The Sky is Falling!!! Does my insurance cover that?
The Sky is Falling!!!
Okay, not literally but figuratively at least. You may have heard over the weekend that a 6-Ton satellite was crashing back to earth. According to the news, the former climate research satellite which was about the size of a city-bus, crashed to earth in the early morning hours of Saturday 24th. This news brought to mind a couple of questions. Would my insurance policy cover me if my house or car was hit by a falling satellite? Would my life insurance pay out if I was squished by the satellite?
As your local insurance agent, I set about looking for answers. According to NASA spokesman Stephen Cole: “There has never been a reported case of any human being injured or any significant property damage from space debris in the 50 years we’ve been putting things up there.”
While you can definitely learn from the past, its not always an accurate predictor of the future. I would hate to be the first person or agent to have to file a claim like this, so I dug a little deeper. I pulled actual home and auto policies from several of our major carriers.
A typical HO-2 policy or ‘broad form’ insurance policy provides protection for the following perils:
- Fire or lightning
- Windstorm or hail
- Riot or civil commotion
- Damage caused by aircraft
- Damage caused by vehicles
- Vandalism or malicious mischief
- Volcanic eruption
- Falling objects
- Weight of ice, snow or sleet which causes damage to a building
- Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire-protective sprinkler system or from a household appliance
- Sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system or an air conditioning or automatic fire-protective system
- Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system or of a household appliance
- Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component)
While the HO-2 can be considered the ‘standard insurance policy’ for a homeowner, many people carry what is called an HO-3 or ‘special form.’ This is an upgrade to the HO-2 and rather than listing specific types of coverage, it covers everything that is not specifically excluded. The standard exclusions for an HO-3 are as follows:
- Ordinance or law, such as demolition or construction required to bring your house up to code
- Earth movement, such as earthquakes, shockwaves, sinkholes, landslides and mudflows
- Water damage, such as floods, sewer back-ups and water that seeps through the foundation
- Power failure
- Neglect, meaning you failed to take reasonable means to save your property during or after a loss
- War, including undeclared war and civil war
- Nuclear hazard
- Intentional loss, meaning something you did on purpose with the intent to cause a loss
- Governmental action, such as the destruction, confiscation or seizure of covered property by any governmental or public authority
- Loss to property, resulting from faulty zoning, bad repair or workmanship, faulty construction materials and defective maintenance
With the standard HO-2, you are covered under ‘falling objects.’ With the standard HO-3, there is not an exclusion for ‘falling objects.’
Auto insurance maintains a different set of exclusions for ‘full coverage’ (also known as comprehensive and collision). Some of which are written into the policy itself and others are self-selected by the customer. Here they are:
- Normal wear and tear
- Mechanical breakdown or parts failure
- Aftermarket parts and equipment (Unless specifically added to the policy)
- Intentional or malicious damage
- Drivers, Medical Payments, PIP, and Uninsured Motorist protection can also be excluded when chosen by the customer.
From here, it appears that YES you would also be covered in the event your car was hit by a falling satellite as long as you maintained ‘comprehensive’ coverage on your vehicle.
Last but not least is your life insurance policy. In the state of Colorado, life insurance policies contain a two-year ‘look back period.’ During this time, they can rescind your policy or refuse coverage for: Fraud on the application or Suicide. So, unless it could be proven that you intentionally stood in the path of the falling satellite, it appears that YES this would also be covered.
So, back to our original question: “The Sky is Falling – am I covered?” Based on these descriptions, you can be fairly confident that YES you’re covered if the Sky is falling!