The continued expansion of artificial intelligence is driving unprecedented demand for data centres across the globe. There is widespread investment in new capacity to support growing digital infrastructure requirements and opportunities are emerging for those involved in the design and construction of these critical facilities.
While data centres present substantial commercial opportunities, they also introduce a range of risk and insurance considerations for firms and professionals involved in their design and delivery. Below, we explore the risks associated from a Professional Indemnity Insurance (PII) perspective with this work and how you can best manage project governance and delivery risk.
PII risks during data centre work
The complex nature of data centre facilities raises several PII concerns for designers and construction professionals. As a result of errors made during the design, construction, or commissioning of a project, data centres may fail to achieve required levels of resilience, power availability, cooling performance, energy efficiency, or operational redundancy.
The costs associated with identifying, mitigating, and rectifying problems can be substantial, and may include:
Remediation costs – Including the cost of investigating issues, design revisions, and the replacement and reconfiguration of critical systems. On large-scale facilities, these corrective measures can quickly escalate into multimillion-pound losses.
Contractual liabilities – Where defects result in outages or performance shortfalls, professionals may face contractual penalties, service credit obligations, delay-related costs, and allegations that the facility has failed to meet agreed performance standards. Competitive pressures may lead firms to accept onerous contractual obligations that expand their liability beyond the standard of care typically contemplated by PII insurers.
Third-party claims – Data centres frequently support mission-critical business operations, cloud services, financial transactions, and wider digital infrastructure. Operational failures can result in claims from affected customers, tenants, or other users. These may significantly exceed the cost of rectifying the original defect.
Emerging liability exposures – Professionals must also navigate evolving regulation, including sustainability and energy efficiency standards, heightened cyber security considerations, and supply chain constraints for specialist equipment. These factors can complicate project delivery and increase the risk of design errors and coordination failures.
Minimising risk in data centre projects
Given the scale of the potential losses involved, insurers are likely to subject firms operating in the data centre sector to heightened underwriting scrutiny. Insurers will want evidence that organisations not only understand these risks, but have the experience, controls, and governance frameworks necessary to manage them effectively. Demonstrating robust risk management practices can therefore be just as important as implementing them, both in securing coverage and obtaining favourable policy terms.
Insureds should be prepared to evidence:
Whether data centre work relates to Tier 1 to Tier 4 as established by the Uptime Institute Tier Classification System
Strong sector experience and relevant technical expertise
Well-established risk management and quality assurance processes
A clearly defined scope of services and a robust understanding of project responsibilities
Understanding of prospective clients, including assessment of their expectations regarding programme, budget, and technical requirements
Comprehensive supply chain analysis including review of suppliers' financial stability and insurance arrangements
Specialist firms with demonstrable expertise, strong governance, and disciplined project controls are likely to be viewed more favourably by insurers.
Getting the contract right
Like with any construction project, when working on a data centre project, design and construction professionals should seek to negotiate protections that appropriately reflect the nature and scale of the risks involved. Key contractual considerations include:
Clearly defined scope of services – Contracts should clearly articulate what services are included and excluded, helping to prevent misunderstandings and providing a stronger defence in the event of a claim.
Exclusions for consequential loss – Ideally, exclusions for consequential or indirect losses would be included given this is a key exposure in any data centre project.
Liability caps – Given the significant financial consequences associated with data centre projects, financial liability caps are essential. These should be no greater than the agreed limit of indemnity and ideally a multiple of the insured’s fee income on the project.
Net contribution clauses – Properly drafted, these clauses limit those losses to that which the Insured is directly responsible. On complex projects such as these, such a clause can prove priceless should there be a claim.
Talk to us
As investment in data centre infrastructure accelerates, professional firms operating within the sector face both significant opportunities and heightened liability exposures. Insureds that can demonstrate specialist expertise, effective risk management practices, and strong contractual discipline will be favoured by any potential PII insurer.
For more information, reach out to a member of our team.
