If a meteor explodes in the sky and damages your building, are you covered?

All-Risk policy would offer protection for this rarest of occurrences, say insurers
February 15, 2013

Meteors enter the Earth’s atmosphere as often as five to ten times a year, but few do so as spectacularly as the one that exploded in the sky over Central Russia on Friday.

According to Space.com, it was the largest event of its kind since the Tanguska event of 1908. The meteor entered the atmosphere at a speed over 54,000 kph and according to preliminary estimates exploded with the force of at least 100 kilotons of TNT.

The force of the explosion caused injuries to as many as 1,000 people. Many of the injuries were caused by flying glass from shattered windows. It also damaged approximately 3,000 buildings, including collapsing the roof of a local factory and damaging the walls of the Arena Traktor, home of the local Kontinental Hockey League team.

Property damage caused by a meteor is, however, an insurable risk.

“A commercial property policy provides all-risk coverage that covers property damage and resulting time element loss if there is direct physical loss or damage to insured property unless specifically excluded,” says Timon Mueller, head of property underwriting for the Americas for Allianz Global Corporate & Specialty. “In general, all-risk policies do not have a meteoroid exclusion, therefore direct physical loss or damage to insured property is covered including the resulting time element loss.

Commercial property policyholders in North America would likely be covered in the event of an incident like the one that occurred in Russia. “In the US in general the policies are written on an all risk basis compared to a named perils policy. Named peril policies are more common in Europe,” say Mueller.

Claims from meteor damage are very rare. “This has translated to a low loss history historically for the insurance industry for this peril,” says Joe McKeown, assistant vice president, property, large commercial & specialty at RSA. However there is the potential for large losses from meteorite damage. “We hope the claim experience continues to allow us to provide this coverage to our customers,” he says.