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The Challenger crew signed waiver agreements before the tragic launch absolving the government of liability in their deaths, underwriters said Tuesday. But teacher Christa McAuliffe had a $1 million gift insurance policy. 'The crew signed a total waiver,' said Larry Little, spokesman for the Aviation Office of America, a major space insurance underwriter. 'That means everybody pretty much gives up liability rights against anybody else.'
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But one of the astronauts -- school teacher Christa McAuliffe -- took out a separate life insurance policy worth $1 million through a private brokerage firm, and that policy will be paid, officials say.
In a related matter, federal taxpayers must absorb the entire cost of an uninsured half-billion-dollar communications satellite, perhaps the costliest sent aloft and lost.
A spokesman for Lloyd's of London, a consortium of brokerage houses, confirmed it held a million-dollar policy on McAuliffe, written by Lloyd's broker Crawley Warren at the behest of the Washington area firm of Carroon & Black, a company specializing in space coverage. The policy had been given as a gift to McAuliffe.
'Any space activity is essentially a high-risk enterprise and the tragic loss was unexpected at any particular time although insurers as well as crews are aware that in the long term there could well be a loss of this type,' said Stephen Merrett, a leading Lloyd's underwriter.
Lloyd's, which is one of the few firms in the small and specialized space insurance market, said there was no Lloyd's insurance coverage on any major item of equipment, including two satellites, being carried on the Challenger mission.
John Horner, a spokesman for C&B in Washington, said the claim would certainly be honored. 'There's simply no question about that.'
Said George Tompkins, a partner in the aviation defense firm of Condon & Forsyth: 'This is a terrible tragedy, witnessed by the entire nation. It's a matter of clear responsible to pay in such a case.'
On the other hand the shuttle's high-cost payload -- known as the Tracking and Data Relay Satellite B -- was uninsured. Brokers say the skyrocketing costs and risks have made such satellite insurance impractical.
'Satellite coverage has proved to be extraordinarily expensive,' said John McCann, spokesman for the Insurance Institute. 'By our estimates seven satellites were lost in a 22-month period, resulting in roughly $1 billion in claims' as against $400 million in premiums paid to insurers.
'(Providing coverage) is simply not worth it.'
Little said the 5,000-pound satellite was one of the costliest produced, and included such exotic features as 14-karat gold antennae. The manufacturer, Contel Spacecom, will be repaid its costs by the government, he said. 'The taxpayers must bite the bullet here,' said Little. But Spacecom, he suggested, faces the loss of future business because its massive tracking satellite was not in place on schedule.
'It's comparable to a salesman wrecking his car,' said Little. 'He may recover the cost of the automobile, but he'll never regain the value of that lost business. That's something you just can't figure.'
A spokesman for Spacecom said it may delay the planned launch of a similar communications satellite later in the year depending on the outcome of the NASA investigation.
Little said the pre-launch waiver agreement was not unusual.
'This is a dangerous business. There is simply high risks involved. It only makes sense to clear up the liability question.' The package of forms to be signed, he said, 'are the size of a small book.'
McCann said additional litigation may result when more facts about the disaster are known.
'If investigators conclude there is a bad piece of machinery at fault or a subcontractor was negligent, then you may see some (legal) action against those private companies.
'At any rate there will be some legal battles ahead. You can count on it.'
