Data Center Construction Insurance Costs: What Developers and Contractors Should Expect in 2026

Here’s the number nobody talks about at data center development conferences: insurance cost. Developers obsess over power costs, land acquisition, fiber connectivity, and construction timelines. They treat insurance as a line item to finalize after design-build contracts are signed. That’s a $10-50 million mistake on a hyperscale campus — and we’ve watched smart developers make it repeatedly because the insurance conversation started too late.

Bisnow’s analysis of data center insurance challenges cites industry estimates that insurance can consume up to 10% of a project’s total budget. On a $20 billion data center campus — which is what Stargate, Vantage Frontier, and other megaprojects represent — that’s potentially $2 billion in insurance costs over the construction and operational lifecycle. Even for a more typical $500 million single-building project, insurance costs in the $3-8 million annual range demand the same financial modeling rigor that developers apply to electricity procurement.

• Builders risk premiums for data center construction range from $0.15 to $0.50 per $100 of project value, with rates varying based on location, natural catastrophe exposure, construction type, and the proportion of technology equipment installed during construction
• Workers compensation costs for data center construction vary by trade classification, from $1.50 per $100 payroll for engineering to $15+ for structural steel and heavy electrical work
• General liability limits starting at $2M/$5M with umbrella requirements of $10M-$25M are standard for data center contracts — premium costs for these limits scale with project value and subcontractor count
• Wrap-up programs (OCIPs and CCIPs) for campus-scale projects generate total premiums of $10M-$50M+ but typically save 10-20% compared to individual contractor policies
• Our licensed advisors model total insurance cost alongside construction budgets, helping developers and contractors understand the full financial picture before committing to site selection, construction methodology, or contract terms — for Texas-specific details, see our Texas Data Center Boom Insurance Guide

Builders Risk: The Largest Single Insurance Cost

Understanding Rate Drivers

Builders risk is typically the single largest insurance expenditure during data center construction. The rate you pay depends on a matrix of factors that interact in ways most developers don’t anticipate. Location drives catastrophe pricing. Construction methodology affects fire and collapse risk. The timing and value of technology equipment installation determines the policy’s maximum probable loss. And the project schedule — any extensions beyond the original term — can trigger premium adjustments that blow past budget projections.

Munich Re’s engineering underwriters emphasize that exposure doesn’t end when construction is complete — it transitions in phases as buildings move from construction into commissioning and then operations. “Certain assets might or might not be insured by a particular policy,” Munich Re’s Martinez explained. “The actual servers in many instances are not even insured under the construction policy.” Getting this transition wrong creates uninsured gaps during the highest-risk phase of the project.

• Base rates for concrete-and-steel data center shells are relatively modest — $0.10-$0.20 per $100 — but rates increase 50-150% when technology equipment installation is included in the builders risk policy
• Natural catastrophe loading adds $0.05-$0.30 per $100 depending on location — Gulf Coast hurricane zones and Midwest tornado corridors carry the highest surcharges
• Delayed start-up (DSU) coverage — protecting against revenue loss when construction delays push back operational dates — is the fastest-growing cost component and the most difficult to secure at adequate limits
• Phased construction programs where some buildings are operational while others are under construction require “hot work” endorsements and coverage bridges that add complexity and cost
• We structure builders risk programs with capacity sourced from Lloyd’s of London syndicates, Bermuda markets, and domestic surplus lines carriers that specialize in data center technology values — this market access directly impacts rate competitiveness

Delayed Start-Up Coverage: The Premium Ceiling

Delayed start-up (DSU) coverage has become the most contentious and expensive element of data center construction insurance. When a $7.1 billion construction loan from JPMorgan is structured around specific delivery milestones — as it is for the Stargate Phase 2 campus in Abilene — missing those milestones creates financial exposure measured in hundreds of millions of dollars. DSU coverage protects against that exposure. But underwriters view it as disproportionate to premium, and they’re increasingly limiting capacity.

For a deeper analysis of builders risk specifically for data center construction, including the unique challenges of hyperscale facilities, our data center builders risk coverage guide breaks down what these policies actually cover and where gaps appear.

• DSU limits for major data center projects typically range from $500 million to $1.5 billion — and underwriters treat these sums as potential maximum loss exposures, limiting their participation accordingly
• Carriers increasingly mandate phased handovers and detailed commissioning protocols before extending DSU coverage, adding project management requirements that affect construction scheduling
• DSU rates are typically 2-3x the base builders risk rate, making this single coverage component a major driver of total insurance cost
• Pre-agreed policy extensions for construction delays are available but must be negotiated at inception — waiting until a delay occurs to request additional DSU time triggers expensive premium adjustments
• Our team negotiates DSU terms at policy inception that anticipate realistic delay scenarios based on our experience with data center construction timelines across Texas, the Midwest, and the Southeast

Workers Compensation: The Volume Play

When 5,000-7,000 workers show up on a data center campus every day — electricians, ironworkers, concrete specialists, heavy equipment operators, HVAC technicians, fiber installers — workers compensation becomes the most operationally complex insurance program on the project. Each trade carries a different classification code, a different rate, and a different injury profile. Managing this across dozens of subcontractors with varying experience modification rates (EMRs) requires either a sophisticated wrap-up program or a very good broker riding herd on individual contractor certificates.

Texas’s non-compulsory workers comp environment adds a layer of complexity. While general contractors on hyperscale projects carry workers comp regardless, smaller specialty subcontractors scaling up to meet demand sometimes operate without coverage. A single uninsured sub creates upstream liability exposure reaching the GC and developer. Our Houston workers compensation guide covers these dynamics in detail.

