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Is Google Earth accurate?

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The imagery can be very accurate in many places but less so in others. Likewise, the layers such as roads, labels, places icons, etc. can be fairly accurate. Google provides a data reporting form for users to report data errors. Google also created a Map Maker web site for users to make corrections directly on the map which if approved will appear on Google Earth and Google Maps.

Note even though Google makes its best effort to keep the data accurate as well as provide tools for end-users to move places, labels, and roads to the correct locations, Google Earth was designed primarily for informational and entertainment purposes, no particular guarantee is offered on accuracy.

To test it yourself get a GPS device and go to the end of your street (e.g. street corner or a similarly clearly visible land mark is the best place to take a recording) and get the GPS location. Be aware that commercial GPS device accuracy can be several meters off so that also is approximate then create a placemark at that location in Google Earth and compare the two.

The Google Earth license agreement disclaimer is as follows: "The coordinates, elevations, distances, and measurements provided by Google are approximations only. Google makes no claims as to the accuracy of these measurements."

Google's imagery varies from sub-meter resolution in major cities to 15 meter resolution for most of the earth's surface, with a global base resolution of 1 km. Since its database is constantly being updated, Google cannot state a specific resolution for any geographic region.
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