Data Center Growth in the U.S.: Where Developers Are Building and What It Means for Insurance

The map of American data center construction looks nothing like it did five years ago. Virginia’s dominance hasn’t faded — Northern Virginia still accounts for more data center capacity than most countries — but the growth vectors have shifted dramatically toward Texas, the Midwest, and the Southeast. Developers are chasing cheap power, available land, and favorable permitting environments. The insurance market is scrambling to keep up.

As of December 2025, Insurance Business Magazine reports that the U.S. has 565 operating data centers and 571 planned projects — meaning the country’s data center footprint is set to nearly double. This isn’t incremental expansion. It’s a complete restructuring of where America’s digital infrastructure lives, and every new site creates a unique bundle of construction, property, liability, and environmental insurance demands.

• Virginia and Texas are the two largest state-level data center markets, with Virginia at 12.1 GW and Texas at 9.7 GW of grid power demand in 2025 according to S&P Global
• Texas data center growth is concentrated across three emerging corridors: Abilene (Stargate flagship), Shackelford County (Vantage Frontier $25B campus), and Caldwell County (Tract 2GW megasite)
• Midwestern states including Ohio, Iowa, and Indiana are attracting hyperscale campuses with abundant power and lower land costs — but these locations sit squarely in tornado-prone regions
• The Southeast corridor spanning Georgia, the Carolinas, and Tennessee is emerging as a growth market, accelerated by the federal government soliciting bids for data centers on DOE land in South Carolina, Tennessee, and Kentucky
• Our licensed advisors track data center development across all major U.S. markets and help contractors, developers, and landowners navigate the insurance requirements specific to each region

Where the Biggest Projects Are Breaking Ground

Texas: Three Corridors, Three Different Risk Profiles

Texas has become the primary expansion market for hyperscale data center developers, and it’s not hard to see why. The state offers abundant land, business-friendly permitting, no state income tax, and proximity to major energy infrastructure. But each Texas corridor presents distinct insurance challenges based on geography, weather exposure, and construction complexity. We cover these in depth in our Texas Data Center Boom Insurance Guide.

The speed of construction in Texas is redefining insurance timelines. Crusoe built the first two Stargate buildings in Abilene from ground-up to operational in roughly 12 months — compressing typical builders risk policy periods and creating underwriting challenges that most carriers hadn’t anticipated for data center construction.

• The Stargate flagship campus in Abilene covers 1,100 acres with eight buildings, 4 million square feet, and 1.2GW of power capacity — Phase 1 went live in September 2025, Phase 2 targeted for mid-2026 with a $7.1 billion construction loan from JPMorgan
• Vantage Data Centers’ Frontier campus in Shackelford County represents a $25 billion investment across 1,200 acres with 1.4GW capacity — construction mobilizing 5,000+ workers
• Tract’s Caldwell County megasite near Lockhart encompasses 1,515 acres supporting 2GW+ capacity, with initial power from Bluebonnet Electric Cooperative expected in 2028
• West Texas and Central Texas corridors face hailstorm, tornado, and extreme heat exposures that increase builders risk rates and complicate workers compensation programs during summer construction
• We’re actively helping Houston-area contractors prepare insurance programs that meet the contract specifications flowing from Crusoe, Vantage, and Tract for these unprecedented Texas projects

Northern Virginia: Capacity Constraints Creating Insurance Pressure

Northern Virginia — “Data Center Alley” — remains the world’s largest data center market by total capacity. But the sheer concentration of facilities is creating insurance challenges that newer markets haven’t yet confronted. When 24% of a region’s total power consumption goes to data centers, any grid disruption creates correlated losses across dozens of facilities simultaneously. Insurers call this aggregation risk, and they’re starting to price it.

CleanArc Data Centers announced plans in late 2025 to expand its Northern Virginia hyperscale campus to nearly 1 GW capacity. These announcements barely make headlines anymore in a market that’s been building for two decades. But the insurance implications compound with every new facility added to an already-saturated grid.

