The short version

• The cross waiver is the defining feature of a launch services agreement. Everyone bears their own losses regardless of fault, and the waiver flows down the entire contract chain.
• US law requires it. 51 U.S.C. 50914 and 14 CFR 440.17 make reciprocal waivers a condition of a licence.
• Above the waiver sit three tiers: mandatory insurance sized to maximum probable loss, government indemnification up to $1.5 billion indexed from 1989, and then the operator again, uncapped.
• The indemnification tier has never been triggered and Congress has never appropriated against it. Its current expiry is 30 September 2028.

A launch failure is the rare commercial event that can generate claims in every direction at once. The launch provider’s vehicle destroyed the customer’s satellite. The satellite’s failure damaged the pad. A component supplier three tiers down may have caused all of it. Government range equipment was involved. Several insurers are subrogated to several of those claims.

Litigated conventionally, one failure produces a decade of circular claims in which every participant sues every other participant and most of the money goes to lawyers.

The industry solved this in the 1980s and has not changed the solution since.

What a cross waiver does

A cross waiver is a reciprocal, no-fault waiver of claims. Each participant in a launch agrees to bear its own property damage and its own employees’ injuries, and waives claims against every other participant, regardless of fault.

The participants are drawn widely: the launch provider, the customer, their contractors and subcontractors at every tier, crew and spaceflight participants, and the US government. Each party must flow the waiver down its own contract chain, so a fourth tier supplier is inside the ring even though it has no contract with the launch provider.

The effect is to convert an interlocking commercial and governmental supply chain into a set of self-insured silos. Each party insures its own property, prices that into its contract, and stops worrying about who was at fault.

Two standard exceptions survive. Wilful misconduct, and claims exceeding the required insurance amounts.

The cross waiver does not touch third party claims by uninvolved people on the ground. Those are handled by the insurance and indemnification tiers below.

Where the requirement comes from

This is not purely a matter of negotiation. US law mandates it.

51 U.S.C. 50914(b) requires a launch or reentry licence to contain reciprocal waivers among the licensee, its contractors, subcontractors, customers and spaceflight participants, each assuming responsibility for its own employees’ injuries and property losses. It also requires the Secretary of Transportation to negotiate reciprocal waivers protecting the government, its agencies and its contractors, except for claims exceeding the required insurance.

14 CFR 440.17 supplies the detail. Waivers are required between the licensee and its contractors and subcontractors and the first tier customer and its contractors and subcontractors, with spaceflight participants, and with crew.

An operator that wanted to negotiate this away could not. It is a licence condition.

The three tiers above the waiver

Third parties, meaning people who are not participants in the launch, are not covered by the cross waiver. For them there is a structure.

Tier one: mandatory insurance sized to maximum probable loss

Under 51 U.S.C. 50914(a) a licensee must obtain liability insurance or demonstrate financial responsibility to cover maximum probable loss from third party claims and from claims for damage to US government property.

MPL is defined at 14 CFR 440.7 as the greatest dollar amount of loss for bodily injury or property damage reasonably expected from the licensed activity. The FAA issues a determination within 90 days of a complete request.

The probability thresholds are the technical heart of the regime. One in ten million for third parties. One in one hundred thousand for government personnel and property. Losses less probable than those thresholds are excluded from the calculation.

Statutory caps sit above the calculation: $500 million for third party liability insurance and $100 million for government property, or the maximum available on the world market at reasonable cost if that is lower.

Duration matters too. Launch cover runs until 30 days after payload separation, and reentry cover for 30 days from initiation of reentry. Certificates of insurance are due at least 30 days before activities begin.

Tier two: government indemnification

Under 51 U.S.C. 50915 the government may pay successful third party claims above the required insurance, up to $1.5 billion plus amounts reflecting inflation after 1 January 1989.

The qualifier is decisive. Payment is available only to the extent provided in advance in an appropriation law or to the extent additional legislative authority is enacted. Congress has never appropriated against it and it has never been triggered.

Tier two is therefore a promise to consider paying, not a guarantee of payment. Anyone modelling it as a hard backstop is modelling something that does not exist.

Tier three: the operator, uncapped

Claims above the indemnification ceiling fall back on the licensee, with no cap. In practice a loss of that size would be an insolvency event.

The expiry date to diarise

Under 51 U.S.C. 50915(f), the indemnification regime applies to a licence issued or transferred for which the Secretary receives a complete and valid application not later than 30 September 2028. That date was set by Pub. L. 118-159 on 23 December 2024, extending it from 30 September 2025.

Note the trigger precisely, because secondary commentary garbles it regularly. It is the date the FAA receives a complete and valid application, not the date of the launch. A licence applied for before the deadline carries the regime with it.

Given the history of short serial extensions, plan on it being extended again and do not build a business case on the assumption.

Drafting points that matter

Flow down is the weak link

The cross waiver only works if every participant is inside it. The commonest failure is a subcontract deep in the chain that omits the flow down, usually because it was papered on a supplier’s standard terms for a component that nobody thought of as launch related. Audit the chain, do not assume it.

Define the participants by reference, not by list

Personnel and suppliers change between signature and launch. A defined class that captures contractors and subcontractors at every tier is more robust than a schedule of named entities.

Wilful misconduct is narrower than it sounds

The exception is not gross negligence and it is not recklessness in the loose sense. Parties who assume it gives them a route back into the ring after a failure are usually disappointed.

Insurance and the waiver must line up

If the cross waiver allocates a loss to a party whose policy does not cover that loss, the waiver has created an uninsured exposure. This is a coordination problem between the contract team and the insurance broker and it is where most real risk sits. We look at the market side in our piece on space insurance.

Non-US launches follow a similar shape

European launch contracts through Arianespace, and licences under the UK Space Industry Act 2018 or India’s IN-SPACe regime, use comparable no-fault allocation and insurance requirements, though the numbers and the indemnity limits differ. The UK, for example, works to a standard €60 million insurance requirement and indemnity limit for typical orbital operations, and the Space Industry (Indemnities) Act 2025, in force from 18 February 2026, now makes a liability cap mandatory in every operator licence rather than discretionary.