Satellite replacement cost (coverage basis)

Replacement cost is the basis on which a space policy sets each satellite's sum insured at launch, before that value declines in orbit. When ViaSat-3 Americas was declared a loss in 2023, the insured claimed $421 million, not the value of a new satellite of the same model: the sum insured had been fixed at inception. Every space policy works this way. For the launch plus one year phase, the insured value is set on replacement cost. That covers building an identical spacecraft, the price of a new launch and the insurance premium for the relaunch. Sometimes it adds the fees for a backup launch reserved with a provider. It is agreed in advance, which removes any valuation dispute after the loss. The in-orbit policy then follows the satellite's life. A spacecraft designed for fifteen years loses value as it burns fuel and years of revenue. The sum insured therefore declines on a schedule set in the contract, often straight-line over remaining life. A total loss in year ten pays only a fraction of the initial cost, and a satellite near end of life is often no longer insured at all. Two points separate this market from ordinary property insurance. New-for-old does not exist: there is no secondhand satellite to buy, and a total loss pays the agreed sum, not an appraisal. And the insurer pays money, it rebuilds nothing. The operator remains free to relaunch, sell its orbital slot or keep the cash, as Viasat did when it said it would not replace the satellite. Partial loss is the exception: below the constructive total loss threshold, the indemnity is prorated to the capacity lost.