Yes, You Do Need Insurance to Launch Your Rocket

You have built a rocket. If you are a U.S. entity or launching from the United States you have even obtained your FAA license. You are on top of all your legal requirements. You are, however, figuring that since the U.S. is a launching state under the Liability Convention and thus responsible for you internationally that you don’t need to bother with getting third-party liability insurance in case you damage someone else’s property.

You are wrong. You do have to get third-party liability insurance.  In 1988, the United States decided it wanted to  share any liability exposure it might have on account of having signed all those space treaties.  Accordingly, Congress passed amendments to the Commercial Space Launch Act–which is now located at 51 USC ch. 509–requiring anyone launching a launch vehicle under U.S. license to obtain insurance or otherwise demonstrate financial responsibility.  This law says you have to get third-party liability coverage for damage you could cause to anyone not associated with the launch.  The FAA may require you to obtain up to $500 million in coverage for the maximum probable loss you might cause to third parties.

The law also says you have to get coverage for damage you might cause to government property.  Most commercial launches still take place from federal ranges owned and operated by the U.S. government.  They include Cape Canaveral Air Force Station, Vandenberg Air Force Base, Wallops Flight Facility, and White Sands Missile Range.  If things don’t go right, a commercial launch may damage government property, and the government wants to make sure that insurance funds will be available to replace that property quickly.  The FAA may require you to obtain up to $100 million in government property insurance.

So, sure, the United States might have liability exposure under a treaty for damage to citizens of other countries, but your insurance policy will include the United States as a named insured.  Also, the treaties don’t apply to damage your launch vehicle might cause to persons within the United States.  That third party liability coverage will apply to them, too.

Now, should you obtain insurance for your customer’s expensive satellite?  Check out the FAA’s regulations at 14 CFR part 440 to figure that one out.