Why the risk profile is changing in 2026

The expansion of AI capacity is increasing both the scale and density of data centre projects. A single campus may combine high-value computing equipment, substations, transformers, generators, battery systems, liquid cooling and complex fibre connections. Many of these components have long replacement times and limited alternative suppliers.

Local power markets are also becoming part of the insurance discussion. A technically sound facility can still face delayed energisation, restricted grid capacity or dependence on a small number of substations. These constraints affect completion dates, revenue forecasts and the size of a credible business interruption loss.

Property damage and machinery breakdown

Property insurance should reflect the interaction between electrical equipment, cooling, fire protection and information technology. Traditional building values may represent only a fraction of the total exposure.

• Transformers and switchgear can create long outages even when physical damage is localised.
• Cooling failures can damage sensitive equipment without a conventional fire event.
• Water used for cooling or fire suppression can affect several equipment rooms.
• Battery and generator systems can create separate fire, fuel and pollution scenarios.
• High equipment density can produce a rapid accumulation of values in one compartment.

Machinery breakdown wording, electrical disturbance exclusions and testing conditions should be reviewed together. The policy must also clarify whether damaged equipment is valued on a replacement, agreed-value or depreciated basis when technology has changed.

Construction and delayed start-up

Many major losses emerge before operations begin. Data centre construction combines civil works with specialised electrical and mechanical systems, and commissioning may expose defects that were not visible during installation.

A construction programme should identify critical equipment, manufacturing locations, shipping routes and realistic replacement periods. Delay in start-up insurance must align with the revenue model and recognise that grid connection, customer acceptance and performance testing may all sit on the critical path.

Business interruption and dependent infrastructure

The indemnity period should be based on the time required to restore full contracted capacity, not merely repair the building. Operators should model simultaneous loss of power, cooling and network connectivity, together with the time needed to replace transformers or specialist computing hardware.

Coverage for utilities, cloud platforms, telecommunications providers and other dependent services requires precise definitions. A provider may fail without suffering physical damage, so non-damage extensions and cyber policies should be compared carefully.

Cyber and technology exposures

Operational technology, building management and cooling controls create a bridge between cyber events and physical operations. A malicious or accidental configuration change can increase temperature, interrupt access or shut down a facility.

The insurance programme should allocate scenarios between cyber, property, technology errors and omissions, and general liability policies. Ambiguous hand-offs can create disputes over whether the event was a security failure, equipment breakdown or professional service error.

What underwriters need to see

• Single-line diagrams and details of power redundancy.
• Cooling architecture, water dependency and emergency operating procedures.
• Fire compartmentation, detection and suppression strategy.
• Equipment values by room, building and campus.
• Commissioning plans and independent quality assurance.
• Supplier concentration and lead times for critical components.
• Contractual service levels and maximum customer liabilities.
• Cyber segmentation and manual override capability.

Test the programme with realistic scenarios

1. A transformer fire removes grid capacity for eight months.
2. A liquid-cooling leak damages several high-density computing racks.
3. A control-system event shuts cooling down without physical damage.
4. Commissioning reveals a design defect and delays contracted revenue.
5. A regional power restriction reduces capacity across the entire campus.

For each scenario, calculate property damage, expediting expense, revenue loss, contractual liability and the effect of policy waiting periods and sublimits.

Conclusion

Data centre insurance is an infrastructure exercise, not simply a technology placement. The strongest programmes connect engineering, construction, energy supply, cyber controls and customer contracts to a single loss model.

Next step: Request a data centre risk and insurance programme review from Kompetenz.