Who gets Lifetime Insurance?
Anyone who pledged for a copy of Star Citizen before the end of the 1-week grace period after the new RSI website opened on June 28, 2013 automatically receives lifetime insurance (LTI) on their pledge ships; this protects the investment they make in the game in perpetuity. Anyone who makes their first pledge after the grace period ends on July 6th, 2013 will start with standard hull insurance (SHI) for their ship, which functions identically but must be periodically renewed with a small fee of in-game credits. The duration can be anywhere from 1 to 6 months depending on the ship and policy type.
What does LTI cover?
Insurance for upgrades and cargo is separate from LTI or hull insurance and is priced based upon the risk level of the system entered. Above risk level 5, upgrade and cargo insurance are unavailable.
If a ship with LTI is destroyed or captured it will be replaced with an identical model in equivalent condition. The replacement may not arrive immediately - it can take some time. The developers have indicated that the more often a ship is destroyed, the longer the wait until its replacement arrives. A person can avoid the wait by owning more than one ship.
Transferring ship ownership and LTI
Ships gifted by early backers retain their LTI. If a ship is legally sold, LTI will follow the ship hull. If it is stolen or captured, the LTI policy will not transfer. Prior to June 28, 2013, if someone received a ship with LTI as a gift, they would gain the same backer status as the purchaser of the gift. LTI insurance does not apply to new ships bought in-game and insurance policies cannot be transferred from one ship to another. The limited number of Vanduul "Scythe" fighters with LTI sold through the RSI site during the original pledge campaigns, and the Banu Merchantman and Xi'an Khartu sold through the RSI site during the one year anniversary sale, are the only insured alien ships.
If you have LTI on an existing ship you can transfer it to a some other versions using "Cross-Chassis Upgrades" for example an Aurora MR to a Hornet. As of August 2014 cross-chassis upgrades are limited to vessels in Arena Commander and you can not downgrade ships or undo the change.[source?]
Insurance may be temporarily suspended for ships with outstanding bounties. Proven cases of insurance fraud will result in invalidation of LTI on that ship and may result in large in-game fines.