Brokers working on large data center developments may need to arrange the transition from builders’ risk to operational property coverage much earlier, as phased projects blur the point at which construction ends and normal operations begin.
The scale of the buildout is compounding the challenge. JLL expects global data center capacity to reach approximately 200 gigawatts by 2030, nearly double its 2025 level. The US accounts for around 90% of capacity in the Americas, which represents about half of the global market. JLL also expects average construction costs to rise by 6% in 2026 to $11.3 million per megawatt, excluding technology fit-outs.
The immediate insurance question arises when one completed data hall becomes operational while work continues on another part of the same campus. A loss crossing those areas could trigger builders’ risk and operational property policies, or create disagreement over which insurer should respond.
“What we're starting to do—and I think the industry is starting to come up with—is build a policy that provides some operational coverage at the end of the builders' risk period, so it transitions to operational coverage with the same carrier,” said Amy Gross (pictured), recently appointed to lead Liberty Mutual’s newly created North America construction team. “If it's unclear, there is coverage, and the carrier knows what's going on.”
Historically, the end of builders’ risk and the beginning of operational coverage could be treated as distinct events, sometimes involving different insurers. Phased openings make those boundaries less reliable.
“There were potential gaps, especially if builders' risk still applied in one section but not another and a loss affected both. Who pays?” Gross said. “We've started looking at adding operational coverage for a portion of time until all of it is finished, to some extent.”
Construction schedules, projected completion dates and details of when each section will become operational increasingly need to form part of the initial placement. Gross said some clients are also considering captives and parametric products for specialized exposures, including weather events that could delay construction or tenant occupancy.
Shared and layered placements involving multiple carriers may be needed to insure a single multibillion-dollar development. While insurers understand catastrophe and fire exposures, the industry has limited claims experience involving data center campuses of the size now being built.
“We haven't seen a huge catastrophic claim on a $300-billion data center,” Gross said. “When that comes in, it's going to test policy language and how claims get allocated across owners, tenants, contractors and others. There's a little bit of nervousness out there.”
Aggregation concerns are not limited to several facilities being exposed to the same hurricane, wildfire or severe convective storm. Multiple projects in the same jurisdiction may draw power and water from common infrastructure, creating correlated vulnerabilities that insurers are beginning to model.
Gross said capacity remains available, but carriers are scrutinizing engineering, redundancy and geographic concentrations. Clients that disclose the full development plan, including later construction phases and the eventual operational exposures, give underwriters more scope to allocate capacity across the project’s lifecycle.
Rising construction costs also increase the importance of accurate valuations. Higher material and replacement expenses can quickly affect total insured values and required property limits, particularly when a project changes scope or extends over several years.
The data center boom is also intensifying competition for experienced construction labor. Large owners and contractors can attract the strongest workers to major developments, potentially leaving other projects with thinner labor pools or encouraging contractors to relax hiring standards.
“What I have seen is a shift, not just from us but from other carriers, toward truly pushing risk engineering upfront and being less willing to waive it than in the past,” Gross said. “Sometimes it used to be, ‘Yeah, we'll write it contingent upon...’ Now it's, ‘No, we want to verify that we're getting the right risks on the book.’”
Insurers are examining driver records, fleet controls, fall protection, hard-hat protocols and measures intended to prevent construction defects. Commercial auto trends on Liberty Mutual’s construction book are approaching double digits, Gross said, while much of its excess portfolio continues to face double-digit rate increases.
Contracts also require early review where offsite fabrication, environmental exposures or wrap-up programs are involved. An assumption that an exposure sits under one policy could leave no coverage if responsibility falls elsewhere and the necessary endorsement was not secured.
Gross urged brokers to get their clients face-to-face with underwriters, “even if it's a long-term renewal, is important.”
“Hearing the story from the client and having an open dialogue with questions and answers allows the underwriter to truly underwrite the risk, versus just seeing a submission that doesn't explain everything,” she said.