• Workers comp rates span from $1.50 per $100 payroll for office and engineering classifications to $15+ for structural steel, heavy electrical, and roofing work — the trade mix on a data center project creates a blended rate that can surprise contractors who haven’t done the math
• Heat illness prevention costs in Texas summer construction are significant — heat-related workers comp claims spike 300-400% between June and September, and OSHA scrutiny on hyperscale jobsites is intense
• Traveling worker endorsements are essential when skilled tradespeople commute from Dallas, Austin, Houston, and San Antonio to remote construction sites in Abilene, Shackelford County, or Caldwell County
• EMR impacts are long-lasting — a single serious injury claim on a data center project can affect a contractor’s workers comp pricing for three years, impacting their ability to bid future work competitively
• We help both project owners evaluating wrap-up programs and individual contractors bidding on data center work model workers compensation costs accurately and structure programs that protect both employees and bid competitiveness

Case Study: How Cornerstone General Contractors Won $180 Million in Data Center Work by Fixing Their Insurance First

Cornerstone General Contractors (name changed for confidentiality) is a Houston-based commercial construction firm with $95 million in annual revenue and 320 employees. They’d built office buildings, retail centers, and light industrial facilities for 15 years but had never bid on data center work. When three data center RFPs crossed their desk in early 2025 — each worth $50-70 million — their CEO saw a transformative growth opportunity. Their insurance program saw a disqualification letter waiting to happen.

Their existing program was built for traditional commercial construction. The data center contracts required specifications their current coverage didn’t meet, and their broker didn’t understand the gap.

• Their general liability limit of $1M/$2M with a $5M umbrella fell short of data center contract minimums requiring $2M/$5M GL with $10M+ umbrella — they were disqualified from even bidding on two of three projects before addressing insurance
• Workers compensation lacked traveling worker endorsements needed for a remote Abilene jobsite, and their EMR of 1.15 (above industry average) was flagged as a risk factor by the developer’s insurance compliance team
• No professional liability coverage existed, despite the RFPs requiring $2M in prof liability for any contractor performing design-build or specialized installation scope
• After engaging our team, we restructured their program in 45 days: increased GL to $2M/$5M, placed a $15M umbrella with a data center-experienced carrier, added professional liability, negotiated traveling worker and multi-site endorsements, and implemented a safety program that reduced their EMR to 0.92 within 18 months
• Result: Cornerstone won two of the three data center contracts totaling $128 million, has since added $52 million in follow-on work, and their insurance program — initially viewed as a cost problem — became the foundation of a business transformation that tripled their revenue pipeline

Wrap-Up Programs: Saving 10-20% on Campus-Scale Projects

Owner Controlled Insurance Programs (OCIPs) and Contractor Controlled Insurance Programs (CCIPs) make financial and operational sense for data center campuses with thousands of workers from dozens of subcontractors. The premium volume alone — $10M-$50M+ for a campus-wide program — creates purchasing power that individual contractors can’t access. And centralizing coverage eliminates the administrative burden of verifying hundreds of individual policies while closing gaps between them.

The choice between OCIP and CCIP depends on project structure and risk allocation preferences. Both models consolidate GL, workers comp, and excess coverage under a single policy. Both require sophisticated program design and claims management. And both deliver savings that justify the upfront structuring costs on projects at the scale of Stargate, Frontier, and Tract.

• OCIPs are sponsored by the project owner and cover all contractors — the owner controls the program, sets safety standards, and manages claims centrally
• CCIPs are sponsored by the general contractor — often preferred when the GC has established safety programs and wants to maintain control over jobsite risk management
• Typical savings of 10-20% on total insurance costs compared to individual contractor policies result from eliminating coverage overlaps and leveraging bulk purchasing power
• Contractors bidding under wrap-up programs deduct their individual insurance costs from bids, since the owner or GC is providing coverage — this creates bid pricing transparency but requires contractors to understand which of their existing coverage applies off-site
• We structure wrap-up programs for data center campus construction and advise both owners and GCs on program design, including coverage specifications, safety program requirements, and claims management protocols

Operational Insurance Costs After Construction

The transition from construction-phase insurance to operational coverage is one of the riskiest moments in a data center’s lifecycle — and one of the most expensive if handled poorly. Builders risk policies expire. Property and business interruption policies bind. Technology equipment moves from inland marine coverage to permanent property schedules. Any gap in this transition creates uninsured exposure during commissioning, the phase when equipment is most vulnerable to damage from testing, calibration, and first-use failures.

Operational insurance costs for data centers include property and equipment coverage, business interruption (often the single largest premium component), general liability, cyber liability, environmental liability, and technology E&O. For a 50MW colocation facility with $200 million in total insurable values, annual operational insurance premiums typically range from $400,000 to $1.2 million depending on location, carrier selection, and coverage breadth.

• Business interruption premiums scale with revenue — a facility generating $50 million annually will pay meaningfully more for BI coverage than one generating $10 million, because the carrier’s exposure increases proportionally
• Cyber liability has become the fastest-growing cost component for operational data centers, with premiums increasing 25-40% annually over the past three years for facilities handling sensitive enterprise data
• Equipment breakdown coverage for specialized data center infrastructure — including cooling systems, power distribution, and UPS batteries — is not included in standard property policies and must be placed separately
• Annual policy renewals are critical for operational data centers — equipment values change as technology is upgraded, revenue grows (increasing BI exposure), and the regulatory environment evolves
• We manage operational insurance programs for data center operators with annual renewal reviews that adjust coverage to reflect current asset values, revenue levels, and emerging risk factors — ensuring programs remain adequate as facilities mature