You could try doing it as a command. /insure would remove $100,000 from the player and expire after an hour or after the next time the player lands or dies. If (and only if) they are killed by another player, it triggers and deposits $10 million in the account. Claims only pay out once every 24 hours, and simply put there are faster ways to make $10 million as a trader in Sirius. This really is just a measure to ensure that a captain who loses his ship will have enough credits to pick up their next cargo.
Of course, that needs balance and work, but it might be easier to manage as a command than as a tiered commodity. Though I do like the idea of having to visit IC stations to purchase the policy, and making it a commodity that is destroyed when the ship is would naturally take care of a lot of book keeping.
In any event, it gives IC something to do in-game, investigate insurance fraud and pass evidence to house police for enforcement. An official faction might even be able to deny use of the command/commodity by pilots or factions not in good standing with IC.