Partial loss clause (satellite)

The partial loss clause pays out on a satellite that still works but has lost part of its capacity or planned service life, without waiting for a total loss. A satellite can lose transponders, electrical power or planned years of service and keep transmitting. That is the usual case in space, where few failures are as clear-cut as a launch explosion. The policy then sets a scale, often as a percentage of the insured value, based on the capacity lost or on how much useful life was cut short against what was expected at inception. Past a cumulative degradation threshold, typically around half the satellite's capacity or value, the claim becomes a constructive total loss: the insurer pays as for a total loss and, where applicable, takes over the degraded asset. The insured therefore does not have to choose between keeping a diminished asset with no compensation and giving up a satellite that still delivers part of its service. Most real space claims go through this mechanism, because they are more often gradual degradations than sudden destruction. The Indonesian satellite Telkom-1 shows the most radical side of the threshold. In August 2017, a sudden reaction wheel failure cost it the attitude control its operation required. The operator declared a constructive total loss without waiting for it to physically disappear, and moved its customers to other capacity right away.