Also, for those suggesting removing all cap limits, or having a cap limit so high (i.e. $1 million) that it essentially serves in practice as no cap, here is something to keep in mind:

At some point somewhere, eventually there would be a IDB situation where the cost became say $100k plus. Obviously this would be very rare, but sooner or later some flight somewhere would result in outrageous amount that would be owed.

At that point, the airlines could then sue that the law is requiring unjust compensation that far exceeds any damages caused, and they would probably win. This could result in the whole law being thrown out the window.

To provide an analogy, if I sign a contract to paint someones house but fail to do so, then I am in violation of the contract and can be sued. However, the person who sues me can only sue for an amount that is justifiable for the damages incurred, not a random $1 billion dollars because they feel like it.

For that reason, I think a good cap would be in the $5 to $10k range.. Significant enough that it would rarely get that high, but even if it did, it would not create an undue financial burden and compensation being made due by the airline.