Partial loss clause (satellite)

The partial loss clause compensates a reduction in a satellite's capacity or planned service life while it otherwise remains operational, without waiting for a total loss. A satellite can lose part of its transponders, its electrical power or its planned years of service without ceasing to transmit, a common situation in space where few failures are as clear-cut as a launch explosion. The policy then sets a scale, often expressed as a percentage of the insured value, calculated on the capacity lost or on the shortfall in useful life relative to what was expected at inception. A cumulative degradation threshold, typically around half the satellite's capacity or value, triggers a constructive total loss: the insurer then settles as for a total loss and, where applicable, takes over the degraded asset. This mechanism spares the insured from having to choose between keeping a diminished asset with no compensation or giving up a satellite that still provides partial service, and it structures most real space losses, which are more often progressive degradations than instantaneous destructions.

The propulsion leaks affecting several Boeing 702SP satellites between 2017 and 2019 were settled as partial losses indexed to the reduction in useful life rather than as total losses, with the satellites continuing to operate on a shortened service life.

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