1. The asteroid and the invoice

Greg Bear’s The Forge of God is about Earth facing an alien machine that will destroy the planet. Amid the panic there is the question of who could have stopped it, who should have seen it coming, and who will pay for the response. Liability is the invoice that arrives after the disaster. For the desktop, the question is simpler but no less real: if this platform damages something or someone, who pays?

Entry 290 covered insurance products. This entry covers liability limits and how risk is allocated among the parties.

2. The liability chain

Liability flows through several levels:

  • International law: the launching state is liable for damage caused by its space objects to other states or their nationals.
  • National law: the state may require the operator to indemnify the government or carry insurance.
  • Contracts: launch providers, customers, insurers, and suppliers allocate liability among themselves.
  • Insurance: the operator’s policy pays up to its limits, and the operator retains the rest.

The desktop’s operator sits in the middle of this chain. The state is responsible to the world, and the operator is responsible to the state and to its contracting parties.

3. Third-party liability limits

Most commercial space regimes require the operator to demonstrate financial responsibility up to a maximum probable loss. In the United States, the FAA sets this amount. The operator must obtain insurance or show other financial resources up to that limit. Above the limit, the government may provide indemnification for some portion of the excess, subject to congressional appropriation.

This structure means:

  • The operator knows its maximum out-of-pocket exposure for third-party claims.
  • The insurer knows the limit it must cover.
  • The government knows the maximum contingent liability it might face.
  • The public is protected up to a calculable amount.

The maximum probable loss depends on the launch trajectory, population density, and the hazards of the payload.

4. Cross-waivers of liability

Launch participants typically waive claims against each other. This cross-waiver means that if the launch fails, the customer cannot sue the launch provider, and the launch provider cannot sue the customer, for direct losses. Each party relies on its own insurance.

The cross-waiver does not cover:

  • Claims by third parties not part of the waiver.
  • Bodily injury or property damage to people outside the programme.
  • Claims arising from gross negligence or willful misconduct.

For the desktop, the cross-waiver protects the launch provider from claims by the operator for loss of the spacecraft, and vice versa. It does not protect either from claims by the public.

5. Allocating risk in customer contracts

Customer contracts must decide who bears what risk. Key allocations include:

  • Launch failure: does the customer pay again, or is the launch service responsible?
  • On-orbit failure: does the customer receive a refund, credit, or replacement?
  • Data quality: what happens if sensor performance is below specification?
  • Service interruption: are there service-level agreements and penalties?
  • Third-party claims: who is responsible if the payload causes damage?

A hosted payload customer will want the operator to carry insurance. The operator will want the customer to accept limits on claims. The contract is where these interests meet.

6. On-orbit liability

Once in orbit, the main liability risks are collision and interference. If the desktop collides with another satellite, the launching state may be liable for the damage. If the desktop causes radio interference, the operator may face regulatory and civil claims.

Collision avoidance is therefore not only a safety practice but a liability control. Good tracking, timely manoeuvres, and transparent communication reduce the risk of being held responsible for an accident.

7. The cost of being wrong

The worst-case liability is unbounded in theory. A collision in a densely populated orbit could create a debris cascade affecting many satellites. In practice, insurance limits, indemnification caps, and contractual waivers bound the operator’s exposure. But reputational damage, regulatory sanction, and loss of future business are harder to cap.

The desktop must be operated as if a single mistake could end the programme, because it could.

What this changes

  • Liability flows from international law through national regimes to contracts and insurance.
  • Third-party liability is capped at a maximum probable loss, with insurance required up to that limit.
  • Cross-waivers allocate launch risk among participants but do not protect against third-party claims.
  • Customer contracts allocate launch, on-orbit, data, service, and third-party risks.
  • Collision avoidance and spectrum discipline are liability controls.
  • The next entry will close the insurance and liability arc with a contemplation.