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Financial Responsibility

Financial Responsibility Determination

Financial responsibilities for permits, licensed launches, and licensed reentry activities are described in 14 CFR Parts 440.

Maximum Probable Loss (MPL)

The maximum probable loss determination is a probabilistic assessment of the amount of insurance or escrow needed to cover damage incurred to life or property as a result of a mishap during launch or reentry. The assessment includes separate values for the amount of third party damages (both property and life) and government property, for the pre-flight and flight portions of launch or flight and post-flight portions for reentry. Maximum probable loss is NOT the maximum possible loss. Costs may exceed the probabilistic estimates. Please see the regulations for the levels of risk MPL is assessed at and how the U.S. Government may cover losses above the MPL for licensed operations (permits do not offer the same protections).

You may request a maximum probable loss determination separately to determine your financial responsibility requirements early on in your launch program. If you do not elect an early determination, the MPL will be provided in your license or permit orders.

Evidence of Financial Responsibility

All permit and launch or reentry license holders must provide evidence of funds equal to the MPL for that license. Possible forms of evidence include:

  • proving you have financial reserves equal to or exceeding the amount specified and these funds have been set aside,
  • placing the required amount in escrow,
  • or purchasing liability and/or property insurance equal to the amount specified.

The most common and preferred method is to purchase liability and/or property insurance. All methods of coverage must comply with the requirements in part 440.

Additionally, all permit and launch or reentry license holders must submit one or more waiver of claims agreements to the FAA's Commercial Space Transportation. These agreements demonstrate the license or permit holder, the customer, space flight participant, crew member, and any contractors or subcontractors of each have promised to waive claims against all other involved parties of the launch, including the U.S. Government. The waiver of claims requirements and sample forms are available in part 440.

Related Documents

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This page was originally published at: https://www.faa.gov/space/licenses/financial_responsibility/