• Loudoun County data centers consumed 24% of total regional power in 2023, surpassing residential consumption at 18% — creating grid stability concerns that affect every facility in the market
• Insurance carriers are beginning to limit aggregate exposure in Northern Virginia, declining to add new data center policies to portfolios already concentrated in the region
• Power purchase agreements and behind-the-meter generation solutions are changing the insurance landscape as facilities move away from grid dependency
• Property and business interruption rates in Northern Virginia data center corridors have increased 15-25% over the past two years as carriers reprice aggregation risk
• For developers considering Northern Virginia expansion, early engagement with specialty brokers who can access surplus lines capacity is essential — waiting until construction permits are in hand means competing for limited insurance availability

The Midwest Gamble: Cheap Power, Tornado Risk

Data center developers have discovered the Midwest’s combination of inexpensive electricity, available transmission capacity, and vast tracts of affordable land. What they haven’t fully reckoned with is the insurance cost of building multi-billion-dollar facilities in Tornado Alley. The industry hasn’t had a major tornado strike a data center yet — but as Bisnow reported, insurance experts say it’s a matter of when, not if.

HUB Executive Vice President Kirk Chamberlain has publicly warned that insurance models were “never really designed for a $20B data center because you don’t typically see $20B of anything sitting in the way of a tornado in the Midwest.” Spring 2026 will be a critical test as a substantial number of megacampuses in the Midwest open or enter active construction during tornado season.

• Ohio, Iowa, Indiana, and Oklahoma are all attracting hyperscale development — each state sitting within established tornado risk corridors that drive catastrophic loss modeling
• ValorC3 claims to have built a tornado-proof data center in Oklahoma with steel blast doors and two layers of concrete, but this approach adds significant construction costs that affect project economics and insurance valuations
• Insurance carriers are applying catastrophe deductibles of 2-5% of total insured value for data centers in tornado-exposed regions — on a $2 billion facility, that’s a $40-100 million deductible before coverage responds
• Wind-resistant construction upgrades reduce premium costs over the facility lifecycle but require upfront investment that developers must factor into project financing
• Our advisors help Midwest data center developers model total cost of risk including construction premiums, catastrophe deductibles, and operational coverage costs specific to tornado-prone locations

Case Study: How Pinnacle Development Group Saved $4.7 Million by Choosing the Right Location

Pinnacle Development Group (name changed for confidentiality) was evaluating three sites for a 200MW colocation campus: a location in central Oklahoma, a site in East Texas, and a property in central Georgia. The CEO had narrowed the choice to Oklahoma based on electricity costs alone — $0.052/kWh versus $0.068/kWh in Georgia and $0.071/kWh in East Texas. On a facility consuming 200MW continuously, that price advantage looked like $28 million in annual savings.

Then we ran the insurance analysis.

• The Oklahoma site’s location in an Enhanced Fujita EF-3+ tornado risk zone added $3.2 million in annual property and builders risk premiums compared to the Georgia location
• Catastrophe deductibles in Oklahoma were set at 3% of total insured value ($54 million retained risk) versus 1% in Georgia ($18 million) — a $36 million difference in first-dollar exposure
• Workers compensation rates for construction trades in Oklahoma exceeded Georgia rates by 22%, adding $1.5 million to the two-year construction-phase insurance program
• The Georgia site’s proximity to multiple fiber routes and redundant grid feeds reduced business interruption premiums by $480,000 annually compared to the more isolated Oklahoma location
• After modeling total cost of risk over a 15-year facility lifecycle, the Georgia site’s insurance savings exceeded the Oklahoma site’s electricity savings by $4.7 million — Pinnacle broke ground in Georgia six months later, and we structured the complete insurance program

How Geographic Choices Affect Every Line of Coverage

Natural Catastrophe Exposure by Region

Every data center location decision is simultaneously an insurance decision. The specific natural catastrophe exposures — hurricane, tornado, earthquake, flood, wildfire — vary dramatically by region and directly determine builders risk rates, property insurance costs, catastrophe deductible structures, and business interruption coverage availability. Developers who evaluate locations purely on power costs and land prices are ignoring the third leg of the financial stool.

