SMAR Daily Industry News

AI Data Center Boom Strains Cargo Insurance Coverage

The rapid expansion of AI infrastructure is highlighting a significant disconnect between the replacement cost of specialized equipment and the broader financial fallout when that equipment fails to arrive on schedule. According to Herman Brito, marine, cargo, and logistics practice leader for the US and Canada at Marsh Risk, the long lead times for components like turbines and cooling systems mean that a damaged shipment can result in consequences far exceeding the insured value of the hardware itself.

Data from CBRE indicates the scale of this development, with 7,481.1 megawatts of data center capacity under construction across eight major US markets during the first half of 2026. With 80.4% of this capacity preleased, developers are facing strict contractual obligations to deliver computing power on time. Consequently, Brito notes an increased demand for delay in start-up (DSU) coverage, which protects against financial losses stemming from project delays.

The current supply chain environment is complicating these insurance arrangements. To secure necessary components, developers are increasingly purchasing equipment in bulk and ordering further in advance. This trend has led to a concentration of high-value assets in storage and transit. Furthermore, reliance on imports remains high; an August 2025 analysis by Wood Mackenzie estimated that 80% of US power transformers would be supplied by imports, with demand for such transformers rising 116% since 2019.

Brito reports that some buyers have sought turbines from unconventional sources, including NASA and Disney, as they attempt to secure equipment for their buildouts. However, relying on manufacturer-provided insurance can leave gaps in coverage. While a manufacturer might reimburse the cost of a damaged turbine, they typically do not cover the liquidated damages or financial penalties a developer incurs for failing to meet contractual GPU delivery deadlines.

To address these risks, Marsh is encouraging earlier collaboration between marine specialists and construction teams. The strategy involves structuring cargo coverage on a contingent basis alongside primary DSU protection, as the latter often requires the former to be in place. While the current marine cargo market offers softer pricing, brokers are warning clients against prioritizing short-term cost savings over long-term stability. Brito suggests that businesses evaluate their risk appetite, considering options like captives or institutional capital, and prioritize insurers with a proven track record for handling complex claims.

For industry stakeholders, this shift underscores the necessity of aligning insurance strategies with the specific contractual realities of data center projects, rather than viewing cargo coverage as a simple commodity purchase.

Why it matters

As AI infrastructure development accelerates, the mismatch between standard cargo insurance and the high-stakes financial penalties of data center delays poses a significant risk to project profitability and developer balance sheets.

FAQ

Why is delay in start-up (DSU) coverage becoming more important for data center developers?
Because developers have preleased over 80% of their capacity, they face significant financial penalties and liquidated damages if equipment damage causes delays in delivering computing power.

How does relying on manufacturer insurance affect a developer's risk?
Manufacturer insurance may cover the replacement cost of equipment, but it typically does not cover the developer's broader financial losses, such as contractual penalties for late delivery.

What is the current trend in equipment purchasing for AI infrastructure?
Businesses are ordering equipment earlier and in larger quantities to secure supply, leading to increased storage and transit exposures.

Source: Insurance Business America. See the original source for full details.