance from progressive.

RE: Insurance policy
By drlumen on 10/16/2012 2:22:21 PM , Rating: 2
It would not be much different to want insurance for $10M for all losses or $9M for the satellite and $1M for the policy.

It would kinda be like the car windshield companies able to skirt around the insurance deductible. They just charge more for the replacement and forgive the deductible amount.

RE: Insurance policy
By Brian H on 10/20/2012 7:57:17 AM , Rating: 2
Worst case only in terms of expenditure. They got what they paid for, which is the best case scenario.

Your analyses seem obsessed with minimizing outlay. It's the return on outlay which is the point of the venture. Your observations and caviling are bootless.

RE: Insurance policy
By kattanna on 10/16/2012 1:19:24 PM , Rating: 2
Since when has an insurance policy ever covered its own premium? That just makes no sense.

since this is FAR FAR from the first time they have launched a satellite into space.. they have a long record i'm sure with said insurance company. I'm 100% sure they have paid enough in past premiums on other launches with no payouts as they were a success that this was not a big deal to the insurance company, for the most part.

RE: Insurance policy
By Brian H on 10/20/2012 7:52:47 AM , Rating: 2
Of course it makes sense. There's nothing special about the premium expense which means the insured must suffer it as a net deduction from any payout. It's just a marginal increase in the amount insured.

SpaceX Mishap?
By othercents on 10/15/2012 4:04:20 PM , Rating: 2
Nice slant, but Orbcomm has a different perspective:

The OG2 prototype was deployed into a lower orbit as the result of a pre-imposed safety check required by NASA. The safety check was designed to protect the International Space Station and its crew. Had ORBCOMM been the primary payload on this mission, as planned for the upcoming launches, we believe the OG2 prototype would have reached the desired orbit.

RE: SpaceX Mishap?
By Nortel on 10/15/2012 4:09:53 PM , Rating: 2
Everyone knows the basics about redundancy and odds of failure. If you have 9 engines strapped together and all 9 HAVE to ignite you have zero redundancy and the more rockets you add the higher your odds of failure are. Every rocket engine added into the mix compounds the chance of failure.

RE: SpaceX Mishap?
By 91TTZ on 10/15/2012 4:20:29 PM , Rating: 3
Usually you design the rocket around the fact that one of the engines won't work correctly. The Saturn V did this and it just burned its other engines slightly longer to account for the loss of thrust.

RE: SpaceX Mishap?
By Rukkian on 10/15/2012 4:40:45 PM , Rating: 2
And in this case, the falcon9 was able to do just that for the primary objective (the dragon capsule), but the secondary (the orbcomm sat) did not get enough of a correction.

RE: SpaceX Mishap?
By Samus on 10/15/2012 11:00:57 PM , Rating: 2
From what I can tell reading the sources there was basically no chance this thing would have made it to high orbit unless there was no ISS-bound Dragon capsule.

Obviously the priority at SpaceX is NASA, not some small communications company that was told the risks of a piggyback launch but ok'd it anyway. I don't see this insurance claim being approved. Risks were known. Useful data was collected. Engine failure or not, the success probability was already very low.

RE: SpaceX Mishap?
By maugrimtr on 10/16/2012 8:55:27 AM , Rating: 2
I think this obviously was NOT a SpaceX mishap. They had a priority in reaching the ISS without taking any additional risks. The communications company agreed to this, fully cognisant of the risk that they might fail to get a higher orbit. SpaceX did their job, took no stupid risks and sent Dragon on to the ISS. Job well done.

The insurance company may actually pay out if their policy underwriting took account of the material risks of a failure and issued the policy anyway. Gamblers can't win them all!

RE: SpaceX Mishap?
By kattanna on 10/15/2012 4:57:24 PM , Rating: 2
The safety check was designed to protect the International Space Station and its crew.

from what i read elsewhere..spacex wasn't even allowed to try because they deemed the ISS and crew were to valuable to risk for a little satellite, which I agree.

while some will try to make it look like a failure, I don't agree because it wasn't allowed to even proceed

RE: SpaceX Mishap?
By Brian H on 10/20/2012 8:04:33 AM , Rating: 2
Actually, were it not for NASA-imposed paranoid safety constraints, the engines (including the glitched one) could have re-ignited after 2nd stage separation and lifted the Orbcomm into a high enough orbit. But SpaceX was constrained from doing so by NASA rulez.

Maybe Orbcomm and the insurer should sue NASA for any added cost that ultimately results.

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