Carriers are increasingly sophisticated in modeling data center catastrophe exposure. Unlike traditional commercial real estate, where building replacement cost is the primary concern, data center losses include irreplaceable equipment, extended lead times for specialized components, and business interruption values that can dwarf property damage. A Nvidia GPU rack destroyed by a tornado takes months to replace — and the revenue loss during that replacement period is where the real financial damage occurs.

• Gulf Coast and Southeast locations face hurricane exposure with wind and flood deductibles that can reach 5% of total insured value for coastal facilities
• California sites carry earthquake risk requiring separate policies from specialty carriers, with deductibles typically ranging from 10-15% of insured value
• Mountain West locations face wildfire exposure increasingly difficult to insure as carriers withdraw from fire-prone regions
• Northeast locations offer the lowest natural catastrophe exposure but face higher construction costs, limited land availability, and aging grid infrastructure
• Our team provides total-cost-of-risk modeling for data center developers evaluating multiple locations, incorporating construction-phase insurance, operational coverage, and catastrophe retention analysis across all candidate sites

Grid Reliability and Power Insurance

Grid reliability directly impacts data center insurance in ways most developers underestimate. In ERCOT territory (Texas), the February 2021 Winter Storm Uri exposed the vulnerability of grid-dependent facilities. Now insurers scrutinize backup power capacity, fuel storage, and behind-the-meter generation for every Texas data center submission. Facilities with on-site power generation — natural gas, nuclear, solar, or battery storage — receive materially better insurance terms than those relying solely on grid power.

The trend toward “behind-the-meter” data centers pairing dedicated power sources with computing facilities is creating a new category of insurance risk. These facilities combine the exposures of a power plant with the exposures of a data center — requiring coverage expertise across both energy and technology infrastructure. For Houston-area energy companies considering this model, our Houston energy insurance expertise translates directly to these hybrid facilities.

• ERCOT grid instability premiums add 10-20% to property and business interruption costs for Texas data centers without adequate on-site backup
• Behind-the-meter generation reduces grid dependency premiums but introduces power plant liability, environmental, and equipment breakdown exposures
• Battery energy storage systems (BESS) installed for data center backup create thermal runaway fire risks that require specialized coverage endorsements
• Power purchase agreements (PPAs) with dedicated renewable or nuclear generation can improve insurance terms by demonstrating power supply diversification
• We help data center developers and operators evaluate the insurance implications of their power strategy alongside energy consultants, ensuring coverage programs reflect actual operational risk rather than carrier assumptions about grid reliability

What This Means for Contractors and Supply Chain Businesses

The geographic expansion of data center construction creates opportunity for contractors, suppliers, and service businesses in markets that have never seen technology infrastructure projects. But the contract insurance requirements flowing from hyperscale developers are unlike anything most regional contractors have encountered. We explore these requirements in detail in our guide to builders risk coverage for data center construction.

A Houston-based electrical contractor bidding on Stargate subcontracts faces insurance specifications written by corporate legal teams at OpenAI and Oracle. A concrete supplier in Caldwell County needs product liability coverage meeting requirements designed for billion-dollar infrastructure. These aren’t optional — they’re bid qualifiers that determine who gets the work.

• General liability limits on data center construction contracts typically start at $2M per occurrence / $5M aggregate with umbrella requirements of $10M-$25M
• Professional liability is increasingly required for contractors providing design-build services or specialized installations
• Workers compensation must cover all trade classifications present on the jobsite, with experience modification rates (EMR) directly affecting bid competitiveness
• Product liability coverage is essential for equipment manufacturers, material suppliers, and technology vendors providing components to data center projects
• We help contractors across Texas and the Southeast build insurance programs that meet the specific requirements of data center construction contracts — qualification starts with having the right coverage in place before the RFP